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The Future: America vs. Eurasia

How will the future play out? Will Europe follow America’s example and sink into nationalist populism that will inevitably tear apart the European Union and open the way to Trump’s divide-and-conquer America First strategy? Will America’s trade war with China escalate in a real war that could go global as Trump’s stranglehold on world trade tightens further? I believe there is hope that neither will happen. Instead, we might witness something utterly different and much more likely: the rise of Eurasia.

Two events these days are early signs of such a shift for anyone who cares to look. One just took place in Paris at the 100th anniversary of the end of World War I organized by French President Macron. The other, thousands of miles away in Singapore, is the ASEAN Summit, from 11 to 15 November where a major new trade deal, the Regional Comprehensive Economic Partnership (RCEP) that for the first time included China, was on the agenda.

The trip was a diplomatic disaster for Trump. He started on the wrong foot even before leaving for Paris. On 9 November, Trump, misunderstanding a Macron statement about the formation of a “true European army”, sent an insulting tweet:

The misunderstanding was soon clarified: Macron had referred to the announced U.S. withdrawal from the I.N.F. nuclear arms treaty with Russia as a reason for establishing an independent army, not that the U.S. was an enemy. Macron in a speech welcoming 84 world leaders to the celebration on November 11, made another statement that shook Trump who considers himself a nationalist:

“Patriotism is the exact opposite of nationalism. Nationalism is a betrayal of patriotism by saying: ‘Our interest first. Who cares about the others?’ I do defend my country. I do believe that we have a strong identity. But I’m a strong believer in cooperation between the different peoples, and I’m a strong believer of the fact that this cooperation is good for everybody.”

From the ashes of the two World Wars came hope, he said. “This hope is called the European Union, a union freely entered into, never before seen in history, a union that has freed us of our civil wars”. Trump appeared “grim” and clapped only tepidly afterward. Significantly he missed the opening of a 3-day conference, the Paris Peace Forum that followed the ceremony to discuss how to strengthen multilateralism.

The next day, on 13 November, Trump took again to Twitter in a series of five aggressive tweets, astonishingly rude and misinformed, including this one:

Not the way to treat the leader of an American allied country. He forgets (or doesn’t know) that his own approval rating in France is abysmal (around 9%).  Macron was forced to respond. France, a historic ally, is “not a vassal state” he said in an interview on French TV: “At every moment of our history, we were allies, so between allies, respect is due. I don’t think the French expect me to respond to tweets but to continue this important history.”

Now that Angela Merkel is on her way out and Brexit is wobbling to its pell-mell conclusion – barring a last-minute legal reversal or a political crisis – there is no doubt that Macron is emerging as the main defender of a United States of Europe. A Europe increasingly under assault by Trump’s America First policies.

Meanwhile, at the other end of the Euroasian continent, in Singapore, RCEP is the second major trade deal under discussion since Trump ditched the Trans-Pacific Partnership (TPP) in January 2017. A serious political blunder considering that the goal of the TPP in the Obama administration’s intention, had been to exclude China. In March 2018, the situation had been reversed and it was America that was isolated: the remaining TPP members (including Canada and Australia) signed the first major Pacific trade agreement, keeping the original TPP content largely intact but renaming it the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) – to take effect soon, on 30 December 2018.

Brookings Institute experts see the new RCEP as something much bigger, “an optimistic answer to populist and protectionist trends around the globe”.

Massive, the new RCEP brings together 16 countries covering 3.6 billion people for a total GDP of some $25 trillion, exceeding that of the United States. The point is that it brings China in for the first time, together with India, Japan and South Korea. It builds on commitments already taken in the World Trade Organization (WTO). Not without difficulty of course. Of the 21 chapters of the treaty, so far agreement was obtained on only seven.

RCEP negotiations are expected to be completed only at the next ASEAN summit in Thailand in 2019. Predictably, problems range from India’s fear of being overrun with products from China, Korea and Japan to Trump’s trade wars, making some countries anxious of “losing” the American market.

How Likely is Eurasia to Replace America as World Leader?

Euroasia: A little used term for a vast continent that extends from Cape Dezhnev (Russia) in the East to the Monchique Islet (Portugal) in the West to Dana Island (Indonesia) in the South. A new geo-political entity that is not yet born. The road is rocky but if it emerges, it will be the largest ever, encompassing two-thirds of the world population.

If Euroasia is to replace America as the center of the world, both in culture and technology, much needs to happen first. Above all, it requires an unlikely alliance between Europe and China with India and Russia keeping the balance. Unlikely but not impossible if political leaders are willing to see the writing on the wall.

At least one major American economist sees it happening. Columbia University professor and best-selling author Jeffrey Sachs, in his remarkable new book Foreign Policy: Beyond American Exceptionalism argues convincingly that as America withdraws behind its borders with Trump’s America First policies, Euroasia will rise. Europe-China trade is on a steady growth trend while US-China trade stalls, hit by Trump’s tariff wars. In Sachs’ words: “Trump’s protectionism and bellicosity will only speed up the integration of Europe and Asia, leaving the United States on the sidelines.” Integration is a big word, in my view, it’s more of an “entente”.

China on a Roll

 China is already on the move. It is wielding the soft power weapons that used to be America’s in four different strategic areas:

  1. Political cooperation: The Shanghai Cooperation Organization, created in 2001 with most of China’s Asian neighbors in Central Asia, plus Russia; with the recent addition (in 2017) of India and Pakistan, it is known as the “Alliance of Asia”; the latest meeting was pointedly held at the same time as the G7.
  2. Infrastructural investments: The Asian Infrastructure Investment Bank, started in January 2016, with now 86 “approved members”, including European countries (but not the US and Japan) and already a hefty list of approved “sustainable” projects mostly in Asian countries; India tops the list, with Egypt the only African beneficiary so far.
  3. Economic investments: The Belt and Road Initiative (BRI), since it was unveiled by Xi-Jinping in 2013, has made huge progress on both its fronts, building land and maritime corridors all the way to Africa and Europe.
  4. Green technologies to fight climate change: The Global Energy Interconnection Cooperation and Development Organization (GEIDCO) with the aim of developing interconnected energy system to meet the “global demand for electricity in a clean and green way” and to implement the Sustainable Development Goals, in particular “Sustainable Energy for All” and climate change initiatives. As Jeffrey Sachs notes in his book: “The idea is to support rapid decarbonization on a global scale” and GEIDCO has signed up “universities, utilities, and power-equipment manufacturers as partners throughout the world”.  

The Chinese revival of the “Silk Road” is also a cultural revival of a very old story of successful trade across the continent. It is finding open arms in many parts of Europe, and especially in Greece, where the Chinese state-owned company Cosco  famously invested some €385 million in the port of Piraeus, near Athens, in 2016.

Symbolic of the resurgence of European links with China, is the revival of the Greek town of Soufli, on the borders of Turkey, where monks from India brought the secret of Chinese silk-making in the 6th century:

Can Europe become a credible partner in a future Eurasia alliance?

Many things can go wrong. Europe may sink back, scared by the prospect of a “yellow peril”, an old phobia rooted in Europe’s racist past and feelings of superiority in the 19th century. But there is a far worse scenario should a populist Euro-skeptic wave take over the European Parliament at the next upcoming elections in May.

The question then becomes: Will Europe find itself paralyzed and broken apart by the rising nationalism/populism that has already gripped Italy, Austria, Hungary, Poland and is threatening many other European nations, including France (Marine Le Pen’s National Rally) and Germany (the populist Alternative for Germany)?

Populists have made it very clear that their agenda is to turn back the clock and replace the European Union with a “Europe of Nations”. This is an outcome Steve Bannon is counting on; his main goal is to weaken Europe with the “movement” he just founded in Brussels, roping in populists like Italy’s Salvini and France’s Marine Le Pen.

If European populists get their way and weaken European institutions so that all that is left are separate fragile nations struggling to find a space in the international trade order – which is what will happen to the UK once Brexit is consumed – who is going to stand up to the Chinese hegemon? Or for that matter, to Putin’s Russia with its imperialist, autocratic tendencies? Not to mention, of course, Trump who prefers weakened European allies.

The downfall of the European Union at the hands of populists opens the door to trade exploitation: There will be no single European voice to talk on a par with the Chinese and cut fair deals for Europeans, protecting European economies and acquired workers’ rights.

The threats to the European Union are many and well-known:

  • The migrant crisis and the inability to address the issue on a collective basis, with many EU members withdrawing from their responsibilities, especially in Eastern Europe, notably Hungary and Poland;
  • The Euro, an unfinished currency:  compared to the dollar, it is “missing a leg”, i.e. the support of a federal Treasury; Macron has made proposals for a federal treasury but Germany, engulfed in the political turmoil caused by Merkel’s planned exit,  is not listening;
  • The imposition of austerity policies by Germany on the weaker EU members (Greece, Italy, Spain, Portugal, Ireland) to defend the Euro and causing unnecessary economic pain in the process, killing off investment opportunities, raising unemployment and weakening basic government services (health, education, research);
  • Trade and investment policies imposed by the United States, in particular the sanctions on Russia (since 2014) and most recently Iran; these are policies that make sense for America but that hurt Russia, Iran and Europe since they are geographically close trading partners; as economists know well, “trade gravity” naturally results in increased commercial exchanges and investments. In that sense, America can go on alone for a much longer time without feeling any blowback from trade sanctions and tariffs.

Any European politician wishing to counter and deflect populists will need to address these four issues: (1) the migrant crisis, (2) the Euro, (3) austerity policies and (4) sanctions on Russia and Iran.

It is no coincidence that the populist wave in Europe is exploiting precisely those four threats to the European Union.

Update Sunday 20 November: Today French President Macron was invited to speak to the German parliament, the Bundestag, and he made an extraordinary and forceful speech in defense of Europe, urging EU revival to prevent global chaos. This is a speech worth listening to, watch the reactions in the Bundestag:

Eurasia Cooperation Beyond Trade Ties: The Role of the United Nations

The United Nations over the last seven decades has played a unique role in sustaining international cooperation and avoiding wars – not just at the Security Council but through the constant work of  its dozen specialized technical agencies, from the Food and Agriculture Organization to the World Health Organization that, overall, employs some fifty thousand people and twice as many consultants across the world. An army of experts that operate discreetly, is hardly ever reported in the news, yet undoubtedly contributes in making a difference in economic development. A role well recognized by developing countries that always ask for “more development cooperation” (the accepted term for aid) at the UN.

This is a role that China also understands well and has famously used in its own interest when it joined the World Trade Organization, obtaining for itself the status of a developing country which allowed it to use trade protection measures. And it is a role the United States has been systematically rejecting since the 1970s. The U.S. continues grudgingly to pay 22 percent of the UN budget though trying regularly to diminish it – and recently, with Trump, cutting it back by $ 285 million.    

Remarkably, the work of the UN knitting the world together with international agreements has bypassed the United States.

The list of major UN agreements not ratified by the U.S. Senate, with little prospect for adoption because of Republican Party opposition over the past four decades, is astonishingly long. Jeffrey Sachs lists 15 treaties in his book, starting with the Convention on the Elimination of All Forms of Discrimination Against Women (1979 – UN Women), the Convention on the Rights of the Child (1989 – UNICEF), the Basel Convention on Transboundary Hazardous Waste (1989 – UNEP, FAO), the United Nations Convention on the Law of the Sea (1991 – UNCLOS), the Convention on Biological Diversity (1992 – CBD) and on and on, until the Paris Climate Agreement (2015 – UNFCCC) signed by Obama but from which Trump plans to withdraw in 2020.

That leaves China and Europe as the main players at the UN where India and Russia have also been quick to make their voices heard. Note that the five permanent members of the Security Council are in the hands of Eurasian members:  two European states (France and the U.K.), China and Russia, leaving the United States alone.

The Threats to Eurasia Entente

Expect the UN to provide a forum for Eurasia political entente over the next decades. But many things could stop this entente. Notably:

  • The breakdown of the European Union at the hands of populists, as noted above. The breakdown has already started with Brexit:

Clearly, the UK – or at least this government – does not see itself as part of Europe. Whether British pro-Remain and Millennials succeed in reversing this trend remains to be seen. They are certainly trying hard. If they fail, the US-UK “special friendship” could return to glory days.

  • The hard-to-predict reactions of Russia and India, lesser but still very important players bent on carving out space for themselves.

Russia is especially dangerous, armed with a superior capability for cyber warfare and stunningly effective disinformation (read fake news) techniques.

  • A return of America to its soft power leadership role.

But that would require several things to happen first: Trump has to lose the 2020 presidential elections; the Democrat who replaces him has to be ready to take on the full brunt of Republican isolationism that has grown over the last 40 years and reverse it. Not easy.   


EDITOR’S NOTE: THE OPINIONS EXPRESSED HERE BY IMPAKTER.COM COLUMNISTS ARE THEIR OWN, NOT THOSE OF IMPAKTER.COM
FEATURED IMAGE: The Bosphorus Bridge, also called the First Bosphorus Bridge in Istanbul, Turkey,  spans the Bosphorus strait connecting Europe with Asia CREDIT:  Photo by Jorge1767.

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