The Stone City

Words Made to Last

Thursday, June 30, 2005

Colonialism 3.0

The United States and India have decided on increased military cooperation. Winds of Change discusses the "New Framework", and mentions its impact on China:

By now, I'm sure you're all asking where China fits in. Actually, India took great pains to avoid any semblance of targeting China with this agreement, and the USA is denying up and down that this has anything to do with China.

As Winds' summary of China's Geopolitical driver and issues notes, however, the competition is implicit. Both China dn India need resources to fuel their growing and industrializing economies. Both have sizable expatriate communities in Africa, which has a lot of mineral resources and is unstable enough to be open to influence. Both also need to ship oil from the Middle East, and both will be shipping it through the Indian Ocean and watching the Straits of Malacca as an economic lifeline. Hence India's giant new naval base INS Kadamba, near Pakistan's deep-water port of Gwadar (built with Chinese help). Neither party has any interest in provoking anything, but both know that having a stronger position will matter down the road, and will affect everybody's calculations.

It doesn't get much stronger than being a geopolitical strategic partner of the United States. China doesn't have to be challenged directly or even mentioned to have its options hemmed, and that's what just happened.

In an earlier post, I described one plausible scenario for Chinese aggression:

China could strengthen itself relative to its Southeast Asian neighbors (and thus profit economically at their expense) by impeding their access to raw materials. If this were done gradually enough, or if the United States became too dependent on Chinese loans and Chinese goods, the world's response might be mere protest.

One way to think about this is by analogy with 19th-century colonialism. The industrialized countries of Europe, seeking to open markets for their goods and obtain raw materials on favorable terms, competed for access to the populations and lands of the pre-industrial world.

In the 21st century, the fungibility of assets means that there is only one meaningful raw material: oil. More precisely, the "raw material" is the currency in which oil is denominated; but all G7 currencies are equivalent for our purpose. The industrialized countries of Asia, seeking to open markets and obtain currency on favorable terms, compete for access to the populations of the post-industrial world.

This analogy is imperfect but useful. While the G7 countries, whose prosperity largely depends on a stable flow of goods, will work to prevent overtly destructive competition (such as interdiction of a rival's shipping lanes), their powers of enforcement will wane. Also, the flow of goods from a single large supplier (such as China) will be economically indispensible, vitiating their will to enforce the current order.

The only reliable guarantee against such destabilization is a stable balance of power among the new industrial nations, which will deter this negative-sum behavior. Thus it is imperative that the U.S. act systematically to strengthen India in the long term.

As resource limits begin to more harshly constrain the growing Asian economies, the competition among them will necessarily intensify. Unless the post-industrial nations show a commitment to preserving the international order, and unless that commitment backed by a determination sufficient to stand against the raw need of the emerging Asian superpowers, then those superpowers will effectively rule the region.

Those too small to participate in the balance of power will be forced into alliances on the stronger party's terms. The most likely outcome is the emergence of two "co-prosperity spheres" backed by Chinese and Indian influence, respectively. Japan -- with both new powers standing between it and the Middle East's oil -- will need good relations with at least one, at essentially any cost.

[Hat tip: Instapundit.]