Tag Archives: US

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.


Transatlantic Trends releases 2012 survey of US and EU opinions

Transatlantic Trends is an annual survey released by the American public policy institute German Marshall Fund with the help of  Compagnia di San Paolo, Fundação Luso-Americana, the BBVA Foundation, the Communitas Foundation, the Swedish Ministry for Foreign Affairs, and the Open Society Foundations. The survey polls opinion on a range of issues in the United States, Turkey, Russia and 12 European Union member states.

Some of the key findings in relation to Asia-Pacific are interesting. When surveying European nations on the question of which region is more important for national interests, the US or Asia, 61% of Europeans thought the US was more important, which is up 9% since last year. The opinion ranged widely with respondents in Russia, Turkey and Sweden most likely to look to Asia. Germans, French and British respondents thought the US to be more important by a wide margin.

US or Asia most important to European national interests?

On the question whether China is a threat or an opportunity, nearly two-thirds of U.S. respondents (59%) thought that China is more of an economic threat and the French were even more likely to view China as a threat. No doubt mirroring some of the fear the French have of globalisation. The successful exporting nations of northern Europe like Sweden, Netherlands and Germany saw an opportunity over a threat.

China, an opportunity or a threat?

The survey also reported on the opinions on military intervention in Iraq, Libya and Afghanistan and it gave some surprising results. Of all countries surveyed, Sweden was the most in favour of military intervention, more so than the US. The majority of Swedes are in favour of intervention in all three countries. Russia and Turkey were the most skeptic to military intervention.

Which country most supportive of military interventions in the Middle East?

Decreasing importance of US – China trade

Interesting piece by Australian military intelligence officer Dominic Skerritt at the always excellent website LowyInterpreter.org, which is run by the Lowy Institute in Sydney, Australia.

This graph shows how US-China trade is becoming less important for the Chinese economy as domestic demand and trade with other countries increases.

US-China trade decreasing as % of total Chinese foreign trade

Dominic points out that Chinese leadership is concerned about its exposure to US debt. Once the trust in the US dollar slips away, will the US still be able to run large deficits or will we see a Greece-style collapse?