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Spengler

The World Learns to Manage Without the US

August 19th, 2013 - 4:06 pm

Cross-posted from Asia Times Online

The giant sucking sound you here, I said on August 15 on CNBC’sThe Kudlow Report, is the implosion of America’s influence in the Middle East. Vladimir Putin’s August 17 offer of Russian military assistance to the Egyptian army after US President Barack Obama cancelled joint exercises with the Egyptians denotes a post-Cold-War low point in America’s standing. Along with Russia, Saudi Arabia and China are collaborating to contain the damage left by American blundering. They have being doing this quietly for more than a year.

The pipe-dream has popped of Egyptian democracy led by a Muslim Brotherhood weaned from its wicked past, but official Washington has not woken up. Egypt was on the verge of starvation when military pushed out Mohammed Morsi. Most of the Egyptian poor had been living on nothing but state-subsidized bread for months, and even bread supplies were at risk. The military brought in US$12 billion of aid from the Gulf States, enough to avert a humanitarian catastrophe. That’s the reality. It’s the one thing that Russia, Saudi Arabia and Israel agree about.


America’s whimsical attitude towards Egypt is not a blunder but rather a catastrophic institutional failure. President Obama has surrounded himself with a camarilla, with Susan Rice as National Security Advisor, flanked by Valerie Jarrett, the Iranian-born public housing millionaire. Compared to Obama’s team, Zbigniew Brzezinski was an intellectual colossus at Jimmy Carter’s NSC. These are amateurs, and it is anyone’s guess what they will do from one day to the next.

By default, Republican policy is defined by Senator John McCain, whom the head of Egypt’s ruling National Salvation Party dismissed as a “senile old man” after the senator’s last visit to Cairo. McCain’s belief in Egyptian democracy is echoed by a few high-profile Republican pundits, for example, Reuel Marc Gerecht, Robert Kagan, and Max Boot. Most of the Republican foreign policy community disagrees, by my informal poll. Former defense secretary Donald Rumsfeld blasted Obama for undermining the Egyptian military’s ability to keep order, but his statement went unreported by major media.

It doesn’t matter what the Republican experts think. Few elected Republicans will challenge McCain, because the voters are sick of hearing about Egypt and don’t trust Republicans after the debacles in Iraq and Afghanistan.

Neither party has an institutional capacity for intelligent deliberation about American interests. Among the veterans of the Reagan and Bush administrations, there are many who understand clearly what is afoot in the world, but the Republican Party is incapable of acting on their advice. That is why the institutional failure is so profound. Republican legislators live in terror of a primary challenge from isolationists like Senator Rand Paul (R-KY), and will defer to the Quixotesque McCain.

Other regional and world powers will do their best to contain the mess.

Russia and Saudi Arabia might be the unlikeliest of partners, but they have a profound common interest in containing jihadist radicalism in general and the Muslim Brotherhood in particular. Both countries backed Egypt’s military unequivocally. Russia Today reported August 7 that “Saudi Arabia has reportedly offered to buy arms worth up to $15 billion from Russia, and provided a raft of economic and political concessions to the Kremlin – all in a bid to weaken Moscow’s endorsement of Syrian President Bashar Assad.”

No such thing will happen, to be sure. But the Russians and Saudis probably will collaborate to prune the Syrian opposition of fanatics who threaten the Saudi regime as well as Russian security interests in the Caucasus. Chechnyan fighters – along with jihadists from around the world – are active in Syria, which has become a petrie dish for Islamic radicalism on par with Afghanistan during the 1970s.

The Saudis, meanwhile, have installed Chinese missiles aimed at Iran. There are unverifiable reports that Saudi Arabia already has deployed nuclear weapons sourced from Pakistan. The veracity of the reports is of small relevance; if the Saudis do not have such weapons now, they will acquire them if and when Iran succeeds in building nuclear weapons. What seems clear is that Riyadh is relying not on Washington but on Beijing for the capacity to deliver nuclear weapons. China has a profound interest in Saudi security. It is the largest importer of Saudi oil. America might wean itself of dependence on imported oil some time during the next decade, but China will need the Persian Gulf for the indefinite future.

A Russian-Chinese-Saudi condominium of interests has been in preparation for more than a year. On July 30, 2012, I wrote (for theGatestone Institute):

The fact is that the Muslim Brotherhood and its various offshoots represent a threat to everyone in the region:
The Saudi monarchy fears that the Brotherhood will overthrow it (not an idle threat, since the Brotherhood doesn’t look like a bad choice for Saudis who aren’t one of the few thousand beneficiaries of the royal family’s largesse;
The Russians fear that Islamic radicalism will get out of control in the Caucasus and perhaps elsewhere as Russia evolves into a Muslim-majority country;
The Chinese fear the Uyghurs, a Turkic Muslim people who comprise half the population of China’s western Xinjiang province.

But the Obama administration (and establishment Republicans like John McCain) insist that America must support democratically elected Islamist governments. That is deeply misguided. The Muslim Brotherhood is about as democratic as the Nazi Party, which also won a plebiscite confirming Adolf Hitler as leader of Germany. Tribal countries with high illiteracy rates are not a benchmark for democratic decision-making … As long as the United States declares its support for the humbug of Muslim democracy in Egypt and Syria, the rest of the world will treat us as hapless lunatics and go about the business of securing their own interests without us.

The Turks, to be sure, will complain about the fate of their friends in the Muslim Brotherhood, but there is little they can do. The Saudis finance most of their enormous current account deficit, and the Russians provide most of their energy.

Apart from the Egyptian events, American analysts have misread the world picture thoroughly.

On the American right, the consensus view for years held that Russia would implode economically and demographically. Russia’s total fertility rate, though, has risen from a calamitously low point of less than 1.2 live births per female in 1990 to about1.7 in 2012, midway between Europe’s 1.5 and America’s 1.9. There is insufficient evidence to evaluate the trend, but it suggests that it is misguided to write Russia off for the time being. Not long ago, I heard the Russian chess champion and democracy advocate Gary Kasparov tell a Republican audience that Russia would go bankrupt if oil fell below $80 a barrel – an arithmetically nonsensical argument, but one the audience wanted to hear. Like it or not, Russia won’t go away.

American analysts view Russia’s problems with Muslims in the Caucasus with a degree of Schadenfreude. During the 1980s the Reagan administration supported jihadists in Afghanistan against the Russians because the Soviet Union was the greater evil. Today’s Russia is no friend of the United States, to be sure, but Islamist terrorism is today’s greater evil, and the United States would be well advised to follow the Saudi example and make common cause with Russia against Islamism.

In the case of China, the consensus has been that the Chinese economy would slow sharply this year, causing political problems. China’s June trade data suggest quite the opposite: a surge in imports (including a 26% year-on-year increase in iron ore and a 20% increase in oil) indicate that China is still growing comfortably in excess of 7% a year. China’s transition from an export model driven by cheap labor to a high-value-added manufacturing and service economy remains an enormous challenge, perhaps the biggest challenge in economic history, but there is no evidence to date that China is failing. Like it or not, China will continue to set the pace for world economic growth.

America, if it chose to exercise its power and cultivate its innate capabilities, still is capable of overshadowing the contenders. But it has not chosen to do so, and the reins have slipped out of Washington’s hands. Americans will hear about important developments in the future if and when other countries choose to make them public. Readers should be warned that those of us with reasonably good track records won’t do as well in the future.

My track record in general has been good. I warned in 2003 that the George W Bush administration’s attempts to build nations in Iraq and Afghanistan would have a tragic outcome. And in early 2006, I wrote: “Like or not, the US will get chaos, and cannot do anything to forestall it.”

In February 2011, I said that we did now know whether then-beleaguered president Hosni Mubarak of Egypt “will be replaced by an Islamist, democratic, or authoritarian state. What is certain is that it will be a failed state.” And in March 2011, I added about Syria, “We do not know what kind of state will follow Basher Assad. We only know that it will be a failed state.”

In April 2011, I declared Israel to be “the winner in the Arab revolts” because “the most likely outcome [in the Arab world] is a prolonged period of instability, in which two sides that have nothing to gain from compromise and everything to lose from defeat – the dispossessed poor and the entrenched elite – fight it out in the streets. Like Yemen and Libya, Syria will prove impossible to stabilize; whether Egypt’s military can prevent a descent into similar chaos remains doubtful.”

In January 2012, I announced a “recall notice for the Turkish model”, adding, “Among all the dumb things said about the so-called Arab Spring last year, perhaps the dumbest was the idea that the new democracies of the Arab world might follow the Turkish model.”

Now the dogs of war are loose and will choose their own direction. You don’t need foreign policy analysts any more. You can hear the dogs bark if you open the window.

Spengler is channeled by David P Goldman. He is Senior Fellow at the London Center for Policy Research and Associate Fellow at the Middle East Forum. His book How Civilizations Die (and why Islam is Dying, Too) was published by Regnery Press in September 2011. A volume of his essays on culture, religion and economics, It’s Not the End of the World – It’s Just the End of You, also appeared that fall, from Van Praag Press. 

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All Comments   (38)
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At TED2010, Bill Gates unveils his vision for the world's energy future, describing the need for "miracles" to avoid planetary catastrophe and explaining why he's backing a dramatically different type of nuclear reactor. The necessary goal? Zero carbon emissions globally by 2050.

A passionate techie and a shrewd businessman, Bill Gates changed the world once, while leading Microsoft to dizzying success. Now he's set to do it again with his own style of philanthropy and passion for innovation.

http://www.ted.com/talks/bill_gates.html
34 weeks ago
34 weeks ago Link To Comment
I don't buy Gates view on CO2. The data is currently running against the warming alarmists.

Further Gates talks of cutting the cost of electricity by 1/2. In the last year or two he has talked about cutting the cost of electricity to 1/4 the current cost of cheapest natural gas/coal. In the last year he has talked of working on thorium reactors which promise reductions in the cost of energy to as much as 1/10 current cheapest natural gas/coal.
34 weeks ago
34 weeks ago Link To Comment
http://www.ted.com/playlists/35/bill_gates_my_13_favorite_tal.html
Hans Rosling: The best stats you've ever seen
(changes in health and wealth around the world since 1960.)
34 weeks ago
34 weeks ago Link To Comment
The world is a safer place with a world hegemon keeping a lid on things.

The last time the world lacked one was in the 1920s and 1930s. The US should have picked up the role following 1919 as the Germans and the Brits fought each other to a draw over who would rule the world. Neither had enough economic power to do so and WWII was a rematch.

If the US had picked up the ball and taken the lead, as it was entitled to do based on economic power alone, in 1920, WWII might have been avoided. Both Wilson and the isolationists in Congress are to blame for our mishandling of the new responsibility. Wilson for proposing a utopian construct and the the isolationists for lacking the historical necessity of the era.

If the US gives up the role, new challengers will step forward and a BIG war will result. Obama is running from the responsibilities as fast as he can and Rand Paul is doing the same. Which is not to say that some realignment is not uncalled for, but a world hegemon will always be a vacuum that MUST be filled.
34 weeks ago
34 weeks ago Link To Comment
Our UN ambassador, Samantha Power, did not even show up for an emergency meeting of the security council about a seminal event, the use of chemical weapons by a member state against its own population.

Did not even show up.

What else is there to say?

35 weeks ago
35 weeks ago Link To Comment
This article in New York Magazine makes the opposite argument that I make. This article makes the argument that 1972 or there abouts marked the end of the expansion phase of the 2nd great industrial revolution that began about 1870.
http://nymag.com/news/features/economic-growth-2013-7/#print

i would argue that 1972 roughly corresponds to the first OPEC oil embargo. What’s important here is that the author doesn’t get how profoundly OPEC has decapitalized the USA for the last half century.

I think we we are in opening years of this process being reversed.

as mentioned before--I would argue that the american science/technology/entrpreneural culture has opened up a two front war on OPEC oil prices. the first front of the war on oil prices is oil and gas fracking. oil fracking increases supplies of oil while gas fracking lowers the demand for oil by diverting more vehicles to natural gas.

Recently a second front against oil prices has been opened up by Tesla and electric cars. The success of this industry will collapse the demand for internal combustion oil based cars—which will collapse the price of oil.

But this won’t be meaninful unless the cost of electricity comes down. imho electricity will fall to 1/4-1/10 of current costs with 4th generation portable nuclear reactors. They won’t be available for another 10 years or so.

The cost of power is directly related to productivity. As power costs decline —productivity increases. Workers who are more productive make more money and and enjoy lower operating costs --and GNP expands.

1960 the USA was way ahead of the rest of the world in terms of wealth and health. But since then, much of the rest of the world has caught up.

Technology imho is going to push the USA ahead again. Here I disagree with the author. imho we have entered a 3rd industrial revolution that’s every bit as profound as the 2nd industrial revolution.

How this relates to the middle east is that its no coincidence that the saudi salafists and the iranian kohemeniasts came to power during the 1970's at the same time as OPEC gained the upper hand in oil pricing power. The moslem world were becoming players on the world stage for the first time in 1000 years and their mullas wanted the credit for the success--because no one invaded and squashed them. The saudis were sweet on Al Queda during the 1990's and didn't turn on them Al Queda until 2004 or so when AQ turned on them--but its been only a decade since the Saudis changed their opinion on Al Quaeda. I'd hazard that the Saudis view events in Yemen Egypt and elsewhere as blowback from decades of supporting salafists of one strip or anther around the moslem world.

A final comment here. It goes to wealth creation. Richard Fernandez posted a very interesting article some months back on two strategies for wealth creation. In first strategy someone figures a way to shrink the total economic pie by siphoning a portion of the wealth into their own pockets. This fits the OPEC model. The second strategy for wealth creation is to create products that grow the total economic pie and then the product/profits grow along with the growth in the economy. This model for growth creating revenues is in character with everything from the Ford model T to Microsoft Windows to Catepillar earth movers.

Always, always-- lower energy and water prices lead to greater wealth for peoples and nations-- except for countries totally dependent on oil for their revenues.
35 weeks ago
35 weeks ago Link To Comment
You must mean "decapitalized the rest of the world."

High oil prices are an absolute show-stopper for most economies, for most nations don't produce oil to speak of.

At least America pumps a lot -- and prints fiat money to cover its imports.

35 weeks ago
35 weeks ago Link To Comment
High oil prices are an absolute show-stopper for most economies, for most nations don't produce oil to speak of.

absolutely agree.

The greatest gift the US could deliver to the world and the greatest boon to the world's economy would be collapsed oil prices. (imho increased US oil production is only keeping up with rising demand & falling production elsewhere for now.)
At least America pumps a lot -- and prints fiat money to cover its imports.

Its only in the last couple of years that US has started to turn things around. The US still imports a net 5 million barrels@day of oil (not counting Canada). increased oil production changes capital flows. imho this keeps US dollar from tanking and thus oil and gold from rising
35 weeks ago
35 weeks ago Link To Comment
Cheap oil would be adisaster for the US economy. Oil is priced in dollars (ie petrodollars) if oil is cheap,demand for dollars goes down and the value of the dollar goes down. Say hello to hyperinflation. that's why the US govt has been opposed to attempts to price oil in euros or the aborted gold dinar. It is why the Iran-india deal was disturbing since it avoided US dollars.
34 weeks ago
34 weeks ago Link To Comment
Cheap oil would be adisaster for the US economy.
..........
Cheap oil is a disaster for one trick pony economies like Russia and Saudi Arabia--but for very diverse economies like the USA and China and even more so for Europe and Japan--cheap oil is pure oxygen to the economy.High oil prices always choke off growth because they skim off capital. Low oil prices always stimulate growth because they return capital right to ordinary people by bottom line-- making them more productive --which gives them high wages--and by top line lowering their basic operating costs because lower energy prices are more stimulative than tax cuts.

Now understand that oil prices are extremely elastic. (Elastic vs inelastic are terms you learn in economics 101) Elastic means that when you lower oil prices --you stimulate growth which stimulates the demand for oil which puts upward pressure on the price of oil.
34 weeks ago
34 weeks ago Link To Comment
Much of the US economy is based on financial markets and the impression/reality that the dollar is always in demand. Lower that demand you lower the dollar's worth. Who will buy our T bills to fund Obamacare ?
34 weeks ago
34 weeks ago Link To Comment
Much of the US economy is based on financial markets
......
Much of the British economy is based on financial markets. the US economy is very very diverse.

impression/reality that the dollar is always in demand. Lower that demand you lower the dollar's worth. Who will buy our T bills to fund Obamacare ?
.............
true but demand is not going to fall. Why? rising US oil production pushes up the value of the dollar--which in turn raises the value of dollars sitting in reserves in banks around the world. plus rising US interest rates are already causing foreign currencies to fall against the dollar. If if anything supply is going to fall. Why? Because not only is the US current account deficit falling because of rising oil production but also the US federal deficit is falling because of increased revenues/taxes.


34 weeks ago
34 weeks ago Link To Comment

Markets More: Saudi Arabia Saudi America Fracking Shale Oil
PRINCE ALWALEED: Fracking Is Going To Crush The Saudi Economy If Nothing Is Done

Read more: http://www.businessinsider.com/saudi-prince-alwaleed-warns-on-fracking-2013-7#ixzz2cfeg1N5m

http://www.businessinsider.com/saudi-prince-alwaleed-warns-on-fracking-2013-7
35 weeks ago
35 weeks ago Link To Comment
Like the Saudis, the Russians are one trick ponies when it comes to their economy. The Saudis depend on oil for 92% of their economy. The Russians depend on oil for nearly as much of their economy. The threat posed by fracking may be behind recent Russian moves. Consider: To Boost Economy, Russia Frees Jailed Entrepreneurs http://www.newser.com/story/172327/to-boost-economy-russia-frees-jailed-entrepreneurs.html
35 weeks ago
35 weeks ago Link To Comment
KSA depends upon oil for 100% of their economy. Don't kid yourself that they've got any other pony.

As for mother Russia, without oil and natural gas export revenues, she implodes. Just ask Gorby.

Riyadh and Moscow HAVE common cause: to keep oil prices high.

Unfortunately, theirs can only be a delaying action.

One by one, every non-fracking nation is going to cave in... and frack.

There is no stopping it.

In the meantime, there is much graft to be palmed, from Warsaw to London. The entire plain of northern Europe sits upon a tight gas formation of epic scope. It surely exceeds the energy yield of Arabia.

And it's right underneath the house!
35 weeks ago
35 weeks ago Link To Comment
I'm getting your various references to Cardinal Richilieu and the Grey Monk and the 30 years war: Back in 1618, there was France and Austria and the Netherlands and the various Germanies and Bohemia and of course, Catholics and Protestants... and 30 years of war that ended only after some 30% of Europe's population was dead. Now? We have the US and Russia and Oil and Sunnis and Shia and plenty of ammunition and a clear intention for all the actors to keep on going for the long haul.
35 weeks ago
35 weeks ago Link To Comment
History refuses to cooperate with Obama in the Middle East

The Washington Post rarely delivers great news to my door step. Today is an exception, although it’s not clear that the Post recognizes it as such.

Here’s the Post’s lead headline: “Egypt’s Muslim Brotherhood appears at risk of falling apart.” And here’s the opening paragraph of the story by Liz Sly and Mary Beth Sheridan:

The world’s most influential Islamist movement is in danger of collapse in the land of its birth — its leaders imprisoned, its supporters slain and its activists branded as terrorists in what many are describing as the worst crisis to confront Egypt’s 85-year-old Muslim Brotherhood.
http://wapo.st/16MXrqA
This is enough to make my day, but it gets better:
http://www.powerlineblog.com/archives/2013/08/history-refuses-to-cooperate-with-obama-in-the-middle-east.php
35 weeks ago
35 weeks ago Link To Comment
The deep game of the Egyptian military has resulted in the MB coming out of the cupboards into the daylight.

During the Morsi regime, these cockroaches were uniquely identified, many for the first time.

If history is any guide, the EA is going to lock them up.

Soviet (blood) purges are not the Egyptian style.

Then again, being in an Egyptian prison is no picnic.

35 weeks ago
35 weeks ago Link To Comment
The deep game of the Egyptian military
.........
Just because their guys say John McCain is senile--which I agree with--is no reason to think the Egyptian military plays a deep game. It would have been enough for them to see that the MB was doing only one thing with their new power. taking away graft positions from military people.

that's why middle east politics look like beauty contests. they're just competing to see who is beautiful enough to screw their own people and make the people smile while they're getting screwed.

(yuck, I suddenly fear this may also be an apt description of american politics.)
35 weeks ago
35 weeks ago Link To Comment
McCain isn't like Quixote. He's like Mr. Magoo.
35 weeks ago
35 weeks ago Link To Comment
Mr. Goldman,
Please correct the first sentence. It distracts from an otherwise excellent article.
The giant sucking sound you here

I noticed that you did not mention the Suez Canal. Is that because no matter who is in charge, the canal will remain open due to the much needed revenue it generates? Also, since the Panama Canal is being expanded and there is talk of using the "Northwest Passage" through the arctic, the Suez Canal is not as crucial as it used to be?
35 weeks ago
35 weeks ago Link To Comment
Oil tankers ( VLCC and ULCC) out grew the canal forty-years ago.

Recently, world scale containerships out grew the canal. They're bypassing it even though it's open. Hence, the panic to increase its dimensions.

BTW, todays canal is three to four times the capacity of day one. It's been continuously excavated for decades.

(Like the Panama Canal, which is also being expanded to handle world scale containerships. The build is half-way complete.)




35 weeks ago
35 weeks ago Link To Comment
It might be a good thing to have China and Russia dominate all these 3rd world dictatorships. After all their bashing of the Western Imperialist Agenda (TM) perhaps exposure to Eastern Imperialism will be good for them. The only two drawbacks are 1) how does the US ensure that it still has access to raw materials and markets and 2) the Russians and Chinese may pull the Saudi gambit- blow up and kill as many westerners and Jews as you like but don't bring that Jihadist crap into our neighborhood.

As an aside, I would love to hear Dr Goldman's take on an article from realclearworld.com - Egypt no longer matters.
35 weeks ago
35 weeks ago Link To Comment
You posit the reversal of our Cold War success. Perfect.

As for "Egypt no longer matters" -- such is projection...

It's DC that no longer matters. See the original post by Spengler.
35 weeks ago
35 weeks ago Link To Comment
explain to me how becoming the world's brokest sugar daddy is a cold war success.
34 weeks ago
34 weeks ago Link To Comment
I think both propositions are true. but mostly because all the actors on the stage are irrelevant to the course of events in the world today. all the real stuff is happening offstage.
35 weeks ago
35 weeks ago Link To Comment
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