Gathering Storms Cloud On The Horizon; Military, Political, Strategic & Economic Uncertainties A...

By Kumar David –

I will argue in this essay that the world has entered a period of great uncertainty following the long wave of expansion and relative prosperity after the end of WW2. This is in the intrinsic nature of capitalism – crisis, war and recession followed by boom; it has always been so though in every instance the specific trajectory has been different. This time there are five distinctive features: the power and preponderance of the United States in the military domain, the never before seen division of the world into a Muslim sphere against Israel and the US joined at the hip while Europe hops around like an embarrassed spectator, third the rise of China as a mighty economy (I will expand on this later), a war in Ukraine which according to available reports Russia is winning (NATO expansion to the borders of Russia can now be ruled out), and fifth, attempts at ethnic cleansing by the Israeli State (a war-crime and a startling repetition the holocaust that the Jews suffered at the hand of the Nazis).

I will spend a little time on US military and on the emergence of a united and angry Muslim world, a significant new phenomenon. US budgeted lay-out on military expenditure in 2023 was about $900 billion (China second at about $300 billion) and includes maintaining and training the world’s foremost air-force, eleven operational aircraft-carriers and their support fleets and paying for two more carriers under construction, upkeep of nearly 1000 military bases on foreign soil, and developing stealth aircraft and high-mobility ultra-sonic missile (HMUSM) systems. These are missiles that can change course in flight, manoeuvre, discharge multiple warheads and shoot down rockets and drones that threaten US ships and bases. Hezbollah and the Houthis have now learnt a trick. They discharge thousands of cheap rockets and drones that cost no more than a few hundred dollars apiece at American facilities compelling the US to retaliate with HMUSMs which cost about a million dollars each. The plan is to deplete the US budget. The Americans are scratching their heads what to do about this. Both the Americans and the Chinese are developing ‘Star-Wars’ capabilities, that is space and satellite based offensive capabilities. The world you may honestly declare is slowly (or not so slowly) going mad.

The specifics of how empires collapse depend on many uncertainties and imponderables. Who would have imagined that Alexander, the military genius who never lost a battle, would be forced to turn back when his exhausted troops refused to cross the Indus declaring that they had reached the end of the world, or that assassination on the Ides of March would botch Caesar’s ambition of conquering the “whole world”, or that in-fighting among his sons would stymie the Great Genghis?  Likewise the incandescence of the Muslim world, Russia’s conquest of eastern Ukraine and Netanyahu’s commitment to ethnic cleansing of the Palestinian people from all the lands of the Tora (Old Testament) will certainly scuttle US Imperialism within the lifetime of my younger readers. Year-2023 has been the most unusual year of the 21-st Century if not the whole postwar period, and 2024-25 may turn out to be cataclysmic.

I refer next not only to political and military events but also to financial ones. A Washington-led group is seriously mulling the confiscation of $300 billion of Russian monies parked in Western financial assets, Treasury Bonds and in banks. The money is to be used as war reparations to compensate Ukraine. Legally however it is blatant theft. I do not know how Moscow will retaliate but it is an invitation to military responses such as devastating attacks in eastern Ukraine, to confiscation of Western assets and investments in Russia and to disruption of the global oil and gas shipments. Russia could encourage Iran, the Hezbollah and the Houthis to play dirty in the Red Sea, the Persian Gulf and the Sea of Aden. Second guessing what may happen is pointless but one needs to be prepared for anything. On an individual note keeping personal savings in US dollars, dollarized asset classes or relying on SWIFT and similar dollar-oriented transactions classes should be minimised. China has developed Yuan led international transfer mechanisms that may be safer to use whenever possible.

2024 and beyond

To return to the angry radicalisation of the Muslim world, now unfolding events would have been thought incredible a few months ago. Turkey’s Erdogan has all but declared war on Israel; it needs to be confirmed but there are reports that Ankara has quit NATO, and Western capitals are alarmed by as yet unconfirmed and unreliable reports that Saudi Arabia has “declared war” on Israel. Putin was welcomed on the tarmac at Riyadh by the aged monarch King Salman himself (and Crown Prince MBS) and his visit was accompanied by festivities suitable for a monarch. The stable capitalist post-war world order has gone topsy-turvy.   

News reports (not all equally reliable, hence?) over the New Year weekend assert that:

* Wave upon wave of Palestinian anger will not abate until a homeland is established.

* Turkey has quit NATO (??)

* Russia and Turkey have deployed troops on the Syrian border within easy reach of Israel

* Iran has sent war ships into the Red Sez is support of Houthi Rebels (?)

* Russia provides missiles for Yemen to attack US base near or in Israel

* Israel’s Supreme Court (split 8-7 decision)  has debared Netanyahu from overruling its decisions

* Massive retaliatory Russian missile strikes across Ukraine

* Russian retaliatory measures such as takeing over US financial assets and investments if the latter goes ahead with its illrgal threat to confiscate $300 billion of Russian assets in American banks “to compensate Ukraine”.

* Immature populisms and hare-brained policies are gaining ground in some developing countries, for example Chile and Argentina

And the list goes on and on; it’s not a pretty picture; the future is going to be grim and very ugly. The Middle East and Ukraine are engulfed in war; will it spread?

China

China is gaining. The Belt & Road Initiative (BRI) is making headway in investment, transport and economic growth in Central Asia (Kyrgyzstan, Kazakhstan, Uzbekistan, Turkmenistan and Mongolia). The role of the state, or to be precise the hegemony of the Communist Party, remains unchallenged as Jack Ma and a few upstart billionaires learnt to their cost. At the small-enterprise level business is bustling- visit Shenzhen, Shanghai, Wuhan, Guangzhou and Hong Kong if you want to see it on the ground. Liberals are right when they bemoan the absence of liberal political democracy in China, but the death of entrepreneurial efficiency that the free-market underscores is not visible at the small-enterprise level. Twenty five years ago I developed and published the thesis that China is neither socialist nor capitalist, that the oxymoron “socialist market economy” was a valid concept, that in the longrun the evolution of global power will decide the fate of China and humanity; that’s unquestionable.

President Xi Jin Ping has recently commenced an anti-corruption drive and launched measures to supervise rampant excesses in social media. The former enjoys broad support among the people but there seems to be mixed reaction to the latter – fears of big-brother peering over one’s shoulder. The importance of the Party if not the State in China’s giant transformation is a topic of endless comment. Pulling six to eight hundred thousand people out of poverty within a few decades is an achievement unparalleled in all of world history. How can one be anything but flabbergasted?

The state has an important role to play in pushing forward economic growth in the third-world and in supervising the economy of capitalist nations. Its role in an oxymoronic “socialist market economy” is an exercise still in progress. There is a lesson here for midget Sri Lanka too. A Planning Commission, as a continuing entity where the best, the brightest and the most flexible minds play a role is needed. There are some useful lessons to learn from Nehru’s India.

The JVP–NPP, in my view still remains the best bet for Sri Lanka in dealing with some of these issues. True it has fallen short of promising free and fair democratic elections so as to erase the blot on its past. It has failed even more woefully in promising anything credible such as devolution of power, a plan for the Eastern Province and its Muslims, endorsement of the 13th Amendment and return to their owners of lands occupied and trashed by the military. But the JVP-NPP still remains the best bet. Sajith’s party is the UNP in other colours and Sajith himself lacks stature as a national figure.

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