A World on the Brink of Change

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Europe is financially deteriorating, absorbing the attention of economic and political actors around the world. Change is coming. The New World Order proclaimed by George H.W. Bush is no longer in effect. Economic optimism has evaporated. Crises have multiplied. The military power of the United States has begun to decline while China continues to enlarge its army and navy. In the Middle East, Iran is continuing to advance its nuclear weapons program. The global economic crisis has triggered revolutions (through food shortages) – the fall of Egypt’s Mubarak and Libya’s Kadafi. Today Russia’s government is facing a crisis of confidence that will force a decision in Moscow: either genuine reform, or a return to outright Stalinism.

Last week, Citi Group’s Willem Buiter said (on Bloomberg TV) that time is running out for Europe. “I think we have maybe a few months – it could be weeks, it could be days – before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.” According to Buiter, the European financial system is determined to respond to the crisis “with both hands tied behind its back.” There is a lack of preparation, of underpinning. The most likely solution, he suggested, will probably spell the “end of the euro zone.”

What does this mean? Nationalism is bound to reassert itself in Europe. Elements currently on the fringe of European politics could be catapulted into the mainstream. A new fascism could emerge. This would entail anti-Americanism, hostility toward Arab and Turkish immigrants, and a military alliance with Russia. Consequently, NATO might disappear as Europe adopts Moscow’s “new security architecture.” More likely, however, the collapse of the euro zone would damage Russia’s economy, destabilizing a regime that has lost much of its legitimacy.

Already the Russian government under Prime Minister Vladimir Putin appears moribund. The peculiar 16 November Moscow Times article by Anatol Lieven, titled “My Gloomy Dinner With Putin” is indicative. “In Russia,” writes Lieven, “both state and society appear to lack the capacity for internal regeneration.” There is a new discontent in Russia. The regime’s popular support has evaporated. The ploy of trading jobs between President Dmitri Medvedev and Prime Minister Putin has been ill received by the Russian public, which now includes an emerging middle class that is determined to push for genuine reform. Any return to Stalinism, any attempt to smash this new middle class, would set off a social explosion. The Russian Army, dominated by Kremlin stooges, has an officer corps of a different stripe; new men born of a new era. Would the army support Putin or the middle class? The hard lesson here, is that if you pretend to be bourgeois long enough, you engender an authentic bourgeoisie. Some analysts estimate that Russia’s emerging middle class (poor as it is) makes up as much as 30 percent of the country’s population. Change may indeed be at hand.

Meanwhile, in the Far East, China’s military growth continues to alarm its neighbors. America is cutting back its military capabilities, with direct impact on the western Pacific. As one example, Australia is now determined to build a submarine fleet (See THE DIPLOMAT, “Why Australia Needs Nuclear Subs”). At the same time, Japanese politicians have publicly boasted of their country’s nuclear potential. It is known that Japan could build a nuclear arsenal within months, since the country already possesses at least 4.7 tons of reactor-grade plutonium – enough to build 700 warheads. Add to this Japan’s uranium enrichment facility, and ready-made ICBM technology (the M-V rocket) for use as a delivery system.

The logic of nuclear proliferation follows an even more dangerous path in the Middle East. According to recent reports, Israel appears ready to strike at Iran’s nuclear program. Israeli authorities are claiming that within approximately nine months, the Iranian program will be immune from attack. This puts a firm date on the window for preemption. Defense Secretary Leon Panetta has warned Israeli Defense Minister Ehud Barak against an attack. “The United States feels strongly,” said Panetta, “that the way to deal with [Iran] is to work with our allies, to work with the international community to develop the sanctions and the diplomatic efforts that would further isolate Iran.” Would the small state of Israel attack Iran in defiance of the United States?

Whatever happens in the immediate future – in Europe, the Middle East, Russia or Japan – the world is going to change from the relatively stable one we have known to an unstable formation which is untested and will form spontaneously out of today’s crises. Therefore, we should set aside old assumptions and discover the logic of an entirely new set of situations. 

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About JR Nyquist

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