Cesran International

Iran Nuclear Deal Exposing the Shifting Distribution of Power

By Prof. Bulent Gokay | 24 May 2010


 

The 2008 report of the US National Intelligence Council – which supports the Director of National Intelligence and is the centre for long-range analysis in the US intelligence community – published in November 2008, issued the latest in a series of futuristic publications intended to guide the incoming Obama administration. The report presents a detailed and comprehensive report on global trends to 2025, which predicted that America’s global superiority would gradually disappear over the next 15 years — in conjunction with the rise of new global powers, especially China and India.  Most press coverage focused on the report’s key message of the “sun setting on US power” (almost identical headlines in the Guardian and the Times).  It is explicitly mentioned in the report that by 2025, the US will be less dominant, and that “China will have the world’s second largest economy and will be a leading military power”. Furthermore, the report identified China and India, together with the US, as the «three of the largest» economies.  It seems that the unprecedented transfer of wealth roughly from West to East now under way will continue for the foreseeable future, with the US relative strength — even in the military sphere — will decline and U.S. leverage will become more constrained.[1]

 

All the existing evidence point out that even without a total collapse of the US global hegemony, there seems to be satisfactory evidence for a great and rapid shift of wealth and power to China and India, and other emerging economies.  The transfer of power from the West to the East is gathering pace since the late 1990s, and Washington think-tanks have been publishing thick white papers charting Asia’s, and China’s in particular, rapid progress in microelectronics, nanotech, and aerospace, and printing gloomy scenarios about what it means for America’s global leadership.  China, India and other emerging economies have so far boasted growth rates that could outstrip those of major Western countries for decades to come.  China is currently the world’s third largest economy with an annual economic growth of more than nine percent.  India’s annual growth rate is eight percent.  Chinese economy expanded by 8.7% in 2009, exceeding even the Chinese government’s own initial expectations. China is now on course to overtake Japan and become the world’s second-biggest economy.

 

 

Although the report, Global Trends 2025, published after the onset of the 2008 global economic meltdown was underway, the report was written before the crisis reached its full extent and so emphasized that the decline of American power would be gradual, extending over a 15-year time horizon. The financial crisis and global economic downturn, however, have radically altered that timetable. As a result of the enormous economic losses suffered by the United States and the other Western economies and Japan over the past 20 months, and China’s remarkably swift economic recovery, the global power shift the report predicted has gathered speed. For all practical purposes, 2025 is already here.

 

A similar projection had come from the accountancy firm Price Waterhouse in 2006, which projected that in 2050 the Chinese economy would be as large as that of the US in dollar terms, and that India would be the third largest in the world.  Another projection, last year, by Goldman Sachs predicted that China would indeed surpass the U.S. much before the mid-century, by 2027, and India’s economic power would become greater than the US before 2050.  These projections also predicted that soon the collective size of E-7 (emerging 7 economies: Brazil, China, India, Indonesia, Mexico, Russia and Turkey) would be about 25 % larger than the collective size of the current G-7 rich economies.  According to the Price Waterhouse research, the banking sector is growing faster and stronger in the emerging economies comparing with the G-7 economies, and by 2020, China, India, Brazil, Indonesia and Russia will between them account for 30% of global GDP, which will bring an important shift in the global balance of economic power.[2] Emerging economies, or “anchor countries”, are the largest economies in their respective developing world region, like China being the dominant economy of East Asia, India in South Asia, Brazil in Latin America, Mexico in Central America, South Africa in Sub-Saharan Africa, and Turkey in the Middle East and the Balkans.  All current indications point out that the anchor counties challenge the existing world economic and political order.  Observers now talk of the emergence of a new ‘Seven Sisters’ (a term used to describe the seven major Anglo-American companies that controlled the world oil after the Second World War).  Today it is not ExxonMobil, Royal Dutch Shell, and the other western companies, but Russia’s Gazprom, CNPC of China, Venezuela’s PDVSA, Brazil’s Petrobras, Saudi Aramco, and Malasia’s Petronas that are seven giant producers.[3]

 

Many of the broad, down-the-road predictions made by Price Waterhouse, Goldman Sachs, and the US National Intelligence Council have, in fact, already come to pass. Brazil, Russia, India, and China (BRIC countries) are already playing far more assertive roles in global affairs, as the predictions envisage would happen in perhaps a decade or so. At the same time, the dominant global role once directed by the United States (and other major Western industrial powers, known as the Group 7, G-7) has already vanished at an extraordinary pace.

 

The recent nuclear agreement brokered by Turkish Prime Minister Recep Tayyip Erdogan and Brazilian President Luiz Inacio Lula da Silva is a clear indication of the shifting distribution of global power.  The agreement struck by Turkey and Brazil, both currently non-permanent members of the UN Security Council,would see the transfer to Turkish custody a large proportion of Iranian stockpile of enriched uranium within a month, subject to monitoring by the International Atomic Energy Agency.  Iran, in return, would be supplied with the more highly-enriched material used in medical isotopes in no more than a year’s time.  In this way, the risk of an Iranian bomb would be reduced, but Iranian regime would retain its own control of the mastery of the nuclear fuel cycle.

 

The new nuclear deal undermines claims of the US administration (which maintains no diplomatic presence in Iran and has had extremely limited contact with Iranian officials) to a monopoly on sound judgments about Iranian decision-making and policy. For months, US officials have asserted that the Islamic Republic is too internally conflicted to have a sound international strategy or make vital decisions.  On the other hand, Senior Brazilian, Chinese, and Turkish officials, who have invested significant amounts of time in substantive discussions with Iranian counterparts, argued to Washington for months that a practical nuclear deal was likely. But US Secretary Clinton and others in the Obama administration believed they knew better, and said so publicly.  Turkish Foreign Minister Davutoğlu’s efforts to arbitrate a nuclear deal with Iran were more or less ridiculed by Clinton who had phoned Ankara only to express her doubt whether Turkey and Brazil could succeed in brokering the deal. When it amazingly happened, she made angry comments that sanctions will be inevitable anyway. Similarly, U.S. officials told Chinese counterparts that, if China does not support harsh new sanctions against Iranian regime, Washington would not be able to hold back Israeli military action against Iran, putting China’s energy supplies at risk.

 

But these emerging powers, or anchor countries, were not prepared to be browbeaten. For Brazil, the idea that Washington could unilaterally redefine the Nuclear Non-Proliferation Treaty (NPT) regarding enrichment was especially odious. Brazilian President have always expressed that isolating Iran’s leaders is counter-productive.  “It is not prudent to push Iran against a wall. The prudent thing is to establish negotiations,” he said.[4] For Turkey, under a popular, democratically elected Islamist government, the idea that Iran’s nuclear program would be treated differently because Iran is governed by Islamists was just as unacceptable. China has longstanding objections to international sanctions, and has consistently supported diplomacy as the best way to deal with the Iranian nuclear question.  Iran, on the other hand, has worked purposefully to develop close relations with important anchor powers, like Brazil and Turkey, as well as the economic giant China.

 

The deal brokered by Turkey and Brazil may allow two of the main players in the UN Security Council, China and Russia, to turn away from the submission to sanctions, and allow them to back a more diplomatic line. They have both been reluctant to engage in new sanctions against the Iranian government, and this agreement will allow them to further delay the process until they see what the recent deal means in practice.  China’s UN ambassador said that “the fuel swap deal was a positive step in the right direction”, while the Russian president welcomed the fuel swap agreement.[5]

 

Both Turkey and Brazil are major powers within their respective regions, and as emerging economies, their markets offer lucrative business opportunities. Equally important, given their location, they also provide access to the surrounding markets. Over the past decade, Brazil has emerged as a unique regional powerhouse becoming a more assertive voice for the emerging economies in international affairs.  Its large population of 180 million people, highly-trained work force, and array of crops and natural resources has made Brazil a largely self-sufficient economic powerhouse.  Goldman Sachs, in its projections, has claimed consistently that Brazil is on course to be the 5th largest economy in the world by 2050. In 2008, the Global Trends 2025 presciently included a scenario in which Brazil acts as a mediator at a moment of crisis in the Middle East.  Similarly Turkey, with a population of 76 million, is an attractive consumer market, and all those youthful workers have turned the country into a workshop for export industries such as cars, aerospace, appliances, and textiles.  International observers put Turkey in the same category as Brazil, Russia, India, China, Indonesia, Mexico and South Africa as an emerging economic power, already dominant in the Middle East and the Balkans.  To broker a deal with Iran is a natural extension of Ankara’s active regional diplomacy.  The last few years have seen a marked rise in both Turkey’s economic prosperity and its political confidence.  Like Brazil, Turkey in recent years has upgraded its engagement with Asia, Africa and Latin America. As a result, Turkey’s foreign policy not exclusively focused on Europe anymore.  Unlike in the 1980s and 1990s Turkey doesn’t perceive relations with the EU as a mutually exclusive partnership. The official Turkish foreign policy line here is that we can have good relations both with our neighbors and also in the wider global network of countries and also with the European Union.

 

These two rising economic powers, from what it is generally used to call the “Third World”, have now asserted decisive political influence on a high-profile international security issue, and, in doing so, they have signaled that the US can no longer unilaterally define terms for managing important global issues.  For the last six decades, fundamental international issues of war and peace have been largely determined by a small group of countries, especially the five permanent members of the United Nations Security Council, the US, Britain, France, Russia and China, with some occasional input from other so-called G7 industrial countries: Germany, Italy, Canada and Japan. The five permanent members of the UN Security Council each have a veto over UN Security Council resolutions; they are also the only countries recognized as nuclear-weapon states under the Nuclear Non-Proliferation Treaty (NPT).  However, we are now in a new chapter in international relations, in which countries outside of the permanent members of the Security Council and their handpicked allies are insisting on having some significant involvement into global matters of war and peace, and are starting to have some success in pressing their argument for inclusion. Brazil, and to some extent Turkey, have been leading powers in these efforts.  The recent willingness of Brazil, and Turkey to challenge the leadership of the United States on the question of responding to Iran’s nuclear program marks a clear shift in power in which the likes of China, India, Brazil, Turkey and Russia join forces in shaping global economic policies and to some extent political issues.

 

So, welcome to the world of 2025. It doesn’t look like the world of the Cold War, and not even the post-1991 world, when the United States stood head and shoulders above all other nations in stature.

 

From 1945 to 1990, the world was bipolar (USA-USSR). From 1990 to 2008, the USA constituted the only superpower at world level.  From 2008 to 2025 it is likely that the world will become truly multi-polar (and dominated by an “oligopoly” gathering the countries of the G8, of the G20, etc, reflecting the new balance of power and the loss of America’s leadership).[6]

 

Whatever one may think of the details and differences of above projections, there is no doubt that momentous changes are happening in the global geopolitical geometry.  With the rapid rise of alternative economic power centres, the relative weight of America in the global economy is plainly declining.  The balance of economic and political power is shifting to China and India and other emerging economies, placing the Asian region, under Chinese leadership, in a much more competitive position vis-à-vis the US.  The increase in output in the emerging economies means the departure of numerous industries from the old industrialised countries, as a result of which real wages in the US and Western Europe are steadily declining, strengthening the trend to chronic unemployment (which is also one of the main reasons behind the current financial crisis).   As a result of this still continuing trend, the buying power of the populations in the advanced economies will diminish even further.  The unconstrained development of global economy in new regions brings devaluation to previously leading centres through intensified international competition.  For the emerging economies, or the anchor countries, not only do these countries experience significant changes as a result of their economic and political rise, but they are also likely to be the beneficiaries of this change as the global balance of power shifts away from the old industrialized countries.

 

 


* An earlier version of this article is published at Axis of Logic. 

[1] « Report: U.S. Power Will Fade By 2025.  National Intelligence Council Predicts Scarce Resources, Loose Nukes, A Rising China », CBS News, 20 November 2008,http://www.cbsnews.com/stories/2008/11/20/world/main4622166.shtml

[3] « The new Seven Sisters: oil and gas giants dwarf western rivals », FT.com, 11 March 2007

http://www.ft.com/cms/s/2/471ae1b8-d001-11db-94cb-000b5df10621.html.

[4] BBC, 3 March 2010, http://news.bbc.co.uk/1/hi/8547150.stm [accessed in May 2010].

[5] “Iran tests Russia-China diplomacy”, Financial Times, 19 May 2010.

[6] The World in 2025. Rising Asia and socio-ecological transition, European Commission, 2009,ec.europa.eu/bepa/pdf/publications_pdf/the-world-in-2025-report_en.pdf, p. 21. [accessed in May 2010]

About

POST YOUR COMMENTS