Posts Tagged ‘ Geopolitics ’

Global Economic Collapse, War, and a Friendly Game of Risk

So, the world. It’s in a bit of a mess. It’s a large and complicated place. Countries are being invaded, banks are collapsing, Russia has sent a fleet to Venezuela… all a bit crazy. Why are these things happening? Are they linked? What will tomorrow be like?

To understand the why, we need to gain some objectivity. We’re always reading newspaper stories that debate or simply proclaim the morality of one action or another. While the US and UK’s invasion of Iraq was for ‘freedom’, Russia’s invasion of Georgia is ‘imperialism’ – I’m sure you’d spotted that one already, but there are many more subtle examples. Morality is, to say the least, a poor explanation of the actions of governments.

So to get a bit of distance from the subject, let’s look at history. This is the second time Iraq has been occupied in 100 years, and the fifth war aimed at controlling Afghanistan in 200 years (if I’m miscounting here, it’s by under-counting). The British state was involved in both Iraq occupations, and four of the five Afghanistan occupational wars. Why?

I find it helps to pretend the world is a game of Risk. In a Risk, six players compete to control the world. Early on in the game, play is fluid, with territories changing hands across the globe. As the game progresses, the world divides itself into heavily defended core territories that are very hard to attack, and a violent periphery where the players jostle for advantage. Obviously, the world is not a game of Risk, but this happens in real life too.

The world has changed since the free-wheeling days of World War 2. It no longer seems plausible for Germany to conquer France. More importantly, it is completely ridiculous to imagine Russia seizing Texas, or America annexing Guangzhou. So the imperial ‘core’ is safe, protected by the dread fear of nuclear war.

The imperial ‘periphery’ – the Third World, all those resource-rich but industry-poor countries where those funny foreigners are always killing each other – is the battleground of these comfortable empires. Certain that they are playing a game where there will be a winner, looking at the world as though it was Risk, they draw imaginary borders, choose friends and foes, and struggle to get the upper hand. Elections, coups, revolutions, wars – even genocides are just moves on the board, searching for fractional advantage.

Historians talk about “the Great Game”, a conflict between Russia and Britain in the 19th century. This consisted of diplomatic maneuverings and occasional war with the Ottoman Empire (Turkey plus an empire that included Syria and Iraq) and Persia (Iran plus an empire that included Georgia), as well as Afghanistan. Afghanistan had the misfortune to lie directly between the old British and Russian Empires. Afghanistan could be Russia’s route to India, and so both powers fought to control it. The British waged two wars there in the 19th century, and one in the early 20th.

The imperial borders haven’t shifted that much since those times, although America has taken on Britain’s role. The Russians invaded Afghanistan in 1979, and Britain again in 2001 – but this time as American vassals, a sort of tragicomic replay of the days when Britain ruled the globe.

I think the evidence is clear: the Great Game never ended. It barely even moved! Afghanistan and the Middle East are where Russia, by land, meets the influence of whoever has the biggest navy. This was Britain, and is now America. Similarly, Africa, South East Asia and South America are not controlled directly by great powers, and so experience the coups and wars that are a symptom of the powerful’s war on the periphery.

The practicalities have shifted a bit. There is no fear of Russia conquering India – instead, the fear is that Russia could control the flow of oil from Central Asia. The northern route is through Russia, and the only possible southern routes are through Afghanistan or Georgia. It is not as simple as “American wants a pipeline through Afghanistan” – instead, controlling Afghanistan would give them greater influence over the likes of Turkmenistan. But in the end, it is the same old Risk-board pattern.

So far so good. But what about China? Why are all the banks collapsing?

Well, post-Cold War, China has a newfound ability to choose its friends, and a newfound economic ‘miracle’. The ‘miracle’ is that China has quickly built lots of factories. They were payed for by Western consumption. Traditionally, Europe and the US made their money from triangular trade. Triangular trade is where you sell me ten foot of string, I weave it into a foot of rope, and I buy the next ten foot of string by selling you an inch of rope back. This is why there are almost no oil refineries on the periphery, and quite a few in Spain. More recently, some bright spark thought “Why not do the weaving abroad too, where labour is cheap?” And so China ended up covered in rope (or, um, computer, car, and everything else) factories.

There’s an obvious problem here – how do you pay for all that consumption if you don’t actually make anything? “Financial services” (ie con tricks) make up some of the gap. The Information Economy was meant to help, but then it turned out that those funny brown chappies can learn to program computers too. Patents help, as long as the big universities are in the West. But none of it is enough. And so, we get to the big D – Debt. If you run out of money, borrow it!

America is massively in debt. I could quote a figure, but it will probably grow so much between me writing this and you reading it that I would end up looking silly. We are talking trillions of dollars – I can’t imagine that, and neither can you. It’s an unfeasibly huge number. People are prepared to lend America this money because they need somewhere to put their extra dollars, and if you’re China and selling bucketloads of crap to the Americans, you have a lot of spare dollars to lend.

Yes, you read that right. America can buy far more from China than anyone buys from America because China lends them the money to do it. And not just China – Japan, the Middle East… it’s hire-purchase on a global scale. This has all been vaguely stable because oil is only sold in dollars, and so everyone needs dollars*. If it sounds mad, that’s because it is. Completely bonkers. And what we are watching now is the whole nonsense coming unstuck. The base of the US economy is in China. The only way left to get money is to borrow it, and to use the ‘financial services’ con tricks…

Well, the con tricks turned out to be cons, and collapsed. And now nobody will lend anyone money. And there’s a Russian fleet in Venezuela. And if I was Bush, I’d be fleeing for my secret escape rocket, cackling madly. As it is, he seems to have decided to invade as much of the world as possible first, but it has only made the situation worse – now America is not just a con trick with an army, it’s a con trick nobody trusts with an army stuck in wars it can’t win!

That’s how the world is, and why we (the people of the old empires) are pretty much screwed. Even if the central banks manage to turn it around this time, and I don’t think they will, it will only delay the inevitable. The factories are all in China, the consumers are all in America. Game over.

* The history of why oil is sold in dollars is very interesting, but not so important here. Look it up!

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