Continued from Trump leads the world that is a changing-Part-1
By Khalid Hussain –
In Syria, Trump has gotten the French by their nether regions with his arbitrary decision to withdraw American forces. President of France Emanual Macron has already called America a reliable ally and wishes to raise an EU military.
This new power vacuum dictates how others might have to withdraw and transition out of Syria.
So the Pax Americana is over. But which one of the many that appear to be out there in recent history? There was Pax Americana I immediately after the second World War wherein dollar became the foundation to the new multilateral system from Brettonwoods. This ended with the Nixon Shock in 1971 heralding Pax Americana II. This is the one which appears to have ended now.
Since there is no Pax American III yet in place, it is my assertion that the Establishment is at war. Brexit was its first volley of violence that is still echoing out there. The other was Trump in the United States. This division between the old Anglo Saxons largely survived because Europe could not imagine global trade and progress without the mighty United States of America leading the way. The decision was arbitrary. The United Kingdom even then played a dubious role by diluting the force of French demand for gold against their American Dollar reserves by also making similar demands. This was used as an excuse by Nixon to shock the world, nay Europeans for 97% global trade was between the 22 countries of the Organization for Economic Cooperation and Development (OECD).
Debt is unsustainable all over the place. The Europeans are as worse off as the Americans who are as insolvent as the Bank of England. It is not as much confidence that is keeping this fiction in place. It is the meek continuity of the poor of the world to continuing supplying the markets with goods and services. They are, of course being misled by politicians with false claims of export earnings to one day pay off their debt. The debt treadmill is dreadful.
It has to come to a logical end. Since it has not, we are logically on a slippery slope of inflationary superhighways. This is one delicious irony for inflation not only increases the cost of living for the poor, it also makes it impossible for the super rich to pay off their debts. Thus the Establishment goes after each other from changes in laws around money laundering to terror financing trying to brow beat the banking systems from sovereign territory to another.
EU the only other Economic block that rival the United States of America. It has the capital, the human resources, the necessary large industrial base to compete with the United States of America over the longer run. China may but the capacity is lacking. This is the context in which natural competition between the Europeans and the America interests plays out. This has led to two distinct political alliances. One is between the UK and the United States and the other is that of the EU with the superpower. The one with the UK is what is known as the Five Eyes as it also includes Canada, Australia and Newzealand. Japan is part of this alliance in Asia as is Singapore.
The rivalry between China and the EU has seen the two economies move closer since 9/11 in 2001. This process has hastened since the 2008 American sub-prime financial crisis that spiralled into the global banking meltdown. Debt is skyrocketing across both sides of the Altlantic. Indeed the whole world is mired in it. This makes inflation the only way out as no debt rewrite option is on the table anywhere.
It is this context in which the global affairs are fast unfolding from Syria to Afghanistan and China to Russia. America is in control with its might military all over the world. Massive inflation calls for greater growth to keep old power solvent. Growth in future is tied to technological shifts codified as the 4th industrial revolution. Yet, it needs the foundation of a natural resource base upon which to function. This is all located in geographies called the Centre and Western Asia wherein Pakistan is located at the geo-strategic confluences. As trade wars intensify, they might even bring the entire banking system down with it. This would be a heaven sent for the powerful who can clean their slates to continue their hegemonies.
Thus the conflicts in trade are really all about commerce and finance. However, as new territories joint global capital from Pakistan to the central Asian republics, the Europeans will have to settle with the American cousins on their terms once again. That is the war wherein Trump is dumping the erstwhile European allies of the United States of America. And the United Kingdom is going with him to show it exists versus the rest of Europe and not with it.
China is the geography that appears to be on the losing side of things in this new scenario. But future is for no one to know.
Khalid Hussain is Resident Editor of TLTP – You may contact Khalid Hussain at Resident.Editor@tltpnews.com.pk
The Law Today Pakistan, commonly known as TLTP, is the largest news wire service, headquartered in Islamabad. The service is providing fast, comprehensive and verified news on superior courts adjudications, regulatory framework of fiscal, monitory and external sectors, economic regulatory bodies amid apex institutions regulating the financial system. TLTP is empowering readers of more than 12 national English dailies in the country.