The world’s most powerful person

According to a survey in the Eurasia Group asking who the the most powerful people in the world are, nobody came out on top. Literally. The results, published in the Foreign Policy magazine, gives first spot to Nobody and thus highlighting that there is currently no clear leader in the world. The Russian president Vladimir Putin comes second in the list. The German chancellor Angela Merkel – weighing in at number 4 – and thus scores higher than both US president Obama and Chinese communist party head honcho Xi Jinping.

The full top 10 list is:

1. Nobody
2. Vladimir Putin
3. Ben Bernanke
4. Angela Merkel
5. Barack Obama
6. Mario Draghi
7. Xi Jinping
8 (tie). Ayatollah Khamenei
8 (tie). Christine Lagarde
10. King Abdullah Bin Abd al-Aziz

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Monocle Magazine’s annual Soft Power list keeps northern Europe on top

The British-based international magazine Monocle has release its annual list of nations’ soft power prowess. Britain came out on tips this year following the successful hosting of the Olympic Games. Northern Europe scored highly and the draw-card of the Germanic and Scandinavian nations were in general the arts, friendly business environments, entrepreneurial population, and good education systems. Continued economic troubles saw previous winner France and other southern European countries such as Spain and Italy sink on the list.

These were the top entrants:

  1. Great Britain
  2. United States
  3. Germany
  4. France
  5. Sweden
  6. Japan
  7. Denmark
  8. Switzerland
  9. Australia
  10. Canada

The coming involuntary retreat of the US military

In the aftermath of the US presidential elections and the re-election of President Obama many international players are now starting to plan for a weakened America and a US military in retreat. The election of Obama might have been popular among the Hollywood jet-set and media elite, but most serious analysts are now starting to question the US’s willingness – and ability – to deal with its fiscal situation. To be sure, it is questionable whether a Romney presidency would have been able to deal with the American staggering debt of $16.3 trillion, but it’s Obama’s total indifference and unwillingness to even address the problem which has got the chattering classes preparing for a world with diminishing American power.

Dealing with the US’s budget deficits can be done in three different ways:

  1. Raise taxes
  2. Increase borrowing
  3. Cut spending

Let’s deal with these options in turn. Obama has hinted at raising taxes for the wealthy and it’s likely that this would have broad public support. But the US’s debt is growing by nearly $4 billion per day. There are thus not enough wealthy Americans in the universe that could be taxed in order to plug such a huge gap. Obama could, and probably will, try to raise taxes across the board, but this would put an economic recovery in jeopardy and would be difficult to get through a Republican-dominated Congress. Moreover, a mid-term Congressional election with a middle class who just received a hefty tax bill will surely make life even more difficult for the Democrat party.

The other option for Obama is to increase borrowing. The Democratic Senate leader Harry Reid has hinted at raising the debt ceiling by another $2.4 trillion in the coming months. This will surely start to make US creditors wondering whether the US will be able to pay back any of this debt. This could easily result in a loss of confidence in the US’s ability to pay back debt and could cause the dollar to drop in value, which would cause a financial disaster in the US. Big creditors, such as China, could also use the situation to make demands on the US by threatening to dump US treasury notes on the market. This is how the US itself pushed Britain to back off from the Suez crisis in the 50s. China could now use the same tactic against the US, maybe in demanding US retreat from the Western pacific.

The last option would thus be to cut costs. It would be difficult for Obama to carry out big cost savings in the big spending tickets of the US federal government. Medicare and Medicaid are difficult to cut given the growing elderly population of the US. Obama is also unlikely to cut federal jobs, as the public sector workers constitute a core constituency for the Democrat party. The only really big area where cuts can realistically come from is Defense and it will also be there that the president will cut. It is likely that first in line will be big ticket items like foreign bases and power projection tools such as aircraft carriers. A lot of US foreign units will start to come back home, demoralised and broke.

Now, for a geostrategy buff this will probably make life rather interesting. As the US retreats, others are likely to move their positions forward. Europe is likely to be forced to step up and increase its own defense spending to fill the void, same goes for Japan and South Korea. Russia and China will see it as an opportunity to project their power in the world and opening of foreign bases will be one way of achieving that. Indeed, Hu Jintao stated at the Communist party congress that China should become a maritime power. The Middle East will see increased activity by Islamists and Iran in jockeying for position.

Obama has not proved to be weak on foreign policy as some had feared. He has largely maintained the policies of the previous president Bush, even stepped up the fight against al-Qaida and other terrorists by making more use of drone strikes against civilian targets. A US military retreat is thus not voluntarily, it is forced by an increasingly unsustainable fiscal position. Decline always starts with the money, but it’s unlikely to end there. Unless the US can deal with its shaky fiscal position it is ever more apparent that we’ve reached the end of the unipolar world.

Russia seeking naval base in Vietnam

As the Russian PM Medvedev arrives in Vietnam for a visit, on his agenda will be to seek access to the Vietnamese port Cam Ranh for the Russian Navy. Vietnam is already an important export market for Russian arms.

The satellite launch company Sea Launch, which launches satellites on rockets from a mobile sea platform that have its main land service base in San Diego in California, is contemplating to move its operations to Cam Ranh. Sea Launch is majority owned by the Russian company Energia since emerging from bankruptcy in 2010.

Russia currently only has one naval base on foreign soil, Tartus in Syria, which is under threat from the civil war in Syria. In addition to Vietnam, Russia is in talks with Cuba and the Seychelles on establishing bases for its navy.

German switch from nuclear energy to renewables proves costly

As if European industry wasn’t in a weak position already, the German decision – triggered by the 2011 Fukushima nuclear plant disaster in Japan – to move away from nuclear power towards renewables, such as solar, wind and biomass power, is starting to put upward pressure on prices. The surcharge for renewable energy is to rise to 5.5 cents per kilowatt hour (kWh) in 2013 from 3.6 in 2012. For an average three-person household using 3,500 kWh a year, the 47 percent increase amounts to an extra €185 on the annual electricity bill.

Chancellor Angela Merkel’s government’s plans to phase out of nuclear energy by 2022 is looking increasingly reckless – and unpopular with the German public. French electricity, which is 80% derived by nuclear power, already much cheaper than what German households are paying.

German electricity prices already some of the highest in the EU

Opposing views on Ariane rocket future

As the American space upstart SpaceX gets ready to resupply the International Space Station under a commercial agreement with NASA later on today, the established players in the international space launch market are starting to take notice of SpaceX’s low-cost strategy and what it will mean to the future satellite launching business. SpaceX’s Falcon 9 rocket will start to compete for commercial business in the coming years and will probably seek to undercut current players on price.

The current commercial space-launch leader, Arianespace with over 50% of the satellite launch market, is currently working on an upgrade to its Ariane 5 rocket which would give the vehicle a 20 percent boost in payload-carrying power and a re-ignitable upper stage. There are, however, different views of the rocket’s future from its two major owners i.e. the French and German governments. The French government is conscious of the future competition from SpaceX and other upstarts and wants to skip the current Ariane 5 upgrade altogether and concentrate on a new more cost effective version to be called Ariane 6. The German Aerospace Center wants to continue the Ariane 5 upgrade instead, which has already commenced, and potentially team up with NASA to work on the Orion deep-space crew transport spacecraft. The French and Italians are sceptical to Orion and want to work on a European low-earth orbit spacecraft instead. There could also be an option to work on the Ariane 5 upgrade and development of Ariane 6 concurrently, but that would require an increased budget.

Arianespace currently needs 120 million Euros in government support annually in order to be commercially viable. Final policies and budgets will be agreed on during a November conference of European Space Agency members.

Arianespace’s Ariane5 rocket takes off

 

China commissions first aircraft carrier

China commissions its first aircraft carrier after years of sea tests. The carrier, which was bought by the Soviet Union as an unfinished carrier, will be named Liaoning.

Aircraft carriers have become less of an effective weapon of war in modern warfare, and instead are more seen as tools for projecting power. However, for China the ability to move airstrike capability beyond its own shores is seen as very important given that the country is surrounded by hostile forces. China doesn’t yet have airplanes that would be capable of taking off and landing on the ship though.

Chinese aircraft carrier at dock in the northern city of Dalian