Monthly Archives: November 2012

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.