Using my current estimates of Comprehensive National Power as a base (an index of power that attempts to express a nation’s economic, military, and cultural power in a single number), I will specially stress the above factors in my analysis of future global power trends. Some results will look plausible and familiar (e.g. China overtaking the US as a superpower by the 2020′s); others will appear utterly bizarre (e.g. Canada becoming a major Great Power in by the end of the century, while India and Brazil plummet back into obscurity). But they are nonetheless all plausible and even likely outcomes, derived from bringing together worlds that all too often are considered independently of each other: the economy; human capital; geopolitics; energetics; and climate change.

There may of course be unexpected discontinuities – popularized as Black Swans by Nassim Taleb – that unravel these projections (the probability of their happening increasing exponentially over time). This will be covered in greater depth below. In the meantime, bear this caveat in mind as you read the rest of the post.

[Graph shows CNP of the greatest Powers 1980-2100; the "superpower" is always at 100 and all other Great Powers are shown relative to it. Click to enlarge.]

Phase 1: The End of Pax Americana (1980-2025)

The US is the current superpower, but China is rapidly making up ground. Its real GDP is now at $10 trillion, though according to some estimates it has already overtaken the $14.5 trillion American economy.

Some critics claim that nominal GDP is a better measure of power, even using these figures to claim that even at 10% growth it will be decades before China surpasses the US. This is a product of economic illiteracy, because it doesn’t take into account the convergence of Chinese price levels to those of developed countries (its nominal GDP has been expanding at more than 20% in the last 5 years).

There are a number of other factors that are often quoted to predict the doom of China’s rise, such as: (1) Growing regional disparities; (2) Income inequality; (3) Environmental degradation; (4) Bad loans and financial collapse, aka Japan; (5) Aging population; (6) Excessive export dependency; (7) Social unrest; (8) Authoritarian nature of its Marxist-Leninist political model.

Suffice to say that they are either common to most industrializing countries (1-3, 7); will only seriously affect it by the time its already developed (4-5); are overestimated (4, 6); or it is unclear why they should derail its economic ascent for long even if they lead to a democratizing revolution (7-8). I address all these points in detail here and here.

In any case, most of these are factors have yet to be realized, whereas many of the same trends undermining US power are already in evidence. You can point out the accumulating weight of China’s bad loans, but it is the Western financial system that had to be bailed out in 2008 at social expense; you can argue that the aging of China’s population will bankrupt its (minimal) social net, but it is the US that is facing a budget deficit of >10% of GDP and a national debt soaring into the stratosphere.

China is already the world’s largest manufacturing power. On current trends, it is due to overtake the US economy by the mid-2010′s (followed in nominal terms sometime in the 2020′s, as restrictions on the yuan are lifted and it appreciates). Since China produces its own military hardware, real GDP is what matters; consequently, it will take less relative effort for the PLA to match and overtake the US (especially in the crucial East Asian region and the Indian Ocean). As Paul Kennedy noted in The Rise and Fall of the Great Powers (of which, incidentally, the Chinese are great fans) military and political power follows naturally in the wake of economic power, whereas trying to achieve results from the opposite directions leads to the “imperial overstretch” that contributed to Soviet collapse and is now undermining American power.

Which brings us to the last point. China’s population is four times bigger than America’s, and human capital among the youngest generations is now as good as the US average. This makes its per capita convergence – and consequently, its ascent to economic primacy – almost inevitable.

But rather than assessing the situation dispassionately and preparing for a strategic retreat, the US is digging in all fronts: foreign wars, deficit spending, oil dependence, political gridlock, etc. This increases the probability that US decline will take the form of a sudden collapse, as of Argentina’s in 1999-2002, instead of fading away like the British Empire after 1945.

Phase 2: The Return of the Middle Kingdom (2020-2075)

The cultural decline will be slower. It took Latin more than a millennium after the collapse of the Roman Empire to lose its status as a lingua franca. Needless to say, the US will still retain a great deal of power by virtue of its large population and developed economy, it will remain in second place, almost no matter what, well into the 21st century. Furthermore, it will retain its deep ties – economic, cultural, etc. – with the Anglo-Saxon world (the UK, Canada, Australia, New Zealand) and, to a lesser extent, Europe. Hollywood, Silicon Valley, and the Ivy League will remain staples of global culture and technology.

However, there’s only so much power you can exercise through the English language, Google, or even Chuck Norris. For everything else there’s China – after a two hundred year break (a mere blip in its millennial history), the Middle Kingdom will have returned to its rightful place at the center of the world.

China is now roughly where South Korea was in 1990. A similar growth profile will by 2030 leave its economic power equal to 25 of today’s Koreas. Imagine that!

It’s unclear what political system China will have by then. Democratization on the Taiwanese model is not inevitable. The Chinese Communist Party (CCP) has studied the Soviet collapse in rigorous detail and is determined not to repeat its liberalizing mistakes. What I consider at least equally likely is an emergence of a “consultative Leninism”, in which the current NEPist model is opened up to democratic elements (e.g. competitive local elections; policy-making based on opinion polling) but under the continuing hegemony of the CCP. This could be China’s own, sovereign road to democracy.

Other possibilities are also possible, e.g. a Singaporean authoritarianism, or “managed democracy” in the style of Putin’s Russia. But short of a reversion to Maoism – which is exceedingly unlikely, given that China now has a commercial class that would strongly oppose it – it’s unclear how the widespread mantra that political change must be accompanied by a cessation of economic growth can be justified.

China’s rise will be accompanied by the flock of BRIC’s trailing in its wake: Brazil, Russia, and India. The first two will enjoy a massive resource windfall from selling their plentiful energy, mineral, and water (in the form of food) reserves to a world made increasingly ravenous by depletion elsewhere and the effects of an increasingly destructive and chaotic climate. Russia will remain a first-class Great Power, and India will join its ranks; Brazil will be the most prominent of the second-class powers, which will also include France, Canada, Germany, Japan, the UK, Turkey, and Korea.

As with China, there are many reasons cited to explain for why Russia will fail to achieve its promise, such as (1) demographic decline; (2) corruption; (3) resource-based economy; (4) crumbling infrastructure; (5) authoritarianism. All these factors are either exaggerated (1-5), typical of most middle-income countries (2, 4), or it is unclear why they are necessarily negatives at all (3, 5). But it also has great strengths. Russia combines the BRIC’s fiscal sturdiness and economic dynamism (both lacking in the West) with a GDP per capita that is almost twice that of the next richest BRIC, Brazil. Its human capital is on a par with the developed world’s, allowing for an easy convergence. Crucially, Russia is perfectly positioned for the coming age of “scarcity industrialism”, in which food, energy, and energy prices soar and global warming opens up vast regions of the country, including the Arctic, to shipping, energy production, agriculture, and habitation. Even at current growth rates of 4% per year, Russia should converge to European income levels by 2020-25 and spend the next few decades comfortably, its energy riches shielded by its nuclear umbrella.

Obviously Russia lacks the population mass, at least at this stage, to become a true superpower (even if it absorbs the other post-Soviet nations into a Eurasian union). This is not the case for India, which will overtake China to become the world’s most populous nation by 2025. But within that fast-growing population illiteracy is still rife and 47% of children remain malnourished. Though it suffers from many the usual ailments of low-income countries – creaky infrastructure, caste-based inequalities, sluggish courts and bureaucracy, etc. – it’s India’s low level of human capital that is the primary cause of its falling so far behind China (manufacturing output is an order of magnitude lower, and the poorest Chinese provinces are equal to the Indian average). Nonetheless, India has the coal to power itself, and temperatures will remain within acceptable bounds for producing stagnant grain harvests for at least the next few decades. And quantity counts. That is why India will become a first-rank Great Power, equaling Russia and approaching the US.

With its ample lands and resources (e.g. iron, oil), not to mention its successes with sugar cane-derived ethanol, Brazil is set to enjoy – much like Russia – a comfortable existence as a regional hegemon in a world of high prices for food, energy and minerals. Its military strength is paltry, but irrelevant given its distance from other Great Powers. It is also the least corrupt of the BRIC’s. However, its prospects for true superpowerdom are constrained by relatively low human capital; as its economy wasn’t distorted by a legacy of socialist mismanagement (as with China or Russia), its GDP per capita is already, more or less, “where it should be.” In the background, Canada will be getting very rich off supplying fuels and water to an increasingly parched and energy-starved US. However, for the time being its profile will remain modest.

The European Union is conspicuous by its absence. Europe is no longer united by the memory of war and the Soviet threat, and each country concerned above all for its own national interests. This is not a stable foundation for a union, and as such it will likely retreat into something like a glorified free trade area by the 2020′s. Real power will be concentrated among the big European Powers, which will carve out spheres of influence and compete with each other for neo-colonial influence: e.g. France (Maghreb); Germany (East-Central Europe); Turkey (Balkans, Azerbaijan, Arab world); the Scandinavian bloc; the Visegrad bloc. Arguably there is already evidence of this in the Anglo-French effort to oust Qaddafi. Read more here.

No European Power will have the mass to become a first-rank Great Power, though it may be (marginally) possible for France and definitely possible for coalitions of European Powers. By themselves, all the European nations will be lingering near the bottom of the CNP scale.

There is no point discussing any other country or alliance. NATO is becoming more irrelevant with each passing year. Japan is technologically advanced, but reliant on the US for its security and dependent on the same oceanic supply routes as China; as soon as the latter becomes the new regional hegemon, Japan’s effective sovereignty is history. Indonesia is similar India, but five times smaller. South Africa, Mexico, Australia, Nigeria, Iran, and Saudi Arabia are all some combination of (1) too underpopulated, (2) too underdeveloped, and (3) too vulnerable to climate change.

Phase 3: Towards a Russian Century? (2075-?)

Beyond 2050 we are getting into very foggy territory. Just think of an educated European observing the world one century ago, in 1911 – could he have predicted Germany’s utter collapse and occupation, and the rise of Russia (now known as the USSR) as a superpower along with the (vastly stronger) US superpower? And could that observer in 1951 have predicted that a China only recently consolidated under Communist control, after a century of stagnation, invasions and warlordism, would just fifty years later have overtaken a Russia that had become a basketcase?

Any number of black swans may have intervened by 2050, steering any projections wildly of course. Here are a few examples:

• China and the US cooperate to build a massive global geoengineering project in the 2040′s that succeeds at checking global warming. This removes the conditions for Russia’s rise to a dominant position.
• Facing desiccation in the West and flooding in the South, the US annexes Canada. As a result, it becomes the greatest Power in the world.
• There is a total war between nuclear Powers, perhaps triggered by a Chinese land grab for the Russian Far East. Whoever “wins” (if that’s the right term), well, wins.
• The development of nuclear fusion, space-based solar power, or some other technology, that reverses the secular trend towards declining EROEI. This massively undercuts the power of major resource exporters, such as Russia, Canada, and Brazil.
• A transition to sustainable development. With global CO2 emissions setting a new record in 2010 (just one year after the deepest global recession in the past half-century), and setting the 2C warming target practically out of reach, there is little hope of that without geoengineering (after 2C the process is expected to display a runaway dynamic due to positive feedback loops). But miracles happen, sometimes.
• A technological singularity. Perhaps this catapults the nation where it first appears into a dominant leadership position, much like Britain during the industrial revolution; or maybe it is so transnational and transformative in its scope that it makes the very idea of nations and national power obsolete. By definition, a technological singularity is beyond the “event horizon” of our limited imaginations, so there’s little more I can say on this.

For the purposes of completing the scenario to 2100, I will assume that the above don’t occur. Instead, the dominant forces in previous decades – economic convergence; declining EROEI and minerals accessibility; accelerating climate change – remain constants.

By the second half the century, climate change will start to dominate over everything else. The latest projections tend to lean towards the high end of the IPCC’s 1-6C warming range for the next century (the scariest of them show that by 2300 most of the world outside the Arctic may become downright lethal during summer). Warming of 4C is the point at which agriculture starts to not only experience difficulties but outright collapse throughout most of the equator and mid-latitudes.

[Map of global drought under aggregated runs of IPCC's models. Most of the US, southern Europe, the Middle East, Africa, and Latin America will be in an unprecedented mega-drought. Read more here.]

All the problems currently experienced by China and India with stagnant grain harvests will increase further, requiring very costly counter-measures. Now this is not to say that there will necessarily be mass famine and “dieoff”, as doomers like to predict. It is certainly a possibility, especially under the most severe warming scenarios, but growing food production in Russia, Canada, and even East Africa may make up the difference. In particular, China should be relatively safe, because by then it should be a developed country.

On the other hand, the Chinese state will have its hands full mitigating disaster after climate disaster. The spate of rebuilding after the flooding of New Orleans, which actually boosted US GDP, was one thing; when commercial metropolises like Shanghai are getting flooded and coastal property prices devaluing to nothing, it is economic and financial apocalypse.

What’s possible, then, is the following scenario. By the 2070′s, the Chinese state becomes so preoccupied with maintaining food stability, and the energy and mineral flows that enable industrial society in general, that the surplus resources and administrative capacity to do anything else diminish. This is not a new development in its history. For much of the 19th century, Qing China was the world’s biggest economy by GDP, even though Britain was becoming far more industrialized. This was because China was at its Malthusian limits; the population level was stable, but it was always on the edge of famine, and presided over by a government made weak by lack of taxable surpluses and unable to check the corruption and independence of its own public officials. The state was unable to defend itself, to modernize the country, or to guarantee its independence.

India is in a worse bind, and not just because it will likely remain less developed than China to that time. The Chinese, at least, have the reserve option of migrating some of their surplus population to Tibet (or East Africa, if they conquer it). India doesn’t have that, and faces the unwelcome prospect of a further flood of excess population – this time from a collapsing Pakistan (the Indus to run dry by late century, as Himalayan glaciers melt) and inundating Bangladesh.

[Totally how things will be. Click to enlarge.]

A consequence is that states with far smaller populations and economies, but greater surplus resources – will emerge as new Great Powers. Primarily, this means Russia, but Canada would also be in this category, as will Scandinavia, Alaska, and (in one or two more centuries) whoever settles or controls Greenland. By virtue of their control over most of the world’s remaining critical resources – water (not only for food, but electricity); gas; coal; metals; whatever’s left of oil – they will wield unprecedented strategic power over the countries to the south.

Perhaps a colonial relationship will develop, in which the Arctic nations send resources and allow southern workers to farm their lands in exchange for selling off their industrial assets and eventually ceding political sovereignty. In the very long term, this will logically lead to the development of caste-based societies in Russia and Canada, as the sheer magnitude of climate refugees would mean that in any integration policy, it would be the indigenous inhabitants who would have to do most of the integrating (and hence politically impracticable).

By the end of the century – a world of two Arctic superpowers, Russia and Canada?

A Short History of Abundance Industrialism

Driven by an electro-mechanical revolution powered by a windfall of cheap oil, the world registered its highest GDP growth rates in the 1950-1973 period. The era was defined by self-confidence and a secular “myth of progress”, which reached its apogee with the 1969 moon landings. But the next decade saw the arrival of major discontinuities. American oil production peaked in 1970, and went into decline. Saudi Arabia settled into its role as the world swing producer, enabling it to inflict a severe “oil shock” on Western economies in 1973 to punish them for their support for Israel, to be followed by another in 1979 coinciding with the Islamic Revolution in Iran. The decade also saw milestones such as the publication of Limits to Growth, the ending of hyperbolic growth of the world system, and a new emphasis on conservation and sustainability (which led to significant improvements in fuel efficiency and pollution control – back then, the fruits were all low-hanging, so impressive results were not hard to achieve). Yet the first tentative steps towards sustainability were not to be followed through, as the newly-elected Reagan took office proclaiming “Morning in America!”, with its implicit promise of a return to a past with no future. It was a false dawn.

Thus began the “age of diminished expectations”. In the US, physical production by volume and real working class wages stalled in the 1970′s, and have since been on a plateau (slightly tilted up according to official statistics, slightly tilted down according to unofficial ones). The age of Mammon saw rising inequality, both within and between nations (the sole major exception being China whose ascent to world power began in the late 1970′s). As the American industrial base entered its long atrophy, its economy shifted towards construction, services, and finance, – symbolized by metastasizing suburbia – and made possible by new drilling by the oil majors in remoter areas like Alaska, the Mexican Gulf, and the North Sea, a political-security rapprochement with Saudi Arabia, the IT revolution, and the rise of multinational corporations exploiting globalizing markets and cybernetic technology in a flattening world. Sustainability went out the window; quite literally, as Carter’s solar panels were removed from the White House roof in 1986. Finally, the US harnessed its new role as the focal point of the emerging global neoliberal system to open up their economies to the world, unleashing China’s “surplus armies of labor” and the former USSR’s energy resources in the service of Pax Americana.

[Source: Tracking the ecological overshoot of the human economy, PNAS.]

This new era of international neoliberalism and developed country post-industrialism coincided with the genesis of humanity’s ecological overshoot of the carrying capacity of the Earth. Though the first global pollution alarm in the form of the “ozone hole” led to an impressive response involving a global agreement on the withdrawal of CFC production, the reaction to the growing specter of runaway climate change caused by man-made CO2 emissions – which is ultimately a far more serious issue – has been muted right up until 2009′s Copenhagen fiasco and today. Instead, the party continued in full blast throughout the 1990′s, for the US was too busy basking in the glow of the ostensible end-of-history triumph of “Western liberal democracy as the final form of human government”.

These hubristic visions of imminent utopia, of global drive-in democracy, collided with hard reality in the first decade of what was supposed to be a “new American century”. The United States is in a state of severe economic disequilibrium and has been in rapid decline relative to its competitors – a condition reminiscent of the USSR in the 1980′s. The probable decline and fall of the global order of which it is the locus will constitute the defining trend of the next decade.

Shifting Winds: The End of Pax Americana

What is Pax Americana? It is the liberal, internationalist, post-Cold War order, which has extended its reach throughout the whole world barring a few socialist holdovers like Cuba and North Korea. Globalization, rule of law, human rights, liberal democracy, free markets, economic growth – these are its self-defined values, which it considers to be the apex of humanity’s socio-political evolution. Its critics, from Western leftists to Third World nationalists, decry it as an exploitative, ruinous, imperialist, hypocritical, end-of-history theology, with voluminous references to the inconsistent ways in which these values are practiced by their own sponsors, or wielded as weapons against its ideological and geopolitical competitors.

But these arguments will soon become academic. As demonstrated by Robert Ayres, there is a glaring hole at the center of modern macroeconomic theory – accounts of growth neglect the vital role of “useful work” (a function of exergy and technical efficiency), whose contribution far outweighs that of labor and capital combined. Both factors have been flattening in the US in recent years, making further growth unsustainable. Furthermore, studies in systems dynamics indicate that brittle systems, with poor “shock absorbers”, can be subject to so-called “cascade collapse“, in which failures at one node produce a self-amplifying resonance that causes many other nodes to fail. If this is an accurate description of the global System, then a setback in any one sphere – be it economic, financial, geopolitical, etc – could usher in a vicious spiral into anarchic apolarity on the international stage.

Pax Americana and its neoliberal ideological superstructure rests on three pillars: cheap oil, American dollars, and the US Navy. Like the legs of a tripod, they all survive – or fall – together. And today, they are crumbling. Let us examine the forces that will be undermining these pillars in the next decade:

Peak Oil

Contrary to the “doomer” worldview, it is almost certainly possible to sustain an industrial civilization without a drop of oil (though ceteris paribus it will be a materially poorer one, because of oil’s uniquely high EROEI). The problem is that today’s industrial system, especially in the US, is built in such a way – gas-guzzling SUV’s on asphalt roads slithering across endless vistas of soulless suburbia – that cheap oil is indispensable to making the commutes and credit flows, the jet flights and JIT production systems, function. An even bigger problem is that Hubbert’s predictions of a global oil peak are (roughly) on schedule: though delayed by the 1970′s oil shocks, it is likely that either 2008 or 2010 was the all-time peak, and oil production will now decline at an accelerating rate – even without accounting for possible discontinuities like a global credit implosion, a sudden collapse of Ghawar, the spread of revolution to Saudi Arabia, or Iranian mining of the Straits of Hormuz.

[Source: World Oil Production Forecast - Update November 2009, Oil Drum. Click to enlarge.]

The US spent prodigious sums to fight a war to open up Iraq’s oil reserves, but today its oil production is no higher than in 2000 (and hopes of massively increasing it are probably unrealistic). Russia has reconsolidated state control over its hydrocarbon deposits, discounting Western recriminations over its “resource nationalism”, and has successfully pushed back against Washington-backed “color revolutions”. Central Asia never proved to be the black gold lode of American geostrategic fantasy, and in any case it has since been closed off again by Russia. Due to their immense capital costs, environmental impact, and low energy-return-on-energy-invested (EROEI), there can be no salvation in tar sands or shale. Nor have there been any efforts at mitigation of the kind recommended in the Hirsch report. Any energy transition will be a very drawn-out process, considering the sheer scale of the infrastructure that will have to be replaced – and using continuously lower-EROEI energy sources!

As such, it can be said with a high degree of certainty that the world will soon experience a severe shortfall in liquid fuels. Because of its high degree of dependence on cheap oil, this will affect the US disproportionately, which will have to make good with demand destruction. The consequences will include major knock-on effects on consumers, who constitute the mainstay of American economic power.

State Insolvency

The geological realities of peak oil (2005-2010), in combination with soaring demand from industrializing Asia, have led to the worst crisis since the Great Depression, with the free-fall only being checked by a dizzying panoply of monetary flooding, fiscal stimulus, and government bailouts. As if this weren’t enough, the US faces rising entitlements costs as the baby boomers start retiring, a bloated military-industrial complex, and increasing commitments to Afghanistan with no timetable in sight (where there are now more US troops than there were at the peak of the Soviet intervention).

[The US budget deficit is predicted to permanently remain in the red even under the rosiest assumptions. As of now, it is the more pessimistic scenarios that are being born out - Republican refusals to raise tax rates or cooperate on Medicare; Soviet-like rhetoric about "defense cuts" while real military spending continues rising; etc.]

Now the major reason why the US has been able to afford both guns (the US military) and butter (its double deficits) in the face of deindustrialization was by giving its many foreign investors an atrocious rate of return, which they accepted in return for America’s “alpha” – its reputation as the largest economy, sole superpower, and global financial center, in other words, the “safe haven” par excellence. It also draws immense strength from the US dollar’s role as the global reserve currency, for instance by allowing it to comfortably buy oil at $-denominated prices even when the currency is weak. But with its “imperial overstretch” (see Afghanistan), moribund financial system, and a budget deficit north of 10% of GDP and projected to remain in the red for the foreseeable future – by some measures, US debt and fiscal metrics are worse than those of the PIGS on aggregate – will this American “alpha” survive? Probably not for much longer.

The creeping monetization of US debt will destroy investor confidence that they will ever make a positive return on their US bond investment. The withdrawal of a single major investor, especially if it coincides with a geopolitical shock, could set off a “cascading collapse” as other investors scurry away from US Treasury bonds. This will leave the US incapable of generating the primary surpluses to service its negative net foreign investment position, leading either to a compound debt trap or a classic emerging market-style currency crisis. Ice or fire? Given America’s democratic system and the bipartisan consensus on fiscal profligacy, I would bet on the latter.

Economic Decline

The collapse of what in some respects resembles an informal tributary system, channeling global (i.e. Asian) savings to the American consumer, will sound the death knell for Pax Americana. As Paul Kennedy argued in The Rise and Fall of the Great Powers, military power is ultimately subordinate to the economic base which supports it. The industrial base that won the Second World War and forged the American superpower has been in decline since the 1970′s – though on paper it boasted a high productivity growth rate, it masked a huge decline in the size and complexity of its “industrial ecosystem”. Mundane manufacturing, the automotive industry, and machine building have all experienced rapid decline; the heavily-subsidized aerospace and defense industries constitute the only major exceptions to this trend.

Now as long as globalization, free trade, and stability reigned, this did not portend international decline. Industrial hallowing out simply freed up workers into sectors that were more in demand, like restaurants, construction, services of all kinds, etc; and women gained many more economic opportunities. The US could get its manufactures from abroad, like Spain during its (literal) Golden Age. Furthermore, the transition from manufacturing to consumption and finance is historically not without precedents, being observed in the halcyon days of empires like Holland and Great Britain. After these former empires had established their initial industrial supremacy through mercantile means, they transitioned to free-trade regimes designed to reinforce their economic hegemony – and in so doing “kicked away the ladder” from countries trying to catch up. (The United States itself was one of the world’s most protectionist nations until the Second World War, at the end of which it accounted for half of global industrial output and drastically reduced tariff rates).

However, as pointed out above, the crumbling of two pillars of Pax Americana, cheap oil and the US dollar, makes the survival of today’s comfortable globalization highly unlikely. When the inflows of cheap credit from abroad cease; when oil flows decline due to geological, political, and geopolitical factors – the US will no longer be able to maintain its privileged position as the world’s “market dominant minority“, its overstretched armed forces will no longer have access to the lavish funding of the days of yore, and the neoliberal world order they upheld will come to an end.

Geopolitical Shocks

Facing the twinned specter of peak oil and fiscal insolvency and supported by an atrophied industrial base, Pax Americana could in fairness be described as a “brittle system” under a growing threat of collapse. Though it may yet fade away gradually into the night, to be slowly displaced by the state-centered, neo-Westphalian, mercantile reality of “world without the West“, it is altogether possible that geopolitical shocks will make the transition far more abrupt and chaotic than expected.

Though nothing’s certain, it is possible, likely even, that the biggest shock will emanate from a confrontation between Iran and the US in the Persian Gulf. Since 2005, the hardline IRGC paramilitary / intelligence clan, whose figurehead is Ahmadinejad), has been in the ascendant in Iran. Their power was further reinforced in 2009 when the Supreme Leader Khamenei sided with the IRGC in the aftermath of the abortive “Green Revolution” spearheaded by the waning “moderate” clerical clan (headed by Rafsanjani), in response to Mousavi’s electoral loss. These internal Iranian developments occurred in tandem with the rising tensions with Israel, Saudi Arabia, and the US over Iran’s pursuit of an nuclear bomb, amidst the window of opportunity left open to the Islamic Republic by the US quagmire in Iraq. Iran sees the Bomb as the best guarantor of regime security by allowing it to establish a regional hegemony in the Persian Gulf region.

This is unacceptable to everyone in the region. Israel views an Iranian bomb as an existential threat; Ahmadinejad expresses the opinion of 62% of Iranians when he says the Israel state should be wiped off the map. The Jewish state is now ruled  by Benjamin Netanyahu, a man who in 2007 opined: “It’s 1938, and Iran is Germany, and Iran is racing to arm itself with atomic bombs”. Not much room for compromise there. The rulers of Saudi Arabia, beset by Iranian-stoked ferment amongst their Shi’ite population and undermined by the Iran-backed al-Houthi insurrection on their Yemeni border, view the prospect of an Iranian bomb with similar trepidation. Though they will protest in public, they will be quite happy to see an Israeli-American strike on Iran; rumor has it that Saudi officials have given Israel permission to fly over their territory via backdoor diplomatic channels.

The US is hesitant. Striking Iran carries great risks. First, no matter how good and accurate your bombs are – the US has accelerated the development of a bunker-buster capable of penetrating 60m of reinforced concrete – they are only worth their weight if you know precisely where to strike. Iranian nuclear facilities are highly dispersed and concealed, making the extent of US intelligence on them uncertain. Second, Iran can mine the Strait of Hormuz and harass oil tankers with coastal shore batteries, diesel submarines, and merchant raiders. This will put at risk 20% of the global oil supply; even if the blockade proves ineffective, as predicted by most analysts, soaring insurance rates may result in oil prices spiraling into new highs due to unprecedentedly tight supplies. Third, the Islamic Republic has a panoply of retaliatory options at its disposal: a renewed Hezbollah missile barrage against Israel, increased support for Shi’ite insurgencies in the Arabian peninsula, and above all a resurgence of political violence and state instability in Iraq. As mentioned above, hopes have been pinned on Iraq to delay global peak oil by another decade. Yet it has always been a land of unfulfilled potential, its imminent oil production takeoff regularly stymied once per decade – in 1979 with the outbreak of the Iran-Iraq War, in 1991 with the Gulf War, in 2003 with the US invasion. It would not be out of character for its oil production to plummet again in 2012, in the face of renewed internecine warfare, Iranian incursions, and mining of the Strait of Hormuz.

Given all these risks and uncertainties, it is not surprising that the US is pursuing a cautious approach, restraining Israel and pushing for “crippling” sanctions on Iran, targeting its gasoline imports. However, the latter will not achieve much, especially since Russia – which has not received the firm recognition of its sphere of influence over the post-Soviet space that it really wants from Washington – will be able to torpedo any sanctions by allowing Iran to import gasoline through its Central Asian surrogates. Israel may grow impatient and eventually jump the gun without US permission. But Iran will likely consider Israeli and US actions to have been coordinated, and will embark on its “Project Mayhem.” The US may be forced to rush in and respond unprepared to contain the fallout as best it could. Now it is true that alarmist predictions that the US Navy will be crippled by Iranian low-tech swarm attacks are largely unsubstantiated, and there is no question that the US will have no trouble in gaining full air superiority over the obsolete Iranian integrated air defense system. However, defeating Iran’s dispersed retaliatory assets in detail may be a difficult and prolonged undertaking, perhaps even requiring the military occupation of strategic Iranian regions such as Khuzestan and Kish Island.

The US finds itself caught in a Catch-22 situation. Let Iran be, and it develops a nuclear deterrent allowing it to make a bid for regional hegemony – if it is not preempted by an Israeli strike. Attack Iran, and needless to say, anything worse than the most optimistic scenarios (in which the Strait of Hormuz only remains blocked for a few days) will constitute a tremendous physical and psychological shock for Pax Americana, a shock in which all its three pillars come under strain in the form of oil supply disruptions, financial turbulence, and prolonged aeronaval operations.

Endgame

In conclusion, given the inherent fragility of the neoliberal world order and the mounting stresses on it in the years ahead, stresses that could be explosively released in a major geopolitical crisis – possible in Iran, though major clashes in other hotspots like the Caucasus or the East China Sea cannot be dismissed – it is unlikely that Pax Americana will survive the decade.

Yet its collapse will not herald a global collapse and a sudden descent into the Olduvai Gorge, for Pax Americana is ultimately just a subsystem of a larger system – that of global industrialism, the System that encompasses virtually the entire world, with the sole exception of hunter-gatherer remnants in the Amazonian fastnesses and a few mystical recluses. The American empire, much like the Soviet one, will retreat from globalist pretensions, while maintaining a continental hegemony. In the meantime, powered by domestic coal and a new kind of resource tributary system - one based on bilateral deals instead of open markets – China will be well on its world-historical “great reconvergence” with the West, making it the preeminent superpower of the age of scarcity industrialism.

The geopolitics of scarcity industrialism are the topic of the next monograph in this series.

China - not only toys, but tokamaks too.

Four cables from Cathay, courtesy of this excellent Cable Search tool.

The first cable (Cable 1) is one of the last dispatches of Ambassador to the PRC Clark T. Randt, a long, analytical piece from January 2009. But it’s also perhaps the least interesting of the four.  This is because it is only a rehashing of the standard narrative that can be found on most editorials on the subject: the post-Mao economic liberalization; fast industrial expansion; pollution and demographic problems; etc. China’s prospects are underestimated, as I’ve argued in the past. For instance, he cites projections that China will overtake Japan in five years years and “could rival the United States in overall scale” by the late 2030′s. But these are surely very, very pollyannish (from the US perspective) since in actuality China overtook Japan this year (2010) and its real GDP is already 70% of America’s.

The real threat to Chinese – AND global – growth prospects are resource constraints. Surprisingly, perhaps, for a US government official, Randt cites estimates having China reach peak oil in the early 2010′s and peak coal “in the next 15 to 25 years” (I think coal production will plateau as early as 2015). However, these shortages will be partly mitigated by huge alternative programs – he cites China as being the world’s largest producer of renewable power and Cable 3 mentions plans to construct 70 new nuclear power plants in the next decade. He is almost certainly wrong in his optimistic ideas that China will buy into the US global order, rather than seeking to remake it in its own images (as all aspiring hegemons try to do). To take an example, the wish that China will make itself into a “reliable partner” for the US and other donor countries is put into question by Cable 4 from the very same embassy, in which a Kenyan ambassador expresses an African preference for Chinese aid over Western “conferences and seminars”. The cable finishes with some platitudes about the US needing to “push for the expansion of individual freedoms, respect for the rule of law and the establishment of a truly free and independent judiciary and press”, which must surely have the publisher of this cable spinning in his British prison cell.

The second cable (Cable 2), from July 2009, is a very informative, but short (so recommended reading), introduction to three major interpretations of Chinese politics: as “akin to… the executive suite of a large corporation, as determined by the interplay of powerful interests, or as shaped by competition between “princelings” with family ties to party elders and “shopkeepers” who have risen through the ranks of the Party.” In the first interpretation, Party General Secretary Hu Jintao is the CEO, with the 25 other members of the Politburo aiming for consensus in decision making. The Politburo members are also oligarchs in practice, having their own vested interests and administrative-economic clans. (BTW, this political system of corporate clans and fusions of economic and political power bears some resemblance to Russia’s).

Many casual observers continue to see China as a sweatshop manufactory of cheap, unreliable goods (poisonous toys, etc) produced by exploited workers on starvation wages, but this is very rapidly diverging from reality. The third cable (Cable 3), from February 2010, has a few examples. With just a fraction of the science and technology funding of developed country universities, Chinese institutions are managing to produce ground-breaking work in esoteric spheres such as nuclear fusion, quantum communications and nanotechnology. Of course, not all of them are “pleasant” advances, and reflect the Orwellian instincts of the Chinese state, such as a biometric sensor designed to identify people by how they walk. An authoritarian state, but one with hi-tech visions that are fast becoming realities.

The final cable (Cable 4), from February 2010, can be summarized by one quote: “[Kenyan Ambassador to China] Sunkuli claimed that Africa was better off thanks to China’s practical, bilateral approach to development assistance and was concerned that this would be changed by “Western” interference. He said he saw no concrete benefit for Africa in even minimal cooperation. Sunkuli said Africans were frustrated by Western insistence on capacity building, which translated, in his eyes, into conferences and seminars. They instead preferred China’s focus on infrastructure and tangible projects.”

Finally, one more piece of news on China, not Cablegate-related. As regular blog readers know, I think that educational capital and more broadly average IQ levels are one of the key – and frequently under-appreciated due to political correctness – determinants of economic development and whether or not convergence to developed country levels is even possible. Its much higher educational capital is one of the key reasons why I think China will continue doing much better than India in development, regardless of its “democratic deficit.” However, many people argue that China’s human capital must actually be quite low, because it doesn’t spend much on education, resources are bare in the provinces, statistical fudging under unaccountable governors, etc.

The recent results from the international standardized PISA tests in math, reading and science will make this an increasingly untenable position. Shanghai got by far the best results out of all the OECD countries (never mind the developing ones). Now while you might (rightly) argue Shanghai draws much of the elite of the Yangtze river delta, the Financial Times has more: “Citing further, as-yet unpublished OECD research, Mr Schleicher said: “We have actually done Pisa in 12 of the provinces in China. Even in some of the very poor areas you get performance close to the OECD average.””

Since countries like the US and France get scores “close to the OECD average”, this means that the workforces soon to be entering China’s economy, even from its poorest regions, will be no less skilled than those of leading Western economies (note too that the numbers of Chinese university graduates are soaring). And with China’s massive population, four times bigger than America’s, its road to superpowerdom must be all but guaranteed.

Cable 1

SIPDIS

DEPARTMENT FOR THE SECRETARY, DEPUTY SECRETARY, EAP A/S
HILL, S/P, EAP/CM
NSC FOR DWILDER

EO 12958 DECL: 01/05/2034
TAGS PREL, PGOV, ECON, EFIN, MARR, MASS, CH
SUBJECT: LOOKING AT THE NEXT 30 YEARS OF THE U.S.-CHINA
RELATIONSHIP

Classified By: Ambassador Clark T. Randt. Reasons 1.4 (b/d)

¶1. (C) January 1, 2009, marked the 30th Anniversary of the establishment of diplomatic relations between the United States and the People’s Republic of China. This anniversary followed the PRC commemoration of roughly 30 years of China’s “reform and opening” policy under Deng Xiaoping, which led to China’s staggering economic growth.

¶2. (C) Thirty years ago, China was just emerging from the nightmare of the Cultural Revolution and 30 years of fratricidal misrule. China’s economy was crippled by years of disastrous policies like the Great Leap Forward. The population was coming to terms with the world’s most draconian population controls enacted in 1976 after decades of Maoist state-subsidies encouraging large families. Chinese foreign relations tended to be more influenced by ideological yardsticks than economic links since China had very few commercial links with the outside world. In 1979, Chinese urbanites on average made the equivalent of five dollars per month.

¶3. (C) Just as no one in 1979 would have predicted that China would become the United States’ most important relationship in thirty years, no one today can predict with certainty where our relations with Beijing will be thirty years hence. However, given the current significance of the bilateral relationship and the risk of missing opportunities to jointly address ongoing and predictable future challenges, below we look at trends currently affecting China with an eye to how those trends might affect relations. Several issues leap out, including China’ insatiable resource needs, our growing economic interdependence, China’s rapid military modernization, a surge in Chinese nationalism, China’s demographic challenges, and the PRC’s increasing influence and confidence on the world stage.

¶4. (C) China has been plagued over the millennia by unforeseen events that devastated formerly prosperous regimes. Mongol invasion, the Black Death, uncountable peasant uprisings, warlords, tax revolts, communist dictatorship, colonialism, famine, earthquakes and other plagues were largely unforeseen by the China watchers of the past. This report focuses generally on more optimistic projections. Given China’s history, however, the United States should also gird itself for the possibility that China will fall short of today’s mostly sanguine forecasts.

Resource Consumption

¶5. (C) Popular and scholarly works in recent years highlight China’s growing demand for natural resources and the possible impact that China’s pursuit of resources will have on its foreign policy. Since economic reforms began in the late 1970s, industrial and exchange rate policies have fueled investment in resource-intensive heavy industries in China’s coastal region, which currently account for approximately 55 percent of the country’s total energy consumption today. A construction boom over the past decade has also stimulated growth in heavy industries. China is now a leading steel producer and currently accounts for 50 percent of the world’s annual cement production. Reflecting China’s emphasis on resource-intensive industries, China’s energy utilization rate grew faster than its GDP between 2002 and 2006. In 1990, China consumed 27 quadrillion British Thermal Units (BTUs) of energy, accounting for 7.8 percent of global consumption. In 2006, it consumed 68.6 quadrillion BTUs or 15.6 percent of the global total. According to U.S. Department of Energy statistics, by 2030 China will account for 145.5 quadrillion BTUs or 20.7 percent of global energy consumption.

¶6. (C) China’s oil demand has grown substantially over the last 30 years. In 1980, China consumed 1.7 million barrels of oil per day, almost all of which was produced domestically. In 2006, China consumed 7.4 million barrels per day, second only to the United States. According to the International Energy Agency (IEA), China’s oil consumption will reach 16.5 million barrels per day in 2030. More than two thirds of the increased demand will come from the transport sector as vehicle ownership rates rise. China became a net importer of oil in 1993, and it now relies on imports to meet a growing portion of its fossil fuel needs. The IEA forecasts that China’s oil import dependence will rise from 50 percent this year to 80 percent by 2030, as domestic oil production peaks early in the next decade. To strengthen the country’s future energy security, the Chinese Government has adopted a “go out” policy that encourages national oil companies (NOCs) to acquire equity stakes in foreign oil and gas production. Today, state-owned Chinese oil giants CNPC/PetroChina, CNOOC, and Sinopec can be found in Sudan, Iran, Kazakhstan,

Venezuela, Angola, and the Caspian Basin.

¶7. (C) China has also increased its reliance on imported minerals, and many analysts have attributed the global commodities boom of recent years in part to China’s growing demand. Between 1980 and 2006, China became the world’s largest consumer of iron, copper and aluminum. Chinese conglomerates are ubiquitous in sub-Saharan Africa exploiting mineral wealth there, and Chinese multinationals have significant investments in Australian mineral and uranium production.

¶8. (C) China’s reliance on coal has come at an appalling environmental cost. This year, China surpassed the United States in carbon emissions, and it will soon become the world’s biggest energy consumer. Between now and 2030, the IEA estimates, China will need to add 1,312 gigawatts of power generating capacity, more than the total current installed capacity in the United States. Coal-fired power generation, a major source of air pollution, accounts for approximately 78 percent of China’s total electricity supply, and it will likely remain the predominant fuel in electricity generation for at least the next 20 years. Analysts predict that domestic coal production will peak in the next 15 to 25 years. China already became a net importer of coal in 2007, and coal imports are expected to grow in the coming decades to meet growing demand in China’s coastal provinces.

¶9. (C) The Chinese Government recognizes the need to reduce dependence on coal, and it is pursuing policies to diversify its energy mix. China is already the largest producer of renewable energy in the world, with major investments in large-scale hydro and wind power projects. Nuclear and natural gas power will also account for a greater proportion of energy production, but under current projections, efforts to diversify China’s energy mix will not have a large enough impact to curb greenhouse gas emissions growth.

¶10. (C) China’s energy intensive growth has also had tragic consequences for public health. By most measurements, at least half of the world’s most polluted major cities are in China. Rural residents, in particular farmers, have been affected by water pollution and dwindling water supplies, which are frequently redirected for industrial use. Respiratory disease, water-borne illness and tainted food scares are facts of modern life in the country. According to a recent WHO study, diseases caused by indoor and outdoor air pollution kill 656,000 Chinese citizens every year. Another 95,600 deaths are attributed annually to polluted drinking water.

¶11. (C) China’s increasing reliance on imported natural resources has foreign policy ramifications and provides opportunities for the United States. A China that is increasingly dependent on Middle Eastern oil might be more likely to support policies that do not destabilize the Middle East. Take Iran, for instance. We have long been frustrated that China has resisted (with Russia) tough sanctions aimed at curbing Iran’s nuclear program. In the future, a China increasingly dependent on foreign energy supplies may recalculate the risk a nuclear Iran would pose to the greater Persian Gulf region’s capacity to export oil.

¶12. (C) Another opportunity presented by China’s increasing resource consumption is in the joint development of technological responses to reduce carbon emissions and to diminish the public health impact of industrial growth. Scientific publications around the world conclude that the projected rate of global energy and natural resource consumption is unsustainable. Experts warn that we must find alternative forms of energy in order to avert calamities posed by global climate change. International efforts to develop and significantly utilize renewable energy, clean up our shared global environment, and conserve our remaining raw materials will not be effective without meaningful Chinese participation. As the world’s preeminent technological power and as a leader in multilateral energy and scientific organizations, the United States is in a unique position to work with China to overcome these challenges.

Economic Interdependence and Chinese Demographics

¶13. (C) In the next fifteen years, while China’s overall population is predicted to stabilize, its urban population will likely grow to almost 1 billion, an increase (of 300 million people) equal to the entire current population of the United States. China plans to build 20,000 to 50,000 new skyscrapers over the next two decades — as many as ten New York cities. More than 170 Chinese cities will need mass transit systems by 2025, more than twice the number now present in all of Europe. China is now surpassing Germany as the world’s third largest economy and is projected to overtake Japan within the next five years. By the end of the next thirty years, China’s economy could rival the United States in overall scale (although its per capita income will likely only be one quarter of the United States’).

¶14. (C) Behind these outward symbols of success will be an increasingly complicated economic picture. Since 1979, by reversing the misguided economic policies of the Mao era, liberalizing labor markets and prices, opening to foreign investment, and taking advantage of the West’s consumer-driven policies, China has maintained fast growth. However, the set of circumstances that allowed such impressive growth rates will no longer exist in the future.

¶15. (C) Many speculate that China has reached the limit to easy productivity gains by rationalizing the state-planned economy. The Economist Intelligence Unit expects China’s annual growth to slow from around 10 percent in the last 30 years to 4.5 percent by 2020. After 2015 when the labor force peaks as a share of the population, labor costs will rise faster. This will increasingly make other countries like India and Vietnam more attractive for labor-intensive investment. In addition, workers will have to support a growing number of retirees. Early retirement ages combined with the urban one-child limits creates the so-called “4-2-1” social dilemma: each worker will have to support four grandparents, two parents and one child. Savings rates will start falling as the elderly draw down their retirement funds.

¶16. (C) China will have to manage an economy increasingly dependent on domestic consumption and service industries for growth. Already, urbanites are buying 1,000 new cars per day, making China the world’s largest Internet and luxury goods market, and traveling abroad in growing numbers. By 2025, China will have the world’s largest middle class, and China will likely have completed the transition from the majority rural population of today to a majority urban population. These consumers of tomorrow will likely flock to products from around the world as their North American, European and Japanese counterparts do today, providing new opportunities for American business. If incomes continue to grow, it is likely that the Chinese middle class will react like educated urbanites in other countries by exerting pressure on the Government to improve its dismal performance on environmental protection, food and product safety. We are already seeing increased public activism over such issues today.

¶17. (C) China will face a challenge in the next thirty years encouraging this urban consumption while dealing with the social equality issues inherent in a rural population where over 200 million people still live on less than a dollar a day. China will also have to find a way to improve the lot of between 150 and 230 million migrant workers who today must leave their children and aging parents behind in their home villages to travel to the industrial centers of the relatively developed coastal regions to work in factories or on construction projects.

¶18. (C) With China’s phenomenal growth has come increased economic interdependence. This will likely increase, although some of the less-balanced elements of China’s economic interactions should be mitigated. Rising consumption rates should work to lower China’s trade surplus as well as its overabundance of foreign exchange reserves. More assets controlled by corporations and individuals, as opposed to the government, will diversify outward investment, reducing political control by Beijing, but also the utility of political suasion for U.S. policymakers interested in effecting the flow of capital to international hotspots.

Chinese Nationalism and Confidence on the International Stage

¶19. (C) As one of two main pillars of post-Mao Chinese Communist Party rule (the other being sustained economic growth), Chinese nationalism is growing and should be monitored closely. As witnessed during the 2008 Beijing Olympics, Chinese are increasingly proud of the tremendous strides their country has made in recent years. More and more young people see China as having “arrived” and might possess the confidence and willingness to assume the responsibilities of a major power. However, as was evident during protests over the 1999 mistaken bombing of the Chinese Embassy in Belgrade, the 2004 protests over Japanese textbooks, and more recently the anti-France diatribes that followed the roughing-up of a disabled Olympic torch bearer in Paris by Free Tibet supporters, this nationalism can also lead to jingoism. Chinese leaders of a system with few outlets to express political sentiments are faced with trying to give vent to the occasional uprising of nationalistic anger without letting it get out of hand or allowing it to focus on the failings of the central leadership.

¶20. (C) With notable exceptions like Zhou Enlai, Chinese foreign policy practitioners thirty years ago had little practical experience dealing with the West. Since then, Chinese diplomats and subject matter experts are increasingly well-educated, well-traveled and well-respected. Chinese diplomats at international fora such as the UN and the WTO have become adept at using procedural rules to attain diplomatic or commercial ends. This trend will likely continue in the coming decades, increasing the likelihood of American decision makers finding more able adversaries when we disagree on issues, but also more able partners where we can agree to jointly tackle a problem of mutual concern such as nonproliferation, alternative energy or pandemic influenza.

¶21. (C) While still reluctant to claim China is a global leader, Chinese officials are gradually gaining confidence as a regional power. By the end of the next 30 years, China should no longer be able to portray itself as the representative of lesser developed countries. This does not mean that it will necessarily identify with the more developed, mainly Western countries; it well might choose to pursue some uniquely Chinese path. In the coming 30 years, a U.S. President might be involved in negotiations with a Chinese leader seeking to reshape global financial institutions like the IMF or the WTO or establish rival institutions for non-Western countries in order to mitigate domestic Chinese concerns. Even so, China’s growing position as a nation increasingly distinct from the less-developed world may expand our common interests and make it easier for the United States to convince China to act like a responsible global stakeholder.

¶22. (C) Foreign assistance coordination is another area of opportunity. China is rapidly ramping up its global economic presence, not only via resource extraction ventures and cheap exports, but increasingly via direct investment and assistance. This investment and assistance are welcome in most less-developed countries, whether in Africa or Southeast Asia, and particularly in countries where China’s longstanding policy of “no strings attached no political interference” appeals to democratically-challenged dictators and kleptocrats. However, China is already facing blowback as a result of its more cavalier approach to issues that more scrupulous donors have wrestled with for decades. Scant attention paid to worker safety, job opportunities for local people, environmental protection, and political legitimacy has had negative consequences for China on multiple occasions, from a tarnished international image and being used as a political whipping boy by opposition groups in democratic countries to unpaid loans, expropriated investments, and even the deaths of Chinese expatriates. As a result, China is beginning to understand the merits of international assistance standards not for altruistic reasons, but for achieving China’s own bottom-line imperatives of a more secure international position and better-protected economic interests in third countries. This realization, coupled with China’s growing economic clout on the world stage, make it quite possible that, in the next 30 years, China will come to be identified by the average citizen in less developed countries not as “one of us” but as “one of them.”

¶23. (C) In all likelihood, a new-found (if still somewhat grudging) PRC interest in internationally accepted donor principles such as transparency, good governance, environmental and labor protections, and corporate social responsibility will have matured in 30 years’ time, making China a reliable partner for the United States, other donor countries, and international organizations in alleviating poverty, developing infrastructure, improving education and fighting infectious disease. And as one of the world’s premier economic powers, China can be expected to have all but discarded its over-worn and outdated “non-interference” rhetoric in the face of massive Chinese investment assets and other economic interests abroad.

¶24. (C) As evidenced by Chinese policies toward pariah states like Sudan, Zimbabwe, Burma and Iran, China is still willing to put its need for markets and raw materials above the need to promote internationally accepted norms of behavior. However, the possible secession of southern Sudan (where much of the country’s oil is found) from the repressive Khartoum-based Bashir regime, the erratic treatment of foreign economic interests in Zimbabwe by Robert Mugabe, the dangers to regional safety and stability posed by Burma’s dysfunctional military junta, and the threat to China’s energy security that a nuclear-armed Iran would represent have given Beijing cause to re-calibrate its previously uncritical stance toward these international outlaws. If China’s integration into global economic and security structures continues apace, we would expect its tolerance for these sorts of disruptive players to decrease proportionately.

¶25. (C) China’s work in the Six-Party Talks and the Shanghai Cooperative Organization may provide guidance as to how to accelerate this trend. China plays a leading and often responsible and constructive role in both of these multilateral groups. Future U.S. policy-makers might usefully consider additional international mechanisms that include both U.S. and Chinese membership such as the proposed Northeast Asia Peace and Security Mechanism that may grow out of the Six-Party Talks. The Chinese themselves have suggested a Six-Party Talks-like grouping to address the Iran nuclear issue, perhaps a P5-plus-1-plus-Iran. In the future, we may wish to consider the United States joining the East Asia Summit (EAS).

¶26. (C) Likewise, as the Chinese economy takes up a larger portion of the global economy, it inevitably will become increasingly affected by the decisions of international economic and financial institutions. Similarly, China’s economic decisions will have global implications, and its cooperation will become essential to solving global-scale problems. Drawing China constructively into regional and global economic and environmental dialogues and institutions will be essential. More and more experts see the utility of establishing an Asia-Pacific G-8, to include China, Japan, and the United States plus India, Australia, Indonesia, South Korea and Russia; others say the time is ripe to include China as a member of a G-9. Giving China a greater voice is seen as a way to encourage China to assume a larger burden in supporting the international economic and financial system.

Role of the Military

¶27. (C) The disparate possibilities exist that in the coming decades the PLA will evolve into a major competitor, maintain only a regional presence or become a partner capable of joining us and others to address peacekeeping, peace-enforcing, humanitarian relief and disaster mitigation roles around the world. China may be content to remain only a regional power, but Deng Xiaoping’s maxim urging China to hide its capabilities while biding its time should caution us against predicting that the PLA’s long-term objectives are modest. In the years to come, our defense experts will need to closely monitor China’s contingency plans and we will need to use every diplomatic and strategic tool we have to prevent intimidating moves toward Taiwan. In the coming years, Chinese defense capabilities will continue to improve. The PLA thirty years from today will likely have sophisticated anti-satellite weapons, state-of-the-art aircraft, aircraft carriers and an ability to project force into strategic sea lanes.

¶28. (C) Thirty years ago the PLA was a bloated political organization with antiquated equipment and tactics. Today, the PLA is leaner and is becoming a modern force. Chinese military and paramilitary units have participated in UN-sponsored peacekeeping missions in East Timor, Kosovo, Haiti and Africa. In December 2008, for the first time, the PLA Navy deployed beyond the immediate waters surrounding the country to participate in anything beyond a goodwill tour to combat piracy off the Horn of Africa. It is likely that China will continue to support UN-sponsored PKOs, and if the piracy expedition is successful, China might follow up with expeditions to future piracy hotspots such as the Strait of Malacca or elsewhere.

¶29. (C) Over the past thirty years, Chinese officials have come to begrudgingly acknowledge the benefits to East Asia resulting from the U.S. military presence in the Pacific, especially the extent that a U.S. presence in the Pacific is an alternative to a more robust Japanese military presence. A peaceful resolution of the threat posed by North Korea might cause China to call for an end to the U.S. base presence on the Korean Peninsula. Perceived threats to China’s security posed by Japan’s participation in missile defense or by future high-tech U.S. military technologies might cause tomorrow’s Chinese leaders to change their assessment and to exert economic pressures on U.S. allies like Thailand or the Philippines to choose between Beijing and Washington.

¶30. (C) Whatever the state of our future relations with China, we will need to understand more about the Chinese military. Multilateral training and exercises are constructive ways to promote understanding and develop joint capabilities that could be used in real-life situations. In the coming years, the Chinese may be called upon to participate in regional peacekeeping and humanitarian relief exercises. Some of these could be handled under UN auspices, but others could be bilateral or multilateral. For instance, Cobra Gold, which is held every year in Thailand, is America’s foremost military exercise in Asia. It has a peacekeeping component and since the December 2004 tsunami in Indian Ocean has included a humanitarian relief element. With proper buy-in by the Pentagon and PACOM, we could create a program to engage the PLA more directly both with our military and with friendly militaries in the region. Modest efforts at expanding search and rescue capabilities on the high seas, developing common forensic techniques for use in mass casualty events, conducting exercises with PLA units tasked with responding to civil nuclear emergencies, or table-top exercises for U.S. and Chinese junior officers could be steps that promote trust with little risk. At the same time, more frequent, regularly scheduled high-level reciprocal visits between Chinese and U.S. security officials might eventually lead to a constructive strategic security policy dialogue on nonproliferation, counterterrorism and other issues.

Taiwan and Human Rights

¶31. (C) Taiwan was the most vexing issue holding up the establishment of relations 30 years ago and remains the toughest issue for U.S.-China relations despite significant improvement in cross-Strait relations since the election of Taiwan President Ma. It will remain a delicate topic for the foreseeable future. We should continue to support Taiwan and Mainland efforts to reduce tension by increasing Taiwan’s “international space” and reducing the Mainland’s military build-up across from Taiwan.

¶32. (C) Thirty years ago, the Chinese state interfered in virtually every aspect of its citizens’ lives. An individual’s work unit provided housing, education, medical care and a burial plot. Reeducation sessions and thought reform were common, churches and temples were closed, and average citizens had little access to the outside world. Today, Chinese have far greater ability to travel, read foreign media and worship. Nonetheless, the overall human rights situation falls well short of international norms. Today, China’s growing cadre of well-educated urbanites generally avoids politics and seems more interested in fashion and consumerism than in ideology; after all, outside-the-box political thinking, much less activism, remains dangerous. However, any number of factors in the future ranging from rising unemployment among recent college graduates, or growing discontent over the income divide separating rich urbanites from poor peasants, to discontent among the mass of migrant workers could lead to unrest and increased political activism. The Chinese Government still responds with brutal force to any social, religious, political or ideological movement it perceives as a potential threat. Chinese political leaders’ occasional nods toward the need for political reform and increased democracy suggest a realization that the current one-party authoritarianism has its weak points, but do not promise sufficient relaxation of party control to create a more dynamically stable polity in the long term.

¶33. (C) While the U.S. model of democracy is not the only example of a tolerant open society, we should continue to push for the expansion of individual freedoms, respect for the rule of law and the establishment of a truly free and independent judiciary and press as being necessities for a thriving, modern society and, as such, in China’s own interests. Someday, China will realize political reform. When that day comes, we will want to be remembered by Chinese for having helped China to advance. Randt

Cable 2

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 002112

SIPDIS

E.O. 12958: DECL: 07/23/2034
TAGS: PGOV CH
SUBJECT: TOP LEADERSHIP DYNAMICS DRIVEN BY CONSENSUS,
INTERESTS, CONTACTS SAY

REF: A. BEIJING 2063
¶B. BEIJING 2040

Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.
4 (b/d).

Summary

¶1. (C) The need for consensus and the desire to protect vested interests are the main drivers of Politburo Standing Committee (PBSC) decision-making and Chinese leadership dynamics in general, according to Embassy contacts with access to leadership circles. Contacts have variously described relations at the top of China’s Party-state structure as akin to those in the executive suite of a large corporation, as determined by the interplay of powerful interests, or as shaped by competition between “princelings” with family ties to party elders and “shopkeepers” who have
risen through the ranks of the Party. End Summary.

Hu Jintao as Chairman of the Board?

¶2. (C) Chinese Communist Party (CCP) Politburo decision-making is similar to executive decision-making in a large company, two well-connected contacts say. xxxxx that Party General Secretary Hu Jintao could be compared to the Chairman of the Board or CEO of a big corporation.xxxxx, used the same analogy in a May 18 meeting with PolOffs. xxxxx said that PBSC decision making was akin to a corporation in which the greater the stock ownership the greater the voice in decisions. “Hu Jintao holds the most stock, so his views carry the greatest weight,” and so on down the hierarchy, but the PBSC did not formally vote, xxxxx. “It is a consensus system,” he maintained, “in which members can exercise veto power.”

¶3. (C) xxxxx had told PolOff previously that he knew “on very good authority” that “major policies,” such as the country’s core policy on Taiwan or North Korea, had to be decided by the full 25-member Politburo. Other more specific matters, he said, were decided by the nine-member PBSC alone. Some issues were put to a formal vote, while others were merely discussed until a consensus was reached. Either way, xxxxx stated sarcastically, the Politburo was the “most democratic body in the world,” the only place in China where true democracy existed. xxxxx said that although there was ”something” to the notion of a rough factional balancing at the top between the Jiang Zemin-Shanghai group and the Hu-Wen group, neither group was dominant, and major issues had to be decided by consensus.

Leadership Dynamics: Driven by Vested Interests

¶4. (C) xxxxx asserted to PolOff March 12 that the Party should be viewed primarily as a collection of interest groups. There was no “reform wing,” xxxxx claimed.xxxxx made the same argument in several discussions with PolOff over the past year, asserting that China’s top leadership had carved up China’s economic “pie,” creating an ossified system in which ”vested interests” drove decision-making and impeded reform as leaders maneuvered to ensure that those interests were not threatened. It was “well known,” xxxxx stated, that former Premier Li Peng and his family controlled all electric power interests; PBSC member and security czar Zhou Yongkang and associates controlled the oil interests; the late former top leader Chen Yun’s family controlled most of the PRC’s banking sector; PBSC member and Chinese People’s Political Consultative Conference Chairman Jia Qinglin was the main interest behind major Beijing real estate developments; Hu Jintao’s son-in -law ran Sina.com; and Wen Jiabao’s wife controlled China’s precious gems sector.

¶5. (SBU) Note: In a development that could fan the “vested interest” rumor mill, China-related websites in the United States this week were reporting that a Chinese security technology company with links to Hu’s eldest son, Hu Haifeng, was being investigated in Namibia on charges of corruption. A July 19 article in a Malaysian paper, cited by a U.S.-based dissident website, wenxuecity.com, reported that Hu Haifeng was a “potential witness” in the case but was not himself a suspect. The report said that the younger Hu was a former CEO of Nuctech and currently the Party Secretary of its parent company, Tsinghua Holding Co. Ltd. According to the China Digital Times website at the University of California Berkeley’s China Internet Project, the Central Propaganda Department on July 21 issued orders to block any reference to the case in the PRC media. End note.

¶6. (C) xxxxx, had told PolOff earlier that leaders had close ties to powerful economic actors, especially real estate developers and corporate leaders, who in some cases were officials themselves. The same was true at the local level, xxxxx stated. He claimed that these interest networks had policy implications since most local leaders had “bought” their positions and wanted an immediate financial “return” on their investment. They always supported fast-growth policies and opposed reform efforts that might harm their interests, xxxxx. Vested interests were especially inclined to oppose media openness, he said, lest someone question the shady deals behind land transactions. As a result, the proponents of “growth first” would always be in a stronger position than those who favored controlling inflation or taking care of the poor, xxxxx.

¶7. (C) xxxxx that the central feature of leadership politics was the need to protect oneself and one’s family from attack after leaving office. Thus, current leaders carefully cultivated proteges who would defend their interests once they stepped down. It was natural, xxxxx said, that someone like Xi Jinping, who maintained a non-threatening low profile and had never made enemies, would be elevated by Jiang Zemin and Zeng Qinghong. Xi would act to ensure that Jiang was not harassed or that Jiang’s corrupt son would not be arrested, xxxxx.

Princelings vs. Shopkeepers

¶8. (C)xxxxx, separately described leadership alignments at the top of the CCP as shaped largely by one’s “princeling” or “shopkeeper” lineage. In separate conversations in recent months, xxxxx said that some argued that China’s ”princelings,” the sons and daughters of prominent Communist Party officials, including many who helped found the PRC, shared a perception that they, as the descendents of those who shed blood in the name of the Communist revolution, had a ”right” to continue to lead China and protect the fruits of that revolution. Such a mindset could potentially place the ”princelings” at odds with Party members who do not have similar pedigrees, xxxxx, such as President Hu Jintao, Premier Wen Jiabao and Party members with a CYL background, who were derisively referred to as “shopkeepers’ sons.” xxxxx had heard some princeling families denounce those without revolutionary pedigrees by saying, “While my father was bleeding and dying for China, your father was selling shoelaces.”

Goldberg

Cable 3

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 000263

C O R R E C T E D C O P Y – (ADDED SECSTATE ADDRESS)

SIPDIS

STATE FOR EAP/CM-BRAUNOHLER
STATE FOR EAP/CM
STATE FOR ISN/NESS
USDOE FOR NNSA/SCHEIMAN, GOOREVICH, WHITNEY
USDOE FOR NUCLEAR ENERGY-MCGINNIS
STATE PASS TO NUCLEAR REGULATORY COMMISSION (DOANE)
USDOE FOR INTERNATIONAL/YOSHIDA, BISCONTI, HUANGFU
NSC FOR HOLGATE

EO 12958 DECL: 01/20/2035
TAGS CH, ENRG, KPWR, MNUC, OSCI, PINR, PINS, SENV, TPHY,
TSPL

SUBJECT: PRC: NUCLEAR RESEARCH AT CHINESE ACADEMY OF
SCIENCES
BEIJING 00000263 001.4 OF 002

Classified By: BRENT CHRISTENSEN, ESTH COUNSELOR. REASON: 1.4(b,d,e)

1.(SBU) Summary: In response to an invitation by the Chinese Academy of Sciences (CAS), ESTH officer traveled to Hefei, Anhui Province, in December 2009 to visit several Chinese government-sponsored scientific institutions. During this time, ESTH officer learned of the below information through official presentations, personal observation, and informal/discreet conversations with CAS staff members. Most significantly, the Institute of Plasma Physics continues to conduct research on how to use nuclear fusion as a sustainable means to produce energy. At the same time, China is expanding its use of nuclear fission as an energy source and plans to open at least 70 nuclear fission power Qnts within the next 10 years. In 2009, CAS’s Institute of Plasma Physics budget was USD$20 million. Additionally, other CAS institutes are conducting research in biometrics, computational physics and material science, nanoscience and nanomaterials, soft-matter physics, environmental spectrometry, fiber optic wave-length division multiplexing, quantum communications, superconductors and spintroncis, and cognitive sciences. End Summary.

Institute of Plasma Physics – Nuclear Research

¶2. (C) In mid-December 2009, the Chinese Academy of Science (CAS) Institute of Plasma Physics (IPP) in Hefei, Anhui Province was preparing for another cycle of experiments with its Experimental Advanced Superconducting Tokamak (EAST). EAST was designed to be a controlled nuclear fusion tokamark reactor with superconductive toroidal and poloidal field magnets and a D-shaped cross-section. One of the experimental goals of this device was to prove that a nuclear fusion reaction can be sustained indefinitely, at high enough temperatures, to produce energy in a cost-effective way. In 2009, IIP successfully maintained a 10 million degree Celsius plasma nuclear fusion reaction for 400 seconds. IIP also successfully maintained a 100 million degree Celsius plasma nuclear fusion reaction for 60 seconds. One of IIP’s immediate goals is now to maintain a 100 million degree Celsius plasma nuclear fusion reaction for over 400 seconds. Currently, IIP is also conducting research into hybrid fusion-fission nuclear reactors that may be able to sustain nuclear reactions indefinitely, and at sufficient temperatures, to cost-effectively produce energy. IIP officials stated that China has the explicit goal of building at least 70 nuclear fission power plants within the next 10 years. IIP scientists claimed current Chinese nuclear energy production efforts use Uranium 235, but research is being done to make Uranium 238 a feasible alternative. IIP’s 2009 budget was USD$20 million – a two-fold increase over the previous year – and IIP leadership expects their budget to increase again in 2010.

[AK: cut.]

Institute of Intelligent Machines – Biometrics Research

¶3. (C) The Chinese Academy of Science (CAS) Institute of Intelligent Machines (IIM) in Hefei has developed a biometrics device that uses a person’s pace to identify them. The device measure weight and two-dimensional sheer forces applied by a person’s foot during walking to create a uniquely identifiable biometrics profile. The device can be covertly installed in a floor and is able to collect biometrics data on individuals covertly without their knowledge. When questioned about the device’s potential applications, IIM officials stated the device was being used by “secret” customers and was not available on the commercial market. IIM also said they were involved with China’s “Program 863.” (COMMENT: Program 863 is China’s national high-technology development plan that includes both military and civilian technology development programs; therefore, it is likely the People’s Liberation Army (PLA) is one of the customers for whom this biometrics device was developed. END COMMENT)

Institute of Solid State Physics – Nanotechnology Research

¶4. (C) In mid-December 2009, the Chinese Academy of Science (CAS) Institute of Solid State Physics (ISSP) in Hefei was conducting research in the fields of computational physics and material science, nanomaterials, and soft-matter physics. ISSP’s 2009 budget was roughly $6 million (USD). ISSP’s top priority projects are: one-dimensional nanomaterials, spin and charge research using perovskite manganese oxides, and the design and preparation of high-dampening materials. ISSP also conducts research on nanomaterials and nanostructures for China’s “Program 973.” (NOTE: Program 973 is China’s national plan for improving basic scientific research and development. END NOTE)

Institute of Optics and Fine Mechanics – Spectrometry & Fiber Optic Research

¶5. (C) In mid-December 2009, the Chinese Academy of Science (CAS) Institute of Optics and Fine Mechanics (IOFM) in Hefei was modifying environmental spectrometry technology to detect TATP explosives for use in counter-terrorism efforts. IOFM was also conducting fiber optic research on wave-length division multiplexing (WDM) technologies using pulsed and continuous laser sources at both single-mode and multi-mode wavelengths. A cursory walk through one of their labs revealed that IOFM was specifically conducting experiments in the 980-1150 nanometer range, and that they were conducting experiments using hydrogen-filled fiber optic communication lines. (COMMENT: Hydrogen-filled fiber optic lines are technologically challenging to manufacture, but provide many advantages; one of which is increased security and protection from tampering. END COMMENT)

University of Science and Technology of China – Organization & Research

¶6. (C) In mid-December 2009, the University of Science and Technology of China (USTC) in Hefei had academic programs focusing on Math, Physics, Chemistry, Life Sciences, Nuclear Science, Engineering, Computer Science, Information Technology, Management, Humanities, and a department dedicated to the development of gifted young people. USTC has 37,000 staff and 40,000 graduate students. USTC oversees two national laboratories: the National Synchrotron Radiation Laboratory and the Hefei National Laboratory for Physical Science at the Microscale (HFNL). HFNL has 95 faculty members and roughly 400 graduate students. HFNL research focuses on quantum communication, nanoscience, superconductors, spintronics, and cognitive sciences. In the area of quantum communication, HFNL was conducting research in quantum teleportation and free space quantum cryptography that scientists hope will result in “totally secure” communications. USTC also oversees China’s “Program 178,” although they did not describe the nature of this program. (COMMENT: A cursory walk through their labs seemed to indicate they had already succeeded in single-particle quantum teleportation and are now trying to conduct dual-particle quantum teleportation. END COMMENT)

HUNTSMAN

Cable 4

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 000367

SIPDIS

STATE PASS USAID

EO 12958 DECL: 02/11/2020
TAGS PREL, ECON, EAID, EINV, CH, XA
SUBJECT: AFRICAN EMBASSIES SUSPICIOUS OF US-CHINA
DEVELOPMENT COOPERATION IN AFRICA

REF: (A) 09 BEIJING 955 (B) 09 BEIJING 1311 (C) 09 BEIJING 2836

Classified By: Economic Minister Counselor William Weinstein. Reasons 1.4 (b) and (d)

Summary

¶1. (C) African Embassy officials told EmbOffs that many in the African community were uncomfortable with the concept of US-China development cooperation in Africa. China’s fast, efficient, “no strings attached” bilateral approach is popular in the region, as is the PRC preference for infrastructure over governance projects. African officials fear that U.S. or European interference will slow down the assistance process and tie conditions to Chinese aid. In the past, the EU angered many African countries when it proposed trilateral cooperation. The Chinese subsequently backed out of discussions citing lack of African support. In addition, African officials believe that competition between donors has had positive consequences for African development, giving the African countries options after several decades of a largely “Western” development model. Despite apprehensions, one official believed that U.S.-China cooperation could be positive if carried out with active African participation. The UK’s Department for International Development (DFID) was offered as an example of an organization that has managed to collaborate well with China in Africa. End summary.

Threatening the Chinese way

¶2. (C) During a February 8 lunch, Kenyan Ambassador to China Julius Ole Sunkuli said he and other Africans were wary of the U.S.-China dialogue on Africa and felt Africa had nothing to gain from China cooperating with the international donor community. Sunkuli claimed that Africa was better off thanks to China’s practical, bilateral approach to development assistance and was concerned that this would be changed by “Western” interference. He said he saw no concrete benefit for Africa in even minimal cooperation. Sunkuli said Africans were frustrated by Western insistence on capacity building, which translated, in his eyes, into conferences and seminars (REF C). They instead preferred China’s focus on infrastructure and tangible projects. He also worried that Africa would lose the benefit of having some leverage to negotiate with their donors if their development partners joined forces.

Lessons from the EU experience

¶3. (C) South African Minister Plenipotentiary Dave Malcolmson echoed the same reservations in a February 9 meeting. According to him, lessons could be learned from the EU experience in 2008. When the EU put together a policy paper on trilateral development cooperation in Africa, many African countries were annoyed because they were not consulted on the issue. They argued that the third party in these nominally trilateral discussions was conspicuously absent. They perceived this as a Western attempt to reign in China’s Africa assistance. Malcolmson said the African resistance prevented any concrete progress coming out of this initiative as the Chinese then subsequently backed out of the discussion, citing African opposition.

Africans don’t want conditions, they want options

¶4. (C) African countries principally fear that the U.S. and other Western countries will use trilateral cooperation to try to attach governance conditions to Chinese development. Malcolmson, who previously worked at the New Partnership for African Development (NEPAD) secretariat, recalled that governance projects received a lot more support from Western donor countries than infrastructure projects. He opined that although governance, peace and security are crucial to African growth, they must be accompanied by measures to reduce poverty and build infrastructure.

¶5. (C) Malcolmson echoed Sunkuli’s comment that African countries also fear losing their bargaining power. China’s emergence in Africa as a counterbalance to U.S. and European donors has been very positive for Africa by creating “competition” and giving African countries options. He recalled that after the 2006 Forum on China-Africa Cooperation (FOCAC) summit, when China announced its commitments to Africa to much international media fanfare, traditional donors changed their attitude. They recognized that they had to measure up to China and “came calling.” The EU proposed infrastructure projects (after having defacto given up supporting these types of projects) and the World Bank began to support more agriculture projects.

The DFID example and recommendations for the future

¶6. (C) Malcolmson clarified that if U.S.-China cooperation leads to a real escalation of resources then it could be a positive step, but many Africans expect that it would slow down development. He cited the DFID’s relationship with China as an example of healthy cooperation. DFID’s success has come from focusing on small projects and working largely outside formal channels (REF A). Malcolmson recommended working through regional African organizations like the Comprehensive Africa Agriculture Development Programme (CAADP) as a way to alleviate African concerns. If both China and the United States contribute resources to promising African development projects, then Africans will welcome trilateral cooperation. He said this would have the added benefit of encouraging the Chinese to venture beyond bilateral development assistance and support regional projects.

Comment

¶7. (C) Sunkuli and Malcolmson’s comments are a potential warning sign as the USG prepares for the upcoming U.S.-China Sub-Dialogue on Africa. As the PRC continues to stress a policy of “non- interference” in the internal affairs of other countries, China could well use any voiced African opposition as an excuse to stop or slow progress on further discussions or collaboration. We should be careful to pick projects that would have broad support within the African community, preferably African-initiated and led, to get the development cooperation dialogue started on the right foot. In addition, we should clearly articulate the benefits of our cooperation to our African counterparts and include African voices in the debate on the U.S.- China-Africa relationship.

HUNTSMAN

The immediate inspiration was Dmitry Orlov’s essay The Collapse Party platform, which argued for setting up a mechanism to clean up the mess left behind industrialism and preparing society for the collapse. Orlov was personally pessimistic about the chances of political organizations achieving this, since to some extent the very notion of a “collapse party” is a contradiction in terms. After a year, it turns out that he was right – at least in the short term. I have neither the time nor the means to push this project, nor have I been able to do anything substantial about it apart from the (soon to disappear) site and a Facebook group. Furthermore, on further examination it never would have any good prospects anyway – even apart from the fact that few comprehend the sheer scope of our predicament, such a ”pessimistic” view is politically unappealing to the vast majority of people.

This post will archive the Party’s Manifesto, which I do think contains some useful pointers to future action. The longer its recommendations remain the laughing stock of “polite society”, the more violent will be the long-term outcomes as the industrial engine splutters and screeches to a stop – and the more brutal and dictatorial the means that will be required to mitigate and adopt to the new conditions. But as a political project the Collapse Party is quixotic, and in any case there’s no point worrying about things you can’t change. Instead, I would recommend focusing on the great new opportunities of an opening Arctic: getting in early on its coming investment boom, snapping up prime Far North real estate and establishing your family as the future landed aristocracy. For true prophets are despised, but Tsars are feared and respected!

The Collapse Party Manifesto

Anatoly Karlin

The world is finite, and so the resource stocks and pollution sinks that sustain industrial civilization (“the System”) are limited. We have been in a state of “overshoot”, beyond the “carrying capacity” of the Earth, since the 1980′s (The Limits to Growth, 2004). Limited resources have been drawn down much faster than they could be replenished, and the Earth’s pollution sinks have been overfilled much faster than they could be regenerated.

Elements of this overshoot can already be seen in phenomena as diverse as plateauing crop yields, topsoil loss, accelerating climate change, peak oil, collapsing fisheries, the depletion of higher-EROEI energy sources, dying rivers, global dimming, the proliferation of “failed states”, neo-colonial exploitation, and rising antibiotic resistance. But things are yet going to get much worse…

Based on paleoclimate reconstructions of CO2 levels, an eventual global warming of above 2C is already inevitable. This will set off a cascade of climatic disasters that will speed up the rate of warming, leading to the desertification of much of the world’s land and oceans, the drying of the great Asian rivers, and massive inundations of the low-lying coasts and deltas that harbor humanity’s heartlands. States will collapse into anarchy, spawning Biblical-scale famines and floods of climate refugees.

Meanwhile, the energetic resources that power the System will be coming under severe strain. Oil production has already peaked, and natural gas and coal will follow in a few more decades. The remaining resources are much harder to extract, since the easiest pickings have already been exploited. We will have to divert ever more energy, labor, and capital towards mitigating the effects of both energy depletion (renewables, remote hydrocarbons) and runaway climate change (adaptation, geoengineering).

This will starve agriculture and the consumer sector, ushering in disillusionment, social discontent, and a longing for a strong hand at the helm of power. This will undermine liberal democracy’s political legitimacy, leading either to anarchy (“failed states”) or increasing coercion (authoritarianism). Geopolitical rivalries over the remaining energy resources will intensify, extinguishing the already dim prospects for international cooperation. Long-term thinking will recede into irrelevance, for political leaders will have their hands full with much more pressing issues – building sea walls, feeding the military, and placating (or dispersing) angry mobs.

Our only way to escape this trap is to rapidly effect a global transition towards “sustainable development”. The imperative of such a transition was recognized as early as the 1970′s, but we have yet to see any truly meaningful action. Nor are we likely to, since the defining feature of industrial-capitalist civilization is indefinite growth, based around the taking of loans against (higher) future returns. There’s a reason why Malthusian societies suppressed usury – and should we continue business-as-usual, we will soon rediscover why.

Though the System is very effective in some ways, it cannot foresee its own demise; nor can its servants even ask questions that hint at the unpalatable answer. However, the casual, detached, and informed observer can. Yes, in a purely technical sense, disaster can still be averted if one could convince people to make, or more likely force through, drastic reductions in First World overconsumption, a full-scale retooling of the industrial system towards renewables and recycling, and a global system of “contraction and convergence” on CO2 emissions.

Achieving this, however, is unlikely in the extreme; any transition to sustainability is going to be stymied by social myopia and geopolitical anarchy, as well as innate human psychological features such as the conservative bias, the denial complex, hedonism, and susceptibility to “creeping normalcy” and “landscape amnesia”. Unless we overcome these failings, or discover a technological silver bullet, we will collide with planetary limits to growth sometime around 2030 to 2050.

In that scenario, the System as a whole will become increasingly fragile, such that a large enough perturbation – say, a major war or global climatic disaster – will send it into a self-reinforcing spiral down into chaos. The electrical-industrial infrastructure supporting modern technology, especially the massive repositories of information entombed within cyberspace, will crumble away into oblivion.
After a short period of unprecedented violence, famine, pestilence, and death known as “the Collapse”, the world will get larger once more, and society will retreat back into the comforting blackness of a new Dark Age.

Faced with these grim prospects, we see it fitting to launch a multi-pronged initiative to if not avert a Collapse (as is the purpose of the global Green movement), then at least to attempt to mitigate, as best we can, its catastrophic humanitarian consequences. We do not wish on the demise of technological civilization, for we recognize that for all its ecological obliviousness and social injustices, it has enabled tremendous progress in science and many aspects of culture and human welfare. That said, we recognize that sometimes, the Second Law of Thermodynamics – the tendency for all closed, complex systems to decay – cannot be sidestepped.

We are “kollapsniks”, and our initiative is the Collapse Party.

We are an individual state of mind, for being mentally prepared for collapse is of the utmost importance. We are profoundly local, for each community will have to weather collapse on its own. We are a global project, for our predicament is global. We welcome everyone regardless of race, sex, creed, or political affiliation.

We propose a program of “sustainable retreat”, emphasizing the following three main principles:

• Reinforce resilience in the face of collapse.
• Inform the people that business-as-usual will lead to collapse.
• Prepare for collapse by focusing on “sustainable retreat” and targeted technological development mitigate the severity of any ultimate collapse.

The Collapse Party Platform

These principles are to be pursued through and beyond the following set of policies.

• Use the remaining high-EROEI fossil fuel stocks in a crash program to build as large a nuclear and renewable energy infrastructure as possible.
• Clean up radioactive and toxic installations while we still have the technologies and resources to do so.
• Work on fostering global unity and a common human identity to encourage cooperation and discourage competition and resource wars.
• Preserve as much as possible of the world’s stock of technologies, bioresources, and knowledge in dispersed repositories (“lifeboats”) in durable, physical format.
• Retool the education system to disseminate practical skills and democratize it using the power of the Internet (as long as it continues to exist).
• Liberalize copyright laws.
• Promote communal-agrarian values (“green communism”), while ditching the individualist and accumulative mentality that is spelling our doom.
• Unite all social groups under different wings of the Party – conventional Greens, as well as socialists, feminists, right-wing survivalists, etc – that are amenable to the kollapsnik message.
• Eschew militarism, dismantle overseas military bases, and repatriate the troops; but maintain a minimal nuclear deterrent.
• Nationalization and / or regulation of the commanding heights of the economy to optimize resource conservation and pollution control.
• Establish a network of self-contained “resiliencies” across the nation and the world, modeled on the Kibbutzim, that will provide physical, mental, and spiritual nourishment to those who need it.
• Allow mostly-unimpeded free enterprise for small, non-strategic, and low-material throughput businesses, for it will still be necessary to keep the consumerist urgings satiated.
• The Party is to be aim to operate on a horizontal and democratic basis, in which promotion and honors are to be based on the judgments of peers on one’s competence and commitment to the cause.
• The winding-down of the prison-industrial complex in a controlled manner; the nature of law and order to be determined in further internal debate.
• General debt amnesty to wipe the slate clean and start from Year Zero in our quest for sustainability.
• Expand resources into research on areas such as sustainable energy, geoengineering, and artificial intelligence to increase the chances of achieving a technological “silver bullet”.

Recommended LINKS from the site: The Archdruid Report; Arctic Progress; The Cost of Energy; Dmitry Orlov; Energy Bulletin; Energy Watch Group; George Monbiot; Green Party USA; Grist Environment; James Kunstler; Jay Hanson; Kurzweil AI; Mark Lynas; Matt Savinar; The Oil Drum; Paul Chefurka; Peak Oil News; Real Climate; Sharon Astyk; Stratfor; Sublime Oblivion; World Changing.

First, there is a major delusion that affects a disturbing amount of the commentary surrounding the size of the American and Chinese economies. Newsflash: nominal GDP and real GDP are different things! China overtook Japan in nominal GDP this quarter, but its real level of output has been the world’s second largest for almost a decade*. The reason China’s nominal, or market exchange rate, GDP is twice lower than its real GDP is because its currency is undervalued relative to the US dollar – simply put, living in China is a lot cheaper than in America. But it’s not an accurate proxy for the actual output of the Chinese economy, which is now at around 2/3 of the US level (IMF)**. The “purchasing power parity” GDP is better suited for gauging a country’s real living standards and economic strength.

Furthermore, many analysts are making the stunningly incompetent, sub-Econ 101 mistake of projecting Chinese’s 10% real growth rates to its nominal GDP. (Needless to say, this is totally absurd; China’s nominal GDP is growing much faster than its real GDP, because as it gets richer its price levels begin to approach those of the developed world). The convenient result of such calculations is to delay China’s sorpasso of the US economy decades into the far future.

Applying linear projections of 10% growth for Chinese GDP and 3% growth for US GDP sees the Middle Kingdom overtaking its superpower rival by 2017. By 2025, China’s economy is 75% bigger than the US.

Now one may make the entirely valid observation that linear extrapolation of current trends is bad futurism. I agree. China’s GDP growth will like moderate in the years ahead, as China develops and gets less bang for each investment yuan. On the other hand, there is still plenty of scope for rapid catch-up. China today is where South Korea was in late 1980′s and its trend rate of growth is slightly higher at 10% relative to Korea’s 8% from the 1960′s to the 1980′s. As China gets richer, this growth rate can be expected to ease to 7-8% (Korea in the 1990′s) and 4-5% (Korea in the 2000′s).

The US cannot expect to see anything approaching 3% growth in the next decade. The realistic scenario is 1) a private sector deleveraging as households begin to rein back the debt-income ratios to some semblance of normality and 2) massive yearly budget deficits supporting a permanently weak economy at a 0-1% growth level. Think an American version of Japan’s Lost Decade.

In the graph below, China grows at 10% until 2015, 7% until 2020, and 5% thereafter – roughly replicating South Korea’s trajectory from 1985/1990. The US slugs along at 1% until 2020, then improves to 2%. In this scenario, China sails past the US in 2015 and is 60% larger by 2025.

In reality, the world is far more complex than macroeconomics alone can describe. As I argued in Shifting Winds, American hegemony is metastable: though outwardly imposing, an interlinked failure in critical nodes such as energy (e.g. oil shock), finance (e.g. currency flight) and geopolitics (e.g. Iran) can lead to a cascading collapse of the entire  system.  Few will risk sticking their neck out with such predictions beforehand, but once the collapse becomes visible in our rear-view mirror, it will acquire the tinge of historical inevitability.

The American service-based economy is reliant on cheap and reliable petroleum supplies to keep the office plankton fed and mobile, but is put at critical risk by the imminent peaking of global oil supplies. The financial / credit system relies on trust and belief (“credo”) in future growth to keep functioning as an economic fertilizer, but it is threatened by awning US economic disbalances and the possibility of disruptions in energy supplies. Finally, both the energy and the financial crisis can be triggered by a single geopolitical event, such as a successful Iranian blockade of the Straits of Hormuz (e.g. in retaliation for an Israeli strike against its nuclear facilities).

The risk of cascaded collapse would not exist if Pax Americana faced fewer challenges, or if its foundations were still strong and wholesome. They are most definitely not in our era of permanent deficits, tight oil supplies and imperial overstretch. In the worst case scenario, this collapse could manifest itself in a fall in GDP of up to 30% to a new “steady state” output level.

But at least the US will recover quickly, right? Not likely. Though a US dollar collapse will restore competitivity to some of its older industries, global resource constraints will prevent it from ever fully recovering. Why should increasingly scarce energy sources continue feeding the office plankton of American suburbia, as opposed to Chinese factory cities whose products the entire world wants?

Contrary to popular commentary, China is unlikely to be hurt much by an economic collapse in its prime market. Net exports only account for 7% of China’s GDP, so though exports will decline, so will the imports used to assemble exports, and the overall effect will be modest. Though ebbing US demand for Chinese goods will hurt coastal regions, create unemployment and incite low-level protests, it is unlikely to reach a critical level since China can refocus development efforts on the interior and raising domestic consumption (there are numerous signs that this is already happening).

China’s biggest challenge will be the peaking of its coal production and AGW-induced declines in crop yields within ten to twenty years. Mitigating these developments will require a great deal of capital and ingenuity, things China is fortunate to have in abundance. Ultimately, with 20% of the world’s population but just 7% of its arable land, the Limits to Growth may cap China’s peak GDP at not much more than America’s current level.

On to our third scenario. From 2011, some combination of critical system shocks initiates a cascading collapse of Pax Americana, resulting in a cumulative US GDP decline of 30% from peak (this is similar to Latvia’s collapse in 2007-2009). After that, there is a permanent zastoi – unlike in previous emerging market crises, a significant recovery will be impossible in the new world of neo-mercantilism and energy constraints. China will be able to leap past the US sometime around 2013-15 and grow to more than double its size by 2025 – despite the slowing of China’s own growth due to peak exergy and the natural effects of economic catch-up.

What is the probability of each of these scenarios happening? In my opinion, Scenario 1 is pure fantasy. Scenario 2 is what I’d vouch for in “respectable” conversation. Scenario 3 is what I really believe will happen (and what I tend to write about on this blog).

In any case, the general outline is clear: no matter which “prism” you see the world through – be it techno-cornucopian, “realist”, or peakist – it appears that China, by sheer virtue of combining 1.3bn souls with modern technics, is destined to soar past the US to become the leading pole, if not of the world system, then certainly of the Pacific region.

This breakout will be all the more dramatic under the American collapse scenario: wracked by internal decline and preoccupied with internecine politicking, it’s not impossible to imagine the US simply not noticing the ebbing of its influence in East Asia.  Of course, there’s a perfect precedent for this: see how post-Maoist China managed to break past the seemingly impregnable Soviet empire that collapsed into anarchic stasis in the early 1990′s.

[Angus Maddison's data adjusted to equalize with IMF 2008 data; note that "former USSR" is a very rough estimate].

* There’s a big debate on the reliability of official Chinese economic statistics. Are Chinese statistics manipulated? by Gao Xu is a recommended rebuttal h/t “in the loop”.

** That is also assuming that the 30% downwards revision to Chinese GDP by the World Bank and IMF a few years ago was well-founded and not undertaken out of political considerations to preserve America’s #1 status. If not, China’s real GDP may already be surging past America’s.

A 2007 Goldman Sachs report estimated India’s GDP growth potential at about 8% until 2020, reinforcing the hype of recent years over “India shining” and the vigorous IT industry springing up in oases like Bangalore. This may well be realistic, even despite India’s manifold social problems (low human capital, creaky infrastructure, caste-based inequalities, an unwieldy bureaucracy, sluggish courts, etc), under a global “business-as-usual” scenario. That however is highly unlikely, for the hard numbers suggest that India will be economically and geopolitically squeezed out of the resources it needs to prosper or even survive by its massive eastern neighbor, China. There are limits to growth on our planet and no guarantees that they will be distributed fairly or equitably in the coming age of scarcity industrialism.

Why India is not China

The two countries share fundamental similarities. Both have more than a billion inhabitants, sustained by great rivers like the Ganges, Huang He and Yangtze that are fed by the (melting) Himalayan glaciers. Both rely on coal to meet the bulk of their primary energy needs and will need to import ever more hydrocarbons, metals and food products from abroad to power future growth. Both are ancient hydraulic civilizations that got left behind during the Industrial Revolution and are now determined to make up lost time. But to realize these dreams, they must compete with each other – directly or indirectly – for the same global energy, mineral and water resources.

Unfortunately for India, its Chinese competitor is dominant across practically all indices of national power one cares to compare.

[Sources: GDP per capita; literacy; manufacturing; Internet penetration; infrastructure; naval].

Let’s now look at the significance of each of the above. First, the average Chinese is now substantially richer than the average Indian. This matters because state power is tied to the surplus it can extract in taxes from a recalcitrant citizenry. There is no better proof of the importance of technological advancement and per capita productivity than 19th century Qing China, which although still the world’s largest economy during the Opium Wars got casually trounced by British gunships with modern artillery and steam power. We aren’t talking about that kind of gap between India and China, of course, but it does exist. The Chinese are now simply better able to actualize advanced industrial and military technologies that they buy (or steal) from the developed world into forms of power that matter – renewable energy, supercomputers, naval C&C, etc…

China leapfrogged India despite the ruinous economic legacy of Maoism, which was surely far worse than that of the “License Raj”. The best way of explaining this puzzle is in terms of China’s better educational profile. The main determinant of long-term economic growth is a country’s human capital (see 1, 2, 3), which for the most part consists of the educational attainment of its population (which in turn is strongly correlated with its level of national IQ). Not only has China implemented basic schooling far more comprehensively than India (see the literacy rates), but in the past decade it has also charged ahead in tertiary enrollments. And there is some evidence that the Chinese have a big structural advantage in IQ over Indians; if that is truly the case, then convergence will be nigh impossible in principle.

As a result of its huge pool of well-educated workers, China enjoys an almost total industrial supremacy over India. China’s manufacturing sector was worth nine times India’s in 2008. This is reflected in practically any sector one cares to survey. Last year, China produced near half the world’s steel and almost ten times India’s output, and 13.8mn automobiles to India’s 2.6mn. In the most fundamental industrial sector, machine tool building, China was global first with 15bn $ of output, relative to India’s insignificant 268mn $. In summary: China is charging past America; India lingers at the level of France, Brazil and Russia.

No matter the hype around IT services off-shoring to India, its eastern rival is more “informatized” (despite the debilitating effects of China’s Great Firewall). Not only is China’s infrastructure already leagues ahead of India’s, it continues to spend three times as much on expanding it further.

Finally, China has a military edge over India – not only in numbers, but also qualitatively in crucial sectors such as naval, space, strategic nuclear and cyberwar. The PRC has a third of the world’s shipbuilding capacity (India has the world’s biggest shipbreaking industry) and some projections indicate the PLAN could have more warships than the USN by 2020. India does not have the industrial strength to embark on such an ambitious enterprise. Plus, a significant part of its military budget is tied up in maintaining military superiority over Pakistan on land; as a result, resources get diverted from the all-important Navy.

India in the Age of Scarcity Industrialism

Though both Asian giants are essentially world-islands (that is, civilizations so deep and self-contained as to constitute their own worlds), they are increasingly tied to the larger world system of capital and resource flows. Their economic progress and rising affluence has to be supported by outside energy sources. Meanwhile, trends such as climate change and urbanization are slated to suppress their agricultural yields, necessitating more imports of “virtual water” in the form of food from abroad. As such, it is vital for both China and India to develop both ways of paying for these life-giving imports (e.g. selling goods, accumulating foreign currency) or if necessary seizing them by force (using gunboats and expeditionary forces). Thus it is their common geopolitical prerogative to safeguard the sealanes carrying their bulk commodity inflows from the Middle East, Africa and South America.

Chinese naval modernization is proceeding in tandem with a far-sighted “string of pearls” strategy of naval base construction on its outlying coastal islands and friendly nations such as Myanmar, Sri Lanka, Bangladesh, and Pakistan (they will host radar stations, anti-ship batteries and logistics hubs for naval operations). India has no such project at sea, while on land it is constrained by the hilly jungles of Indochina to the east, the impenetrable Himalayas to the north and a hostile Pakistan to the west. Though it does have a thin slice of access to chaotic, mineral-rich Afghanistan and Russian-dominated Central Asia, it is hard to see how India can marshal the political will and capital resources to build the necessary infrastructure to exploit them.

It should not be forgotten that India faces severe challenges managing its own subcontinent. Contrary to popular opinion, the Pakistani military is not the foremost strategic threat to India – even the worse-case scenario, a full-scale nuclear exchange, will not kill more than 1% of the Indian population. Far more worrying is the specter of the collapse of the Pakistani state. The region contains a 168mn strong population, growing at more than 2% a year, in a desert only made habitable by canal systems drawing on the Indus River, which is dependent on Himalayan glacial runoff for 90% of its water volume. Perpetually capital-poor, indebted and overpopulated, Pakistan faces the specter of a drying Indus by the 2040′s (if the more pessimistic studies are correct)… after that come the climate refugees, the collapse of the Punjab breadbasket, the raids from the Baloch highlands and general nuclearized anarchy. Bangladesh, most of whose 160mn people live just one or two meters above sea level in an area the size of England, could literally find itself underwater as the 21st century grinds on. No wonder India is pouring 1.2bn $ into a border fence sealing it off.

(Incidentally, the prospect of failed states spilling mass columns of refugees into India would make a great leverage point for China. By supporting Pakistan and Bangladesh just enough to prevent them from collapsing, they would become its vassals…)

India too will experience diminished river flows because of melting glaciers, but not to a critical extent like Pakistan, because the Ganges and Brahmaputra are far more monsoonal. (Nonetheless, like China, India has some very ambitious water megaprojects on the cards). In an abrupt reversal from the earlier successes of the Green Revolution, the rapid depletion of the fossil aquifers used for irrigation in India is contributing to stagnating food production. Though China also suffers from the same problem, it is better equipped to weather it by virtue of its economic strength (foods for goods deals) and strategic foresight (e.g. buying foreign farmlands).

India’s best strategy now is to push the Japan-Korea-Russia-India strategic alliance concept beyond mere rhetoric. If these countries remain splintered in the face of a waning American superpower, Chinese hegemony in the Pacific and Indian Oceans becomes near inevitable. On the other hand, Japanese and Korean capital and knowhow, Russian energy and military technology and Indian manpower and potential economic dynamism could balance out China (and their foreign policy experts worry at the prospect). This diplomacy should be pursued in conjunction with increased spending on ballistic missile defense (to neutralize the Pakistani strategic threat), buying back Sri Lanka (to break China’s string of pearls) and most importantly naval expansion (to exert control over the Indian Ocean littoral).

Conclusions

Some commentators believe India has a long-term advantage over China because of 1) its vibrant liberal democracy and 2) younger and more fertile population. I disagree on both counts.

First, there is no empirical evidence showing that democracies develop faster than authoritarian regimes; indeed, the converse is often true, since the latter can often suppress living standards to squeeze out more resources for investment (on the other hand democracies tend to be freer of the megalomaniac delusions indulged in by some autocrats and hence experience fewer absolute train-wrecks). There may well be a case to be made that a more authoritarian Indian government could have provided mass education and infrastructure better and earlier. Or maybe not: as Amartya Sen theorized in The Argumentative Indian, they do have a traditionally open and discursive culture, one that seems far closer to the West than “Oriental despotism”. Regardless, I think it is safe to say that at least until both Asian giants become fully developed – which will take decades if it ever happens at all – democracy won’t give India any significant advantages.

Second, the idea that China will grow old before it will grow rich is one that should die already. If you don’t want to read this Goldman Sachs report, consider that China’s current development level is the same as South Korea’s in the late 1980′s; its fertility transition lags by only a decade or so (Korea’s fertility fell below replacement level rates in 1983 and is now at 1.19 children per woman; China’s in 1993 and is now at 1.77 children per woman*). Doesn’t exactly sound like the makings of a demographic apocalypse. Meanwhile, India’s huge (and still growing at 1.3% per year) population will sooner be a liability than an asset.

In the final analysis, demography and democracy count for little in the hard, cold (or should that be hot?) world of the post-peak oil future. What matters is India’s capacity to build a modern, sustainable society, solve its environmental challenges and overcome its geopolitical dilemmas. So far it has been largely unsuccessful on all three fronts. Development is largely confined to urban oases, at the cost of further environmental strains and geopolitical dependencies. Its policy-makers do not appear to be pursuing a coherent grand strategy. And when it comes to the manifold impacts of scarcity industrialism – diminishing energy and food sources, climate change, failed states – India is subject to forces beyond its control. It is hard to avoid the conclusion that India faces an increasingly bleak future in a world of limits to growth.

* Adjust down to 1.60 to take into account the male-female gender imbalance.

2. Putin made a conciliatory speech on the 70th anniversary of the Katyn massacre, much more so than the one a year ago. It was balanced and considered, condemning the crimes of totalitarianism, while avoiding any acknowledgement of modern Russia’s responsibility.

In a bitter irony for the Poles, three days later the firebrand Polish President Lech Kaczynski’s plane tumbled out of the sky while flying (uninvited) to attend a separate commemoration. Among the dead were assorted members of the Polish military, clergy, politicians, and Katyn victims’ families (see list).

First, putting all your eggs in one basket is pretty stupid. High-ranking politicians and generals are important national assets. They shouldn’t all be packed into one plane just to save a little money. In banana republics – which fortunately for Poland it is not – such accidents can cause state breakdown and revolution.

Second, the insistence on continuing to land in Smolensk against the advice of ground control is key to understanding the tragedy. Lech Kaczynski has a history of interference with pilots’ decisions. During the South Ossetian War, he threatened to fire the pilot for countermanding his orders to land in a war zone and instead continuing on to Azerbaijan. Though the threat wasn’t carried out, the pilot is known to have suffered from depression afterwards. The same pilot was flying the aircraft in this case. It will not be surprising if some similar, irresponsible stubbornness typical of Kaczynski was at play here. Or perhaps the pilot just really, really didn’t want to “fail” Kaczynski again.

Few people explicitly blamed Putin, the FSB, or even NKVD trees planters from the 1940′s for the crash. The exceptions were ultra-nationalist Artur Gorski (he who also tried to make Jesus Christ proclaimed King of Poland) and the ever reliable Russian liberast Novodvorskaya. There is absolutely nothing indicating a conspiracy, which in any case is highly unlikely given that this would have produced great risks for very limited payoffs.

Russia has been using the crash as an opportunity to mount a charm offensive towards Poland: Putin hugging Polish PM Donald Tusk; shows of solidarity towards Poland from Russia’s leaders and citizens; the prime-time airing of the Polish movie “Katyn”. I am almost certain that most of it is simulated, at least amongst the Russian leadership. Would America’s elites shed any real tears if Chavez, or Putin for that matter, fell out of the sky while flying to the United States? No, I don’t think so. But it seems to be working.

The fortuitous (for Russia) death of Kaczynski kills two birds with one stones. One of the most prominent and respected Polish proponents of the anti-Russian agenda is elimated, while relations with Poland can be improved so as to ease its concerns over Russia’s westwards-creeping sphere of influence.

3. In recent months, there has been talk of Poland’s reserves of shale gas, which – or so some commentators have suggested – will wean off east-central Europe from its dependency on Russian gas. US giants announced exploratory drilling will begin in Poland within the next few weeks. One oil and gas research group estimates there could be as much as 1.4tn cubic meters of unconventional gas in tight rock formations across northern and central Poland, which have recently become accessible thanks to American developments in hydraulic fracturing technology. These reserves would boost the EU proven reserves of natural gas, now at 2.8tn cubic meters, by 50%. Furthermore, Poland itself – whose own gas consumption is pretty low at 14bn cubic meters of gas (72% imported) – will become self-sufficient for decades. Poland is clearly very enthused about this, offering foreign companies excellent tax incentives for developing the shale gas.

Will this actually produce the desired results? First, the high costs mean that only 28% of gas-producing wells have generated decent profits, making investment risky. Second, they have amazingly huge decline rates – e.g., around 60% per year for the Barnett shale fields in Texas (and up to 80-90% in the Haynesville wells). This makes ramping up production quickly difficult since you have to run so hard just to keep still. Third, the projections indicate European gas production (now c. 200bn cubic meters) will decline while demand (now c. 520bn cubic meters) will increase. Poland’s 1.4tn cubic meters of shale gas reserves are insignificant relative to Russia’s 43tn cubic meters of conventional gas reserves, for which the infrastructure is already built. Finally, it is not even at all clear that Poland switching from coal to shale gas will even be that environmentally-friendly.

Now if there is the political will in Poland, it will probably be able to build up a shale gas infrastructure and ensure itself – and even its Visegrad and Baltic neighbors – energy independence for a few decades, starting from around 2020. (That period may also coincide with Nabucco coming onstream by 2015, if it gets the go ahead this year). The geopolitical configuration of Europe will change. Poland will become a far more significant pole in the European power balance than it is today, while Germany – and Britain further downstream – will become even more dependent on Russian gas, delivered by the Nord Stream pipeline bypassing Poland and the Baltics.

4. The Eyjafjallajökull volcano in Iceland erupts, covering northern Europe with a haze of ash and disrupting transatlantic flights.

There are three things to be said about this. First, people in Britain have been reporting that the sky was unusually clear, with nary a cloud in sight, and that there was a spike in temperatures, with people even sunbathing. This was to be expected following the grounding of air fleets in the affected regions, since aircraft contrails, or vapor trails, are a major source of global dimming. This effect limits the amount of solar radiation hitting the surface of the Earth, and has caused the real extent of global warming to have been underestimated. (Or put another way, if all the world’s air fleets were to vanish today, temperatures would immediately spike by about 1C).

Second, the Eyjafjallajökull volcano could trigger off the much bigger Katla volcano. Katla has seen a significantly increased incidence of tremors in the past day. In the worst scenario, albeit a pretty unlikely one, the skies over Europe could remain ashen for up to two or three years – wrecking havoc on transatlantic transport and nudging already-strained airlines into bankruptcy. However, there shouldn’t be any major cooling effect, since even the larger Katla eruptions have historically been an order of magnitude less intense than that of Mount Pinatubo in 1991. (Unless the really big one blows off, that is Laki, whose eruption in 1783 caused dearth throughout Europe). That said, the global warming-induced melting of the Icelandic glaciers could make its volcano eruptions both bigger and more frequent in the decades to come.

Finally, see this Oil Drum post about The Possible Impact of the Icelandic Volcanoes on Energy Production. In short, major Icelandic eruptions could cause energy problems due to 1) a decrease in biofuel crop yields and 2) wind turbines having to be shut down so that their turbines don’t get damaged by air particles from the eruption.

5. With the British elections on May 6th 2010 fast approaching, the key debates center around the economy. During the recession, Britain experienced a peak-to-trough fall in GDP of 6.2% and its budget deficit this year will account for 12-13% of GDP. Foreigners are beginning to look at Britain as the new “sick man of Europe”. Below are three articles which, roughly speaking, offer an “optimistic”, a “realistic”, and a “pessimistic”, respectively, view on the British economy.

A) The pain to come: A terrible recession will be followed by a lacklustre recovery, but Britain is no basket-case (Economist). ”The economy may have been lopsided before the recession, but on nothing like the scale of southern Europe. In 2007 Spain’s current-account deficit ran at 10% of GDP; Greece ran one of 14.4%. By comparison, Britain’s 2.7% was a mere bagatelle. The fall in the pound has allowed the economy to regain competitiveness in a way not open to the weaker members of the euro area. As for the resemblances with the 1970s, history is not repeating itself. Inflation has recently flared up, but at 3% in February it is tame; the post-war high, reached in 1975, was 27%… But [Britain's debt figure] is inflated by London’s role as a global financial hub where foreign banks cluster to do international business. Adjusting for this, McKinsey reckoned that debt amounted to 380% of GDP in 2008. Although this was the second-highest after Japan (459%), four other countries – Spain, South Korea, Switzerland and France – had debt above 300%… Britain’s economy was overhyped before the recession, but the gloom has been overdone since the great fall.”

B) A Prayer from the Death Bed: Great Britain Stars in Its Own Greek Tragedy (Spiegel). “The country that was once referred to as “Cool Britannia” is in a serious crisis, with a hole in its budget even bigger than Greece’s budget deficit, now at 12.2 percent. And nobody knows how to fix the problem. Indeed, the problem has become so worrisome, that the European Commission told London on Wednesday to do more to tighten its budget, … “The fiscal strategy outlined in the United Kingdom’s convergence program does not foresee the correction of the excessive deficit by the fiscal year 2014/2015, as recommended by the Council,” the European Commission said in a statement… The accountants at PricewaterhouseCoopers have calculated that starting next year, Britain would have to make across-the-board budget cuts of 5 percent a year to come close to cutting the deficit in half by 2014. But because the Brown government has already declared the budgets for health, law enforcement and schools to be off-limits, cuts of up to 10 percent – per year – are to be expected in most areas… And things could even turn out to be much worse if there is no strong economic upturn during this period. … There will also be massive cuts in low-income housing construction and transportation, translating into even more dilapidated housing, more potholes on Britain’s already miserable roads, and new cutbacks in high-speed train service. Universities have already lost close to £1 billion in funding, and various think thanks predict that the defense budget could shrink by about 15 percent between now and 2015.”

C) Election 2010: Debt – A conspiracy of silence (The Independent). ”In 1975 the UK had government interest-bearing debt of about 45 per cent of the total economy (GDP) and the debt was rising at about 8 per cent per year. We then had to crawl to the IMF in 1976.Today, that interest-bearing debt is about 65 per cent of GDP, rising nearly 13 per cent a year. A degree in economics will not be necessary to spot that things are a lot worse than in 1975… The mid-1970s IMF crisis was triggered largely by the fact that foreign buyers of government debt were so nervous of the UK’s ability to repay debt that interest rates roared into the teens. Inflation was a much bigger issue then than now, and foreigners and Brits alike also feared we intended to “repay” our debt with relatively worthless scraps of paper. So there was a buyers’ strike on government debt and we had to be bailed out. Rationally, the currency collapsed in value, and as the cost of importing oil and the like rose, so did inflation. … So how can we get out of this financial hole before our creditors get to us? There are three ways to reduce our national debt: let inflation rip to destroy the debt; increased tax revenues from higher taxes and economic growth; cut government spending. … The political debate talks of a few hundred million here and there – it needs to be about tens and scores of billions. Neither party has plans to deploy actions for the economy remotely commensurate with the size of the problem.”

I lean towards the “realistic” / “pessimistic” sides of the debate. The Government’s rosy projections of 2.5%+ growth are unlikely to materialize. Consumption is going to be kept down by consumer indebtedness, the upcoming hikes in interest rates, and increases in tax rates. There’s little room for export growth, considering the deindustrialization of the British economy. Finally, there itsenergy problems. The North Sea oil and gas fields are fast depleting and Britain’s reliance on gas supplies is increasing. Having failed to make any long-term arrangements with suppliers like Gazprom on the cheap, it will be forced to bid at spot prices on the LNG market to a greater extent than the European nations. Finally, the emerging trends towards the unraveling of liberal globalization cannot bode well for a nation that derived so much of its prosperity from open markets and international financial, legal, and consulting services.

Now what about the elections? Below is a graph of party approval ratings. Of late, the Conservatives, New Labor, and the Liberal Democrats have been running neck and neck.

[Opinion polls on British election: Conservatives, New Labor, Liberal Democrats].

My suspicions are that if the Tories win, there will be attempts at a strong fiscal rentrenchment. The shrinking of the public sector will hurt living standards, but lay the foundations for eventual stabilization. On the other hand, New Labor or the Liberal Democrats will be unwilling, or unable, to follow through will this, and the eventual result would be one default or another accompanied by a sharp drop in living standards. Another possibility is a “hung parliament”, should the three parties all win roughly equal shares of the vote (as seems to be a strong likelihood today). Such a paralysis would delay any actions to address Britain’s imbalances.

6. Demography watch.

• U.S. Birth Rate Decline Linked to Recession – small fall in US birth rates in 2009.
• On migration and population in reunification-era Korea (Randy McDonald) and discussion.
• Russia’s demography Jan-Feb 2010: relative to same period last year, births fall 0.8%, deaths fall 2.0%. Not too surprising since Russia’s recession troughed some nine months back.
• Comparative demography in the CIS states (Demoscope).
• Таджикские трудовые мигранты во время кризиса (Demoscope).

7. Energy & climate blast – lots of important reads these last two weeks.

• Online World3 simulator @ http://live.simgua.com/World.
• Confidential document reveals Obama’s hardline US climate talk strategy.
• The dark side of coal – some historical insights on energy and the economy (Ugo Bardi). 1) In a world devoid of coal or other high-EROEI energy sources, life is hard and dependent on muscle power. 2) It is justifiable, and if so to what extent, to cite the economic ramifications of “peak coal” as a contribution factor to the European crisis of 1914-45 (since oil only began to expand in a big way from the 1950′s).
• Avoiding Collapse (Global Guerrillas)
• Easter Island : A Case Study in the Response to Resource Depletion.
• Hottest Jan-Feb-March on record in 2010. Could the deniers and fudgers STFU already? More.
• The Future of Capitalism – Profits and Growth (George Mobus).
• Peak asphalt: the return of gravel roads (Ugo Bardi).
• Social Security and Medicare Funding Issues: Even Worse when One Considers Resource Constraints (Gail Tverberg).
• Increasing Global Nonrenewable Natural Resource Scarcity—An Analysis (Chris Clugston) – important reference.
• Tipping towards the unknown – “Researchers propose critical planetary boundaries, transgressing them could be catastrophic. But there is hope.”
• You think only leftist losers go on about peak oil? US military warns oil output may dip causing massive shortages by 2015.
• Dancing with the devil known as geohacking & Birth control vs. geohacking (Lou Grinzo).
• The Twilight of the Machine & A Blindness to Systems (John Michael Greer).
• An Introduction to Global Warming Impacts – a summary from Climate Progress. For another key post on Limits, see World Oil Production Forecast – Update November 2009 from Oil Drum.
• A Superstorm for Global Warming Research, an 8-part skeptic series by Spiegel. Criticized here at Real Climate.

8. Eurasia watch.

• The Failure of the Anti-Russian “Freedom Agenda” (Daniel Larison).
• Yanukovych removes Ukraine’s application to join NATO, a move that is supported by the majority of the Ukrainian population.
• Russia’s industrial production in Q1 2010 continues a slow recovery. More encouragingly, after the sudden collapse in late 2008-early 2009, Russian consumer expectations are rapidly approaching their old boomtime highs. Merrill Lynch is particularly optimistic – Russian Economy May Get ‘Biggest Bounce’ in World, making the highest yet prediction of 7% growth  for 2010 (most analysts suggest 4-6%).
• Randy McDonald writes about Soviet computers.
• A detailed study from Russia’s VTsIOM polling agency on the Internet in Russia. Summary: 81% of Russians have cell phones; 46% have computers; 38% are Internet users (23% use it daily).
• Russia Weekly Sitrep (Patrick Armstrong).
• The Sirens of Russia. Post by A Good Treaty about Russia’smigalka culture of impunity – and how it is perhaps slowly beginning to retreat under public pressure and the influence of social media.
• Russian attitudes towards Katyn (Levada). Some 50% of Russians view Poland positively, 26% negatively (AK: these figures are likely the reverse in Poland). Only 43% of Russians have heard about Katyn. Asked who was responsible for it, 19% said the USSR, 28% Nazi Germany, and 53% didn’t know. Around 15% think it was “genocide”, 38% a “crime”, 14% consider it justified under wartime conditions, and 33% didn’t answer. Only 18% think Putin should apologize for Katyn in Russia’s name, while 46% disagree. Of the latter, 47% think he shouldn’t apologize because Nazi Germany was responsible; 34% – because today’s Russia shouldn’t answer for the USSR; and 8%, because it would weaken Russia’s position in relation to Poland.
• Russia: Other Points of View analyzes Stratfor’s coverage of Russia and The Dangers of Meddling in Russia’s North Caucasus.
• The new Journal of Eurasian Studies (h/t Sean) from South Korea. I checked out the first article in its first issue: Eurasian polities as hybrid regimes: The case of Putin’s Russia, which is basically accurate: “It is argued that Russian political development under Putin is best understood not as “authoritarianization” but as a process in which Russia transitioned from a system of “competing pyramids” of machine power to a “single-pyramid” system, a system dominated by one large political machine. It turns out that in single-pyramid systems that preserve contested elections, as does Russia, public opinion matters more than in typical authoritarian regimes.”

9. Mexico and the Failed State Revisited (free Stratfor) has the counter-intuitive take that far from challenging the state, the drug cartels are actually benefiting the Mexican economy because the immense profits reaped from selling drugs to the affluent US can be reinvested into Mexico.

…It is not clear to STRATFOR that Mexico is becoming a failed state. Instead, it appears the Mexican state has accommodated itself to the situation. Rather than failing, it has developed strategies designed both to ride out the storm and to maximize the benefits of that storm for Mexico. First, while the Mexican government has lost control over matters having to do with drugs and with the borderlands of the United States, Mexico City’s control over other regions — and over areas other than drug enforcement — has not collapsed (though its lack of control over drugs could well extend to other areas eventually). Second, while drugs reshape Mexican institutions dramatically, they also, paradoxically, stabilize Mexico. …

On the whole, Mexico is a tremendous beneficiary of the drug trade. Even if some of the profits are invested overseas, the pool of remaining money flowing into Mexico creates tremendous liquidity in the Mexican economy at a time of global recession. It is difficult to trace where the drug money is going, which follows from its illegality. Certainly, drug dealers would want their money in a jurisdiction where it could not be easily seized even if tracked. U.S. asset seizure laws for drug trafficking make the United States an unlikely haven. Though money clearly flows out of Mexico, the ability of the smugglers to influence the behavior of the Mexican government by investing some of it makes Mexico a likely destination for a substantial portion of such funds.

Of course, there’s also the problem that Mexico’s oil production is plummeting as the supergiant Canterell depletes. (the state oil company is blamed for managerial fecklessness, but geological reasons are more important). An interesting scenario: if Mexico becomes a net oil importer and the US relaxes its drug policies, could it experience a liquidity crisis?

10. Ahmed Karzai and the US have fallen into a blame game of necessity. Karzai criticizes the West for electoral fraud and legitimizing the insurgency. Since NATO troops are, one way or another, going to leave Afghanistan in a few years, Karzai needs to build a base of support amongst his own people and his neighbors (Iran, China) if he wants to survive. The US in turn blames Karzai’s corruption for the sabotage of the war effort, because the alternative would be an indictment of the entire American war strategy. As of now, Karzai may be rightly feeling like Ngo Dinh Diem in South Vietnam, – the US no longer regards him as a reliable asset and he is at risk of being overthrown in favor of someone more manageable.

11. From Stratfor. There is relative optimism in Iraq and the US about the security situation as American troops continue a steady withdrawal. However, there remain questions about the governing capability of the new government and the ability of the security forces to maintain stability. Iran retains the potential to inflame ethno-sectarian strife, albeit thus far it prefers to (successfully) exercise its influence through “softer” means. The main problem is that by invading Iraq, the US has destroyed the old Iran-Iraq balance of power – and the forthcoming withdrawal of US forces will actually give Iran much better opportunities for extending their sphere of influence over Mesopotamia.

According to another source, Iraq will take 5-10 years to (re)build a military capable of defending the country against Iran or Syria. “The Iraqi plan is to stock up on superior American weapons, and train Iraqis to use that stuff with effectiveness approaching that of the Americans. That takes money, and time. Iraq is buying second-hand F-16s, but it will take three or four years to get the pilots and ground crews up to an acceptable level of performance. Along with this, the Iraqis want to buy modern anti-aircraft missile systems, and get them into service.” Also recall that it will take about a decade to ramp up Iraqi oil production, if the effort is successful.

Conclusion? The US is withdrawing from Iraq, bogged down Afghanistan, and in uncertain fiscal straits. Iraq has the potential to stand on its own feet, but will need a few years of stability. Thus, Iran will now enjoy a “window of opportunity” of around 5 years to make a play for hegemony in the Persian Gulf.

12. Palestinians Try a Less Violent Path to Resistance.

RAMALLAH, West Bank — Senior Palestinian leaders — men who once commanded militias — are joining unarmed protest marches against Israeli policies and are being arrested. Goods produced in Israeli settlements have been burned in public demonstrations. The Palestinian prime minister has entered West Bank areas officially off limits to his authority, to plant trees and declare the land part of a future state.

Something is stirring in the West Bank. With both diplomacy and armed struggle out of favor for having failed to end the Israeli occupation, the Fatah-dominated Palestinian Authority, joined by the business community, is trying to forge a third way: to rouse popular passions while avoiding violence. The idea, as Fatah struggles to revitalize its leadership, is to build a virtual state and body politic through acts of popular resistance. …

Nonviolence has never caught on here, and Israel’s military says the new approach is hardly nonviolent. But the current set of campaigns is trying to incorporate peaceful pressure in limited ways. Rajmohan Gandhi, grandson of the Indian independence leader Mahatma Gandhi, just visited Bilin, a Palestinian village with a weekly protest march. Next week, Martin Luther King III is scheduled to speak here at a conference on nonviolence.

Reminds me a bit of this scene from A Sum of All Fears.

13. Peter Lavelle interviews Middle East journalist Robert Fisk back in September 2009. If you want a ten minute video summary of why the West fails in Dar al-Islam – this is it.

14. United States watch.

• Obama Limits When U.S. Would Use Nuclear Arms to states that have nuclear weapons or haven’t renounced or violence the Non-Proliferation Treaty. It is rational and profitable for US interests.
• US gunships attack Iraqi civilians in Wikileaks scandal (see video). This is a non-story – mistakes do occasionally happen (if you really want to get all moral and uptight about this, the relevant question is why the US is in Iraq in the first place). Some might complain the soldiers were cold-hearted by laughing and making morbid jokes, but humor is a typical defense mechanism to scenes of carnage.
• Obama administration ‘looks backwards’ to punish heroes. As I’ve said before, most of the Obama administration’s “change” is more cosmetic than real. It is a continuation of Bush post-2006.
• The march to American Caesarism continues. When did it become legal to assassinate Americans? “Anwar al-Awlaqi, the New Mexico-born cleric living in Yemen, has been placed on a target list that makes him fair game for assassination by the U.S. military or CIA”. The problem isn’t so much the authorization of assassination, which is a useful anti-terrorist tool, but the fact that this further widens the gap between US liberal/rule-of-law pretensions and reality, and hence undermines its international legitimacy. After all, Israel or Russia, states that are not averse to assassinations on foreign soil, don’t portray themseves as guarantors of liberal internationalism. America does.

15. The consevative reaction in Europe spreads to Hungary, with the election of the Fidesz Party to power. By itself this is a normal development unworthy of much comment, except for the fact that the democratic left (the Socialists) have now been marginalized, and now enjoy about the same level of support as the far-right Jobbik and his Movement for a Better Hungary. This party is truly extremist – it has a “Magyar Garda” militia, its symbology draws on the banned Nazi-era Arrow Cross Party, and its rhetoric attacks the Jews above and the Roma below.

Hungary is going to face lean economic times in the years ahead and Viktor Orban of Fidesz can be expected to come under attack by a Jobbik energized by supporters dissilusioned of conventional politics. As Walter Mayr of Spiegel writes in “The Monster at Our Door”: Hungary Prepares for Shift in Power, the end result could be that Orban deserts austerity politics for the seemingly greener pastures of identity politics – for instance, it is known he is in favor of double citizenship for ethnic Hungarians outside Hungary, which could lead to clashes with Romania and Slovakia. (Though it should be stressed this is hardly unusual for Eastern Europe – for instance, Russia’s conferral of dual citizenship was one of the factors provoking conflict with Georgia over S. Ossetia and Abkhazia, and the Romanians themselves are at odds with Russia and Ukraine thanks to their issue of Romanian citizenship to Moldovans).

16. The Caucasus Emirate (Scott Stewart & Ben West), free Stratfor article about what is now the foremost jihadi group operating against Russia in the North Caucasus.

Umarov’s founding statement for the Caucasus Emirate, in which he called for the region to recognize the emirate as the rightful regional power and adopt Shariah, marked a shift from the motives of many previous militant leaders and groups, which were more nationalistic than jihadist. This trend of regional militants becoming more jihadist in their outlook increases the likelihood that they will forge substantial links with transnational jihadists such as al Qaeda — indeed, our Russian sources report that there are connections between the group and high-profile jihadists like Ilyas Kashmiri.

However, this alignment with transnational jihadists comes with a price. It could serve to distance the Caucasus Emirate from the general population, which practices a more moderate form of Islam (Sufi). This could help Moscow isolate and neutralize members of the Caucasus Emirate. Indeed, key individuals in the group such as Umarov and Kosolapov are operating in a very hostile environment and can name many of their predecessors who met their ends fighting the Russians. Both of these men have survived so far, but having prodded Moscow so provocatively, they are likely living on borrowed time.

17. Maoists kill 75 police in central India attack. Not much comment, except to note that many countries, including ostensibly succesful and democratic ones, have violent, festering insurgencies. Russia/Chechnya is hardly unique.

18. Turkey Overtaking Germany No Wishful Thinking on Paradigm Shift (h/t Randy McDonald). “Turkey’s $620-billion economy could move ahead of Germany’s to become the third-biggest in Europe by 2050, behind Russia and the UK”. Such long-term projections are pretty useless, but it’s true that in the medium-term Turkey has bright prospects, in part thanks to its demographic vigor and favorable geographical position.

19. @ any Asian readers or people familiar with the region – how accurate is this “Spenglerian” article on “Asia’s Permanent Advantage” by Chan Akya?

For the frequent traveler, there is a stark dichotomy across the world. Almost without exception, traveling with an Asian carrier to any Asian airport is a pleasure. In contrast, using any airline domiciled in Europe or North America with passage through airports in that part of the world is stunningly inconvenient. …

When you leave the airport in Shanghai and can get to the main city 30 kilometers away within eight minutes on the superfast magnetic levitation train, you cannot help but notice that the actual technology for this wonder comes from Germany. Yet, there are no such trains in operation anywhere in Europe, let alone Germany. …

Surely this is because, here in Asia, we are in the biggest cities you say. … Well, drive from Shanghai in virtually any direction and the first time you see roads that are any worse than those around the city you are a good 200 kilometers away. And even there, the roads are better than many American motorways.

Yeah alright, so the Chinese truck driver barreling towards you looks like he hasn’t slept in three days (very likely), and there is the occasional car wrapped into the milestone on the side of the road; but none of that detracts from the sheer robustness of the infrastructure. …

And then the last observation sinks in. Every single Asian city is heaving at the edges, with millions of people. Yet, crime rates are negligible and social tensions appear well under control. A far cry from the banlieu of Paris or the Turkish quarter of Berlin, for example, not to mention the public housing nightmares of Chicago or Detroit.

It is not the gargantuan dams of China or the super-efficient underground in Singapore that impresses you, but rather the fact that even the most economically backward parts of Asia have taken growth to be their mantra. What’s more, they have the financial muscle to push it through.

With that, your despondency turns to depression. How, you ask, can the “developed” world ever regain its luster?

For a start, all American and European cities will have to reinvest hundreds of billions into their cities to rejuvenate the existing infrastructure. Then the states/smaller countries will have to connect the cities to the rest of the region, install new technology infrastructure, focus on customer service and improve productivity to new heights to compete with the Asians.

Ah, but a minor detail intervenes. Who has got the money to do all that? Well, let us raise taxes you say. Problem is, no one in your country is making much money in the first place so raising taxes will simply drive consumption down and drive the deficit wider. Well, let us borrow the lot you say. Trouble is, no one has the money to lend to you at your abysmally low rates. Except the Asians – who you then recall can play tough once in a while.

And that’s about when you reconcile to the inevitable future – Asia with its apparently permanent advantage on infrastructure and operating efficiency leaving Europe and North America ever further behind. Nothing appears to have the ability to reverse this trend.

See also It’s China’s World. We’re Just Living in It (Rana Foroohar & Melinda Liu) - “The middle kingdom is rewriting the rules on trade, technology, currency, climate—you name it.” Another related post on the same theme is Coal and Treasuries by Gregor McDonald.

20. Military blast.

• The Post New START Nuclear Arsenal – a summary: “1,550 strategic warheads; 700 deployed ICBMs, deployed SLBMs and deployed nuclear capable heavy bombers; A combined limit of 800 deployed and non-deployed ICBM launchers, SLBM launchers and nuclear capable heavy bombers.” See Sublime News #7 for more details.
• Sizing Up Sukhoi’s PAK FA 5th Gen Fighter. Summary: it is a superb dog-fighter and its IRST may be the first to pick up a hostile stealth fighter, but there are questions over whether the Russian MIC is advanced enough to produce and maintain many of these complex planes (more).
• Chinese Fleet Closes In On Okinawa, increases tensions since China started drilling offshore gas halfway between Okinawa and the mainland. Also illustrates increasing ambitions of the Chinese Navy (PS. No longer PLAN) to carve out a maritime buffer space beyond its eastern seaboard.
• South Korea buys CBU-105 sensor fuzed weapons, a cluster-type bomb that is programmed to hunt for tanks below it. An excellent way of stopping any Northern armored assault, this tilts the militay balance on the peninsula further in the South’s favor.
• Andrew Barton describes environmental warfare as a “target-rich environment” and predicts it will become more prevalent. That is in line with my own thinking.
• Iran gets advanced military speedboats, illustrating its asymmetrical strategy geared at closing down the Straits of Hormuz in the event of war with Israel or the US.
• France Backs Away From The Chinese Threat – France won’t supply Pakistan with advanced military hardware since it would pass them on to Chna.
• Case in point – China copies Swedish Bv206 all-terrain vehicle.
• Russia has problems with their Yasen nuclear powers cruise-missile subs.
• Gates Says U.S. Has Conventionally Armed ICBMs. They are not a good idea.
• Iran boosts air defenses with new missile system – an upgraded version of the Hawk, a 1960′s system and probably vulnerable to Israeli/US jamming.
• India sets sights on killer drones.
• Smart trucks in Afghanistan.
• Global IT Supply-Chain Insecurity is important.
• From the Monitor scam to the Gorschkov scam, corruption in military procurement – an eternal scam.
• Future for US naval procurement looks bleak as costs rise and budgets are slashed. Substantial decline in Navy size is inevitable.

21. Things are getting more interesting in North Korea. There is danger of famine. The people are increasingly disillusioned, but unlikely to revolt. A coup by pro-Chinese military officers is a possibility. “Rumors of a North Korean submarine being responsible for the March 26th sinking of a South Korean corvette are growing more popular in the media… Survivors of the explosion agree that the blast came from outside the ship.” Watch this space.

22. Russophobe & liberast watch.

• Link to The Soviet Story propaganda flick. I haven’t yet seen it, or plan to, despite having had the chance. (The screening coincided with my gym-going time).
• David Satter, respected Russia-watched: “The present Russian leadership not only does not care about America’s security concerns, it is indifferent to Russia’s own.” Need more be said?
• The bear is back: Poland’s tragedy, Russia’s gain (Arthur Herman) – “the most insane column in the entire history of mankind”, according to Mark Adomanis.
• Putin wins again: Rebuilding imperial Russia (Ralph Peters), whom Mark Adomanis says is “very likely the single most repulsive figure in American  journalism”. More on Ralph Peters.
• Paul Goble the Propagandist flip-flops from “Muslims will take over Russia!” in 2006 to “Muslims are no longer a demographic reserve” in 2010. Either way, however, Russia is doomed according to according to Goble’s cherry-picked sources. There is something resembling a “discussion” of this article on SWP’s blog.

23. Remember what I wrote about Russians’ attitudes to Stalinism in Sublime News #7? An “interesting” discussion about it developed on a far-right forum.

24. Flotsam and jetsam.

• GDP by… language (Randy McDonald).
• Phrases people search for to arrive at poemless blog.
• Spiegel has a 7-part series on The Failed Papacy of Benedict XVI.
• Richard Dawkins plans to arrest the Pope. George Monbiot approves.
• The “Pedophile’s Paradise” (Brendan Kiley) – “Alaska Natives are accusing the Catholic Church of using their remote villages as a “dumping ground” for child-molesting priests—and blaming the president of Seattle University for letting it happen.”
• Just An ‘Average Brunette’ from the Banlieue – the three female challengers to Sarkozy from the Socialist, Communist, and Green Parties. I hope they win!
• Journalist on the run from Israel is hiding in Britain: ‘Haaretz’ writer fled to London fearing charges over exposé on Palestinian’s killing. Now while there’s no argument Israel is a liberal democracy, it is highly influenced by the prerogatives of the national security state.
• Why are so many girls lesbian or bisexual?
• Ending the Myth of ‘Market Fundamentalism’ (Dean Baker)
• «Я опознал свою дочь» – the Moscow shahidka‘s father speaks out.
• For all their problems, North Korea remains firmly committed to Juche, release “Red Star” operating system based on Linux. (h/t Randy)
• Tea Partiers Are Fairly Mainstream in Their Demographics.
• San Francisco “anti-war” rally (are commies, Islamists) according to this conservative-leaning blogger.
• Stalinist Icon (h/t Jason)
• The East German bunker that was to have been the Warsaw Pact operational center for conducting a nuclear war against NATO forces in Europe.
• Cannibal trial halted after juror falls ill looking at pictures of girl, 16, who was ‘eaten with potatoes’. Why did Russia have to cancel the death penalty in deference to European cultural Diktat?
• Dmitry Rogozin: “Sergey Kovalev is a parody and a loser compared with the great human rights activist and intellectual Andrey Sakharov”. Links to К портрету Сергея Ковалёва.
• Tourist attractions… wait a second, how can that be?!
• How do you perform in this Zombie Survival Quiz?

2. Some Westerners like to condemn Russians for their ambivalence towards Stalin, since he killed far more Russians than Hitler! (This is a constant theme of anti-Stalin* and general Russophobe propaganda). Quite apart from this being simply wrong according to all objective estimates, Russians themselves say they suffered far more under four years of the Nazi assault than twenty plus years of Stalinism.

According to polls, 50% had a close relative die in the Great Patriotic War (33% – injured, 16% – missing in action). Only 14% say that nothing particularly bad happened to a close relative during the war. These answers are in line with the statistics on wartime demographic losses – some 27mn Soviet citizens died in that war (13mn Russian), of them 8.7mn soldiers (5.8mn Russian). In contrast, in response to the question, “Did anyone in your family suffer from the repressions shortly before or after the war?”, 22% of Russians said “yes”, while 63% said “no”. (Furthermore note that “suffer” does not imply death, since contrary to the popular anti-Soviet mythology most Gulag inmates survived).

* And before some fanatical ideologue comes out with the cheap “You’re a filthy Stalinist!” card, I would note that it is quite possible to condemn Stalin on the basis of his real crimes, without resorting to neo-Goebbelsian propaganda about “62 million victims of Communism” or “Stalin killed more Russians than Hitler”. If anything such rhetoric actually encourages the rehabilitation of Stalinism.

3. Related: The illiberalism of anti-Putinism (Mark Adomanis). Now make no mistake – as of now, I think he is one of the best, if not the best, “popular” Anglophone bloggers on Russian politics. Of course, I don’t agree with everything he writes, sometimes quite forcefully. Such as the following:

In short, if you’re willing to believe that, by virtue of opposing Putin, Russian communists aren’textremely nasty and scary people, you’re the sort of person who will believe anything.

Myself, I find it arrogant, narrow-minded, and frankly presumptuous to label a major stratum of a population as “extremely nasty and scary”. As another commentator pointed out, this is very similar to the rhetoric of the Russian “liberals” whom Mark attacks as conceited and illiberal. But instead of hearing it from me, feel free to go to the discussion in question and make you own conclusion.

4. The Return of the Reich watch. Carrying on from Sublime News #6, more from Stratfor on how Germany is becoming a “normal country” and unsettling traditional European arrangements in the process. First, Germany is no longer willing to underwrite EU stability, i.e. see the punitive terms of the bailout offered to Greece. Down the road, this might result in acrimony over the Common Agricultural Policy (benefiting France and the new Visegrad members) and the UK rebate, since a resurgent Germany is unlikely to want to pay for them as before. Second, the traditional Bismarckian policy of Germany is to “make a good treaty with Russia”; together with Nord Stream, this should increase the distance between Germany and Poland. A future consequence may be to reinforce the Visegrad-US relationship at the expense of EU integration.

Timothy Garton Ash has a quite brilliant historical overview in Berlin has cut the motor, but now Europe is stalled which I can’t help but quote in extenso:

On Saturday Helmut Kohl, the “chancellor of German unity“, will turn 80. To mark the occasion the chancellor, Angela Merkel, and many others in Germany will deliver nice tributes to old king Kohl; yet his country’s current approach to Europe, and especially to the embattled eurozone, risks dismantling his European legacy. If you ask why the European project is faltering today, one of the main reasons is that the German motor has stalled. And if you ask why that has happened, the short answer is: because Germany has become a “normal” nation, like France and Britain. Assuming, that is, anyone in their right mind would call us normal.

In the steps of his mentor, Konrad Adenauer, Kohl tirelessly insisted that German and European unity were “two sides of the same coin”. That coin eventually became the euro. Kohl, like most of his predecessors, was committed to European integration for two reasons: because, out of personal wartime experience, he believed in it; and because he understood that it served the German national interest. Only by reassuring Germany’s neighbours that Germany had changed, and was utterly devoted to integrating itself into Europe, could the Germans hope to achieve their national goal: the reunification of Germany in peace and freedom. It worked. When the chance came, unexpectedly, in 1989, Kohl seized it with both hands – and all Europe has benefited. We could not have a Europe whole and free without a Germany whole and free in its centre. …

Had he been chancellor today, Kohl’s response would surely have been to take the next step: putting the long-term politics of European unity before the short-term cost, but also moving towards a stronger fiscal, and by extension political, union. In the meantime, however, this has become a different Germany. Until unification, Germany wanted to be super-European, for reasons of personal memory, idealism and historical responsibility; but it also needed to be, in its own national interest. After unification, at last a fully independent, sovereign country, it no longer needed to be. Everything would now depend on the inner power of wanting.

Students of Germany then watched with interest to see if it would continue the exceptional European commitment of the Adenauer-to-Kohl Federal Republic. Or would it become a more “normal” nation state, like France and Britain, pursuing its own national interests, through European channels for choice, but on its own account, even at the expense of others, when it considered that necessary? The special relationship it developed with Russia, including the bilateral securing of its energy needs, gave a clear indication which way post-unification Germany was leaning. Now its response to the first historic crisis of the eurozone makes the conclusion definite.

Some critics blame Merkel personally for this. The former foreign ministerJoschka Fischer quips that the one-time Ms Europe seems to have become Frau Germania. Indeed, this cautious, consensus-building “chancellor of the centre” does not have the strategic boldness of an Adenauer or a Kohl; but even a bolder leader could only go so far against the grain of domestic opinion. And from the shrieking headlines of the tabloid Bild newspaper to the costive judgments of the German constitutional court it is plain that the Germans are not prepared to make any more sacrifices for the sake of “Europe”. For preference, they would probably rather have the D-mark back. Or, failing that, a right, tight little north European “nordo” (or perhaps “neuro”), leaving the feckless south Europeans to cope with a weaker “sudo” (or “pseudo” – hat-tip to the former Barclays boss Martin Taylor for this coinage). The economic ramifications are complex and uncertain, but this spring may yet be seen as the beginning of the end of the eurozone – that final, most daring step of postwar German Europeanism. …

So instead of complaining I note this final irony. Twenty years ago Eurosceptic British Conservatives shrieked with alarm at the prospect of a united Germany imposing a federal European superstate upon us. Some even cried: “A Fourth Reich!” Today, as Eurosceptic British Conservatives edge back towards power, we can see that the unintended result of German unification has actually been the emergence of a more British Europe: dramatically enlarged to the east, inter-governmental rather than federal, with Germany too calmly pursuing its own national interests in its own national way, like Britain and France. Come to think of it, Margaret Thatcher is the one who should be posting a message of thanks on Kohl’s 80th birthday website. Whether the old man would appreciate it is another question.

5. Lou Grinzo of Cost of Energy offers a useful graph summarizing the estimated cost / effectiveness ratios of various geoengineering options.

See also Hacking the planet: who decides?

6. Energy & climate blast.

• Copper Peak (Jean Laherrère) projected at c. 2020. (Gold peaked in 2000).

• James Lovelock: Humans are too stupid to prevent climate change - ”Even the best democracies agree that when a major war approaches, democracy must be put on hold for the time being. I have a feeling that climate change may be an issue as severe as a war. It may be necessary to put democracy on hold for a while.” Welcome to the ecotechnic dictatorship! (But really, kudos to Lovelock for having the balls to state this obvious but unpalatable fact).
• How Close will the U.K. Come to Running Out of Natural Gas in Storage this Spring? Britain’s minimum natural gas storage levels have seen a steady pattern of decline since 2005, in large part due to the depletion of its indigenous gas sources. Soon there will have to be additional LNG and Russian gas imports to prevent Britain from freezing during late winter. See also Power crunch looms for Britain. It is important to note that the UK is not only one of the most fiscally overstretched European nations (10%+ budget deficits for the next two years assuming reasonable growth), but also has one of the most precaurious energy situations.
• Riddles in the Dark (John Michael Greer)
• Our Future and the End of the Oil Age: Building Resilience in a Resource-Constrained World – a presentation by Dmitry Orlov.
• It’s STILL the coal, stupid (Lou Grinzo), or in other words, the brouhaha over Obama’s loosening of restrictions on offshore oil drilling is somewhat misplaced.
• The Copenhagen Accord at Three Months: 110 Countries Now Support a New Global Effort to Achieve Climate Safety. With interactive map.
• Koch Industries’ diabolical 20-year campaign to discredit AGW.
• Climate-row professor Phil Jones cleared of charges as anyone familiar with the situation would have expected from a neutral jury (note the hysterical denier rage in the comments). See the detailed write-up by Climate Progress.

7. Pavel Podvig writes on the New START treaty in numbers. The main conclusion is that the reductions are in fact very modest. See reproduced table below.

Russia

The United States (UPDATED 02/29/10)

8. Military blast.

• All Raucous On Cyber War Front
• China buys air defense systems from Russia. Some 15 S-300 batteries for around 2bn $. This sale isn’t detrimental to Russia, since 1) the Chinese already have a similar system in the HQ-9 “adapted” from stolen Russian and American data anyway, and 2) Moscow has the S-400 with incipient anti-ballistic missile capabilities and is developing the S-500 which is supposed to be a full-fledged ABM system.
• China’s DF-21 “carrier killer” ballistic missile and US plans to defend against it.
• F-16 Beats The F-35 – Romania to get 48 F-16C’s over 4.5bn $ by 2020.
• Russia’s fifth-generation tank the T-95 may be outed in 2010.
• RAF jets intercepted Russian bombers flying in British airspace, an increasingly frequent occurrence. AFAIK this is a two-way game – Russians too have complained of NATO aircraft violating their airspace.
• Dam Busting Russian Bombers At Work – apparently Russia uses bombers to blow away ice dams to prevent flooding. Cute.
• Russia begins constructing the 4th Borei submarine.

9. It appears the emerging consensus on the sinking of the South Korean corvette is that it detonated an old North Korean mine, though the hostile torpedo theory isn’t ruled out. Things may become clearer in a month once the ship is recovered and analyzed. Meanwhile, many rumors indicate that the hermit kingdom is now suffering from severe turbulence in the wake of the failed currency reforms.

One of the more damaging stories to spread through North Korea recently was the one about the several billion dollars Kim Jong Il has stashed in foreign banks. Bank secrecy laws in Europe, particularly Switzerland, have been under attack by major world economic powers, and it’s been getting harder to keep money hidden. The fact that Dear Leader Kim has billions stashed overseas, while millions go hungry in North Korea, is not very good PR.

An increasing unstable, and perhaps dangerous, situation. But at least they’ve finally completed Pyongyang’s first skyscraper after 23 years.

10. Serbians say sorry for 1995 Srebrenica massacre.

Serbia’s parliament has apologised for the Serb massacre of 8,000 Muslims in Srebrenica in 1995 but stopped short of calling the killings genocide, after a debate showed deep divisions over the country’s role during the Balkans conflict.

A document put forward by Belgrade’s ruling coalition of democrats and socialists condemning “the crime” and apologising that “not all was done to prevent this tragedy” was narrowly carried as Serbia continued its bid to become a member of the EU and attract business investors. …

They denied western accusations of mass executions and one, Slobodan Samardzic, warned: “Serbia will sign its own guilt with this declaration.” Another, Velimir Ilic, said that in Srebrenica, “the crime was no greater than in other places”, citing Croatian moves against Serbs.

Why should Serbia apologize for the Bosnian Serbs who were clearly not even under its control? Why apologize for it at all when doing so implies taking responsibility for genocide? I can’t believe the Serbs are naive or stupid enough to do it out of altruism, so clearly short-sighted economic reasons connected to EU membership are the cause. And the funny thing is that this act of false contrition only got them more humiliation from the Europeans.

The European Union, which has been coaxing Serbia into a historical reckoning about its bloody role in the Balkan wars of the 1990s, gave a cautious welcome Wednesday to a declaration by the Serbian Parliament that condemned the 1995 massacre of 8,000 Muslims in Srebrenica. But it warned that what amounted to reluctant, latter-day contrition about the worst massacre in Europe since World War II was insufficient if Serbia wanted closer ties with the bloc.

I would venture to guess that Germany wants an admission of genocide from Serbia particularly badly. After all, it is weighted down by the unique guilt of the Holocaust, and getting another European nation – in particular the Serbs whom they tried to exterminate in WW2 – to explicitly admit to genocide would lessen the “uniqueness” of the Holocaust and help justify Germany returning to acting like a “normal nation” in the international sphere, as it is already beginning to do (see above).

11. Venezuela / “Rise of the Rest” watch. Putin will help us get nuclear power, says Chávez, causing Western chauvinists to squirm with indignation.

Russia has said that it will help Venezuela to set up its own space industry and develop nuclear energy, the Latin American country’s President announced yesterday. The two have also signed a new contract to exploit Venezuelan oil and are discussing a raft of further military and energy deals.

The deal will allow Moscow to entrench its foothold in Latin America through a deepening alliance with America’s main regional foe. As the Russian Prime Minister Vladimir Putin visited Caracas, Venezuela’s vocal, anti-imperialist leader, President Chávez, said that the allies were building “a new, multipolar world”. …

They discussed a range of military deals and a $2 billion (£1.3 billion) line of credit for weapons purchases secured by Mr Chávez during a visit to Moscow in September… Venezuela has spent more than $4 billion on Russian weaponry since 2005, including tanks, helicopters, Sukhoi fighters and the S300 anti- aircraft missile system. The deals helped Russia to oust the US as the No 1 arms supplier to Latin America. …

Mr Chavez took the opportunity of the anniversary of the Falklands war to demand the UK relinquish this “bastion of colonialism”, cheering: “Long live the Malvinas, they are Argentina’s”. He reiterated that Venezuela would stand beside Argentina in any war although he added “we don’t want conflict”.

A few comments. First, developing a nuclear industry would be highly beneficial for Venezuela. Though it theoretically has a lot of oil, most of it is unconventional heavy stuff locked up in the Orinoco belt that will probably never be exploited on a large scale because of the massive energy and water costs. Meanwhile, Venezuela’s current oil production is in slow decline. Second, Venezuelan arms acquisitions appear to be essentially defensive in nature, and perhaps partly aimed at buying off the conservative officer class. They certainly don’t constitute a real offensive threat to Colombia, whose terrain is unsuited for mobile armored warfare and is defended by a large, experienced army (not to mention 2,000 US troops).

Finally, one big, ongoing thing in Venezuela is the electricity crisis. This is due to a confluence of several factors: 1) a severe drought that has severely reduced water levels on the three dams that generate 70% of its electricity, – caused by this year’s El Nino and seen in China too, 2) the big rise in electricity demand during recent years, fueled by Venezuelans’ rising prosperity, while investment into the electricity-generating sector was slow to react. (Charmingly, one of the measures used to contain the crisis is to get soldiers to give out free energy-efficient light bulbs). This is all of course highly inconvenient for Chavez, but there is very little likelihood that it will topple him.

12. Interesting tidbit on Poland. In Sublime News 3, I referenced a discussion I had on Adomanis’ blog on Poland’s demographic and economic future. One of the major reasons for pessimism is that even if Polish fertility rates climb back up, labor demand from aging Western European states like Germany will only result in an accelerating exodus of young Polish workers, which will undermine any hopes of “convergence” to German levels of income. I disagreed with this:

I am not a big fan of the idea that West European labor shortages will prove an irresistible magnet to East-Central European laborers.

First, the economic disparity is no longer as big as it once was. Poland already has nearly 60% [AK edit: actually 52%] of Germany’s GDP per capita, and is more economically dynamic (because it is catching up). And Poland is one of the poorer Visegrad nations.

Second, migrants are drawn to economic dynamism – the highest inflows in the last ten years went to Britain, Ireland, Spain, etc, not Italy or Germany (which are demographically worse off). You say that Germany, Italy, etc will face labor shortages. But that assumes economic growth and growth of demand for labor can sustainably continue there. I think that assumption is questionable.

Why work in foreign nations who look down on you and where you pay a large chunk of your (stagnant) salary to support their elderly, when you can work in a still-growing Poland?

Article from March 22, 2010: Germans travel to Poland for work. “Unemployed Germans have begun travelling to Poland in search of jobs – in a dramatic reversal of the usual trend for immigrant workers.”

13. Russia watch. Detailed GDP stats revealed for 2010 (7.9% decline). In summary: agriculture 0%, extractive -3%, manufacturing -15%, construction -17%, retail -9%, finance 2% (!), government expenditures 2%. As shown in the graph below, the crisis essentially knocked Russia back to 2007.

Nonetheless, the emerging consensus is that it was a short-lived shock. Russia – Europe’s Bright Light of Growth. Not a headline you normally expect from CNBC, but with most commentators now predicting growth of 4-6% in 2010, there you go:

As the investment community gains confidence in the likelihood of a sustained economic rebound, Russia has emerged in far better shape than many other European markets. In fact, with low debt, inflation under control, a large consumer base primed to buy goods and services, and the price of oil recovering, Russia may well be the most dynamic place on the continent.

14. More on Eurasia.

• Russian Leader Meets Burjanadze: What is on Putin’s Mind? (Jamestown)
• Имя модернизации — социализм – Zyuganov, KPRF chief, on Medvedev’s modernization plans.
• Govt OKs Stalin Monument, Flirts With USSR 2 (Ukrainiana)

15. Ever wonder why Afghan insurgents love IED’s so much? The Weakness of Taliban Marksmanship…

16. Not often that I agree with Daniel Pipes, Iraq’s Cosmetic Election is an exception…

“It takes a cynical mind not to share in the achievement of Iraq’s national elections.” So writes the Wall Street Journal editorial board today. I’m no cynic, but my mood about Iraq could variously be described as depressed, despairing, despondent, dejected, pessimistic, melancholic, and gloomy.

That’s because the Iraqi regime (along with those of Afghanistan, Lebanon, and the Palestinian Authority) is a kept institution that cannot survive without constant American support. As long as Washington pumps money and sacrifices lives to maintain the Baghdad government, the latter can hobble along. Remove those props and Iranian-backed Islamists soon take over.

17. Floatsam and Jetsam.

• Я “живущий в США российский экономист”.
• Check out Alexa Meade’s art. Normally, paintings try to imitate photography. Here, photography tries to imitate paintings!
• Google Shows How HTML5 Can Run Quake In The Browser.
• Krugman: GOP taken over by nutters.
• I Was Colonel Schultz’s Private Bitch. “Pocket books called Stalags were practically the only pornography available in the conservative Israeli society of the early 1960s. Though it was claimed that the Stalags were translated from English, they were actually created and written by Israelis.”
• Briton recalls his risky view of Auschwitz horror
• The Sex Scholar: Decades before Kinsey, Stanford professor Clelia Mosher polled Victorian-era women on their bedroom behavior—then kept the startling results under wraps
• Pfizer ordered to pay up over ‘AIDS-like’ virus infections; creates dummy corporation to do it as to as not interrupt its relations with Medicare and Medicaid. Quoting a commentator, “Wow, I wish I could create a dummy corporation to take the rap for any illegal activity that I could get involved with.” (h/t eXiled Online)
• Welcome to Flatland! Way out of line…

18. Хрїстóсъ воскрéсе! Воистину воскресе! (My recommended Paschal reading: Three Versions of Judas by Jorge Luis Borges).

1. Rising tensions over the Falkland Islands between Argentina and the UK, following the discovery of oil in the region and Britain’s decision to start exploration drilling. Contrary to media hype, war is not imminent; even though Britain, like the US, suffers from “imperial overstretch” and a military-industrial “death spiral”, it is still far, far more powerful than Argentina. The Royal Navy has the world’s second best “power projection” capabilities (amphibious, logistics, aeronaval). Argentina’s military power, never impressive to begin with, has only stagnated since 1982.

On the other hand, this episode does represent two important things. First, the geopolitical factors that constitute negative feedback loops to the resource extraction sector that supports the global industrial system. For instance, as oil production peaks, we can expect an accelerating scramble for the remaining reserves. This may yield short-term benefits for the stronger Powers that will emerge victorious in the neo-colonial gunboat wars of the future, but will accelerate the decline at the global level. Second, we find that most Latin American countries expressed their support for Argentina, even including regional rivals like Brazil and Chile. This illustrates the rising prominence of the “World Without the West” / “Clash of Civilizations” paradigms that will replace neoliberal internationalism in the coming age of scarcity industrialism.

However, I must emphasize that these are incipient trends, not current realities. For now, the overwhelming fact on the ground is that 1) Argentina is weak and 2) it can only count on rhetorical support from its neighbors, not military (Brazil has no particular interest in allowing Argentina to become a potential challenger to its regional hegemony). However, many things can change within a decade. As I wrote earlier, Britain faces a panoply of problems – fiscal, debt, energy, separatism, etc – that will critically undermine its international power, including the ability to sustain the current scope of its armed forces. (In this respect, it is essentially a microcosm of the United States). Meanwhile, though it has plenty of its own problems, Argentina has shown signs that it has outgrown out of its traditional fiscal problems. Following six years of very fast growth, it was little affected by the 2008 economic crisis, its public finances are not unduly bad by global standards, and looking further ahead, its agricultural and natural resource wealth stand it in good stead for the coming age of scarcity industrialism.

If Argentina pursues a rational military procurement and modernization program (amphibious ships, cruise missiles, modern diesel subs, UAV’s, etc) - and assuming it is not once again derailed by the mismanagement and corruption that made it into a unique specimen of a country that went from “developed” to “developing” status after 1950 – then the military balance may swing sufficiently wide in its favor as to enable it to contemplate a successful military solution to the Las Malvinas issue by 2020.

2. Shortly after penning an anti-guvmint screed, Joe Stack crashed his plane into the IRS building in Austin, Texas, in a symbolic copycatting of 9/11. Though legally an unequivocal terrorist (as defined by the PATRIOT Act), he is fast becoming a folk hero amongst the Tea Partiers.

Though I don’t care to comment much on the ethical and moral issues, this does shed light on pertinent current trends. Foremost, the growing disillusionment with the System, the increasing perception by the citizenry that the United States is becoming a “hypertrophied state” hijacked by connected elites, who use it to cushion themselves with corporate socialism while pushing capitalism on the rest. In terms of the Belief Matrix, the country is beginning to lose belief in itself (“rejection of tradition”) and move away from rational-liberalism towards the illiberal populism and patrimonialism that is the common refuge of many post-collapse societies. Also recalls this line from Tainter’s Collapse of Complex Societies:

According to RM Adams, “By the fifth century, men were ready to abandon civilization itself in order to escape the fearful load of taxes”.

Would this action have any real effect? Rehashing the arguments of proponents of the “propaganda of the deed”, Baudrillard would argue that it would have a profound symbolic impact.

The terrorist hypothesis is that the system itself suicides in response to the multiple challenges of death and suicide. Neither the system, nor power, themselves escape symbolic obligation -and in this trap resides the only chance of their demise (catastrophe). In this vertiginous cycle of the impossible exchange of death, the terrorist death is an infinitesimal point that provokes a gigantic aspiration, void and convection. Around this minute point, the whole system of the real and power gains in density, freezes, compresses, and sinks in its own super-efficacy. The tactics of terrorism are to provoke an excess of reality and to make the system collapse under the weight of this excess. The very derision of the situation, as well as all the piled up violence of power, flips against it, for terrorist actions are both the magnifying mirror of the system’s violence, and the model of a symbolic violence that it cannot access, the only violence it cannot exert: that of its own death. This is why all this visible power cannot react against the minute, but symbolic death of a few individuals.

But in this case Trotsky’s analysis is the more persuasive.

But the disarray introduced into the ranks of the working masses themselves by a terrorist attempt is much deeper. If it is enough to arm oneself with a pistol in order to achieve one’s goal, why the efforts of the class struggle? If a thimbleful of gunpowder and a little chunk of lead is enough to shoot the enemy through the neck, what need is there for a class organisation? If it makes sense to terrify highly placed personages with the roar of explosions, where is the need for the party? Why meetings, mass agitation and elections if one can so easily take aim at the ministerial bench from the gallery of parliament?

In our eyes, individual terror is inadmissible precisely because it belittles the role of the masses in their own consciousness, reconciles them to their powerlessness, and turns their eyes and hopes towards a great avenger and liberator who some day will come and accomplish his mission. The anarchist prophets of the ‘propaganda of the deed’ can argue all they want about the elevating and stimulating influence of terrorist acts on the masses. Theoretical considerations and political experience prove otherwise. The more ‘effective’ the terrorist acts, the greater their impact, the more they reduce the interest of the masses in self-organisation and self-education. But the smoke from the confusion clears away, the panic disappears, the successor of the murdered minister makes his appearance, life again settles into the old rut, the wheel of capitalist exploitation turns as before; only the police repression grows more savage and brazen. And as a result, in place of the kindled hopes and artificially aroused excitement comes disillusionment and apathy.

3. Yushenko goes out with a provocative bang, making Galician nationalist / Nazi collaborator Stepan Bandera into a “Hero of Ukraine”. With Tymoshenko’s challenge to the election results dismissed, the new Ukrainian President is now Yanukovych, who represents the Russophone, pro-Russian eastern and southern regions and Donbass oligarchs. This should come as no surprise to S/O readers, given that I predicted Yanukovych would win the second round from the beginning. (Pic h/t @ Ukrainiana).

According to the election results, the final tally was Yanukovych 49%, Tymoshenko 45%. This was stunningly similar to the result I predicted from analyzing which other candidates’ supporters would vote for Mr. Blue or the Gas Princess.

Adding up these figures, Yanukovych gets 50% of the votes, whereas Tymoshenko gets 46%.

The only question now remaining is how fast Yanukovych will now move Ukraine back into Russia’s orbit, perhaps starting with entry into the Russia-Belarus-Kazakhstan customs union.

4. The Airborne Laser (ABL), mounted on a modified Boeing 747, finally succeeded in “killing” a low-tech Scud missile in testing. Yes, not very impressive so far. The range was short and the second test failed anyway. But the regular mechanical breakdowns of the first WW1 tanks, far from invalidating the concepts of armored warfare, were instead portents of the future. What we are seeing is nothing less than the dawning of the age of automated laser weaponry.

5. Its official. Russia’s population grew by 23,300 souls in 2009, for the first time since 1995. Though the rate of natural increase remained slightly negative for Russia as a whole (the Siberian and Urals Federal Regions actually saw positive natural population growth for the first time in 19 years), this was more than compensated for by immigration.

This improvement was in large part thanks to an impressive increase in the life expectancy, which rose to 69 years in 2009 – almost as high as in 1963-68 (before the alcoholism epidemic) and 1986-91 (Gorbachev’s anti-alcohol campaign. Birth rates also increased by 3%, hysterical Russophobe predictions of a crisis-induced “abortion apocalypse” to the contrary.

This of course should come as no great surprise to S/O readers, since back in mid-2008 my projections indicated that:

Russia will see positive population growth starting from 2010 at the latest.

Natural population increase will occur starting from 2013 at the latest.

Russia’s total life expectancy will exceed 68 years by 2010 and reach 75 years by 2020.

Now according to my models, in the case of a total fertility rate of 1.5 (i.e., the same as in 2008, when it was 1.49, so that is actually discounting any further increases) and assuming a very modest life expectancy rise (74 years by 2025 – it is already close at 69), and 300k annual migration (currently around 200-250k), “the population size will remain basically stagnant, going from 142mn to 143mn by 2023 before slowly slipping down to 138mn by 2050″. Of course it is also entirely possible that Russia’s LE will converge to developed-country levels quicker and that the TFR will stabilize at 1.7-1.8, in which case its population may grow back to around 150mn by 2025.

Thus far, the reality of Russia’s demographic turn-around is actually exceeding both Rosstat‘s and my own most optimistic forecasts (not to even mention “pessimists” like Eberstadt, Steyn, etc). No wonder that pundits are beginning to read and propagandize the gist of my articles, e.g. from Mark Adomanis at True Slant (h/t poemless).

1) Its population is in steep decline and chronically afflicted by alcoholism.

These are actually two very separate issues, but what the hell, why not, we’ll combine them. As I’ve argued before Russia’s population decline has actually abated rather dramatically. What is Russia’s demographic future? No one really knows (predictions are hard, especially about the future!), but it stands to reason that it’s not nearly as bad as Black, Eberstadt, Steyn, Feshbach, and all the other nameless neocon apparatchiks,  most of whom have made crude linear projections decades into the future, think. And alcoholism in Russia is not some eternal unchanging constant: the country’s current high rates of alcoholism are the result of a trend that started in the 1960’s, not in prehistory. Alcoholism in Russia was and is largely a reaction to bleak socioeconomic conditions and the easy availability and cheapness of alcohol,not the result of some quasi-mythical Russian predilection for booze and penchant for self destruction. Will this trend be reversed? Perhaps! Perhaps not! The truth is no one really knows, but to pretend that Russians are utterly passive in the face of some all-powerful and immutable force known as “alcoholism” is as condescending as it is stupid.

Now the next question – should I now rest on my laurels, or should I continue trying to refute the demographic doomers who continue to insist that Russia’s population will fall to 128mn within two decades?

6. Goldman Sachs helped Greece conceal its deficit spending shenanigans by providing it with loans disguised as currency trades. Can this get any dodgier? This also introduces an interesting philosophical exercise – who’s more responsible, the bank(st)ers or the politicos? (The drug pushers or the drug abusers?). And of course Greece is far from alone. The real elephant in the room is the United States.

7. Russian Twitter hero and unabashed patriot, Dmitri Rogozin, proves that Western diplomats are girly men.

8. Two stories that represent the two most important trends of our world systems – shortage of Rare Earth Metals could thwart innovation (limits to growth) and 10 profound innovations ahead (technological progress). If we could find some way to figure out which trend is the stronger and more stable one, you could make a good guess as to the meaning of the 21st century.

9. What blogging is all about… (h/t Lou).

10. Yulia Latynina, Russian liberal par excellence (that is, in the anti-democratic 19th century sense of “liberal”), on why Letting Poor People Vote is Dangerous. At least she is brave enough (or stupid enough?) to say what many liberasts think, but don’t have the guts to do so outright. H/t Sean.

Viktor Yanukovych’s victory in Sunday’s presidential election — not unlike the victories of former Chilean President Salvador Allende, Iranian President Mahmoud Ahmadinejad or Adolf Hitler — once again raises doubt about the basic premise of democracy: that the people are capable of choosing their own leader. Unfortunately, only wealthy people are truly capable of electing their leaders in a responsible manner. Poor people elect politicians like Yanukovych or Venezuelan President Hugo Chavez.

When the Orange Revolution hit Ukraine five years ago, the people arose in a united wave and did not allow themselves to be deceived by the corrupt elite. That elite had reached an agreement with the criminals and oligarchs of Donetsk to make a minor criminal, who could not string two sentences together, the successor to former Ukrainian President Leonid Kuchma.

And by far my favorite bit:

Can you imagine U.S. voters putting a leader in the White House who is a puppet of the ruling elite and criminal clans?

Socialist democrat Allende = genocidal maniac Hitler? The same US whose regulatory bodies are captured by Wall Street, which confirmed itself as an oligarchy with the recent removal of campaign funding limits for corporations? (I can just about see a few post-peak oil decades down the line Exxon oligarchs sending American conscripts to fight national liberation movements in Saudi Arabia or Nigeria).

Really, why the fuck does anyone act surprised that Russia’s limousine liberals – part disconnected elitist, part neo-Bolshevik, part plain insane – only have the support of 3% of the Russian population?

PS. More inane rantings from Latynina. It appears her disdain for facts extends well beyond Russian politics.

“The global warming is an invention of the global bureaucracy,” says one of Russia’s leading journalists and authors, Yulia Latynina, who in most of her publications exposes controversial activities by the Intergovernmental Panel on Climate Change (IPCC).

“The IPCC are unable to explain to me why the 10th century and the 16th century in Europe were far warmer than it is today. They are unable even to tell what the weather tomorrow is going to be like, that is doing something that can be verified,” Latynina says in a weekly magazine. “One simple question – why do they think that warmth is bad? Did the human race drown or perish in the 10-13th centuries?”

The global warming threat, she believes “is one of the brightest illustrations of the Global Bureaucracy’s ideology, a phenomenon that is still largely embryonic. But if the current trend continues, it may spell the end of the Western civilization, freedom and progress in science and engineering.”

11. Back in the real world, the news from the climate front, as usual, gets worse by the month if not the week.

Organizers of the recent climate conference in Copenhagen sought, unsuccessfully, to forge agreements to limit global warming to 2 degrees C by the end of the century. But even an increase that small would cause deadly harm. And far greater damage is likely if we do nothing.The numbers — and there are many to choose from — paint a grim picture. According to recent estimates from the Integrated Global Systems Model at the Massachusetts Institute of Technology, the median forecast is for a climb of 5 degrees C by century’s end, in the absence of effective countermeasures. That forecast, however, may underestimate the increase. According to the same M.I.T. model, there is a 10 percent chance that the average global temperature will rise more than 7 degrees C by 2100, and a 3 percent chance it will climb more than 8 degrees C. Warming on that scale would be truly catastrophic. Scientists say that even the 2-degree increase would spell widespread loss of life, so it’s hardly alarmist to view the risk of inaction as frightening… (The M.I.T. model estimates a zero probability of the temperature rising by less than 3.6 degrees by 2100.)

You bet. A rise of more than 5 degrees C will result in a global collapse of food production and the almost certain demise of industrial civilization. At above 7 degrees C, we may well be looking at human extinction as “zones of uninhabitability” begin to overspread much of the world.

An adaptability limit for large warmings–are we accounting for it?

Steven Sherwood(1), M Huber(2)
(1) Yale University, Department of Geology and Geophysics, New Haven, CT, USA
(2) Purdue University, West Lafayette, IN, USA

The consequences of large warmings (>4C), which on current trends look increasingly likely in the 21stcentury if not the 20th, have received little attention. It seems to be widely assumed that humans can adapt to any amount of warming, on the basis that humans live in such a wide variety of climates now. We show that when examined in terms of the peak value of the wet-bulb temperature (Tw), which ultimately governs the possibility of transfer of metabolic heat to the environment, the world’s present-day climates are far less variable than one might think based on mean temperature. A warming of only a few degrees will cause large parts of the globe to experience peak Tw values that never occur today; 7C would begin to create zones of uninhabitability due to unsurvivable peak heat stresses (periods when the shedding of metabolic heat isthermodynamically impossible); and 10C would expand such zones far enough to encompass a majority of today’s population. It is unknown how much of our present 7-10C cushion we can live without before experiencing significant problems, making it difficult to draw conclusions about more modest climatechanges, but the limits themselves rest squarely on basic thermodynamics. These inferences stand in contradiction to damage functions currently used in economic cost-benefit calculations. In these, climate damages increase with global mean temperature according to a polynomial form, and remain moderate (typically <30% of GDP) even for 10C or more despite the implication that most of the surface wouldbecome uninhabitable by humans and most livestock during the warm season…

12. Meanwhile, AGW deniers continue spreading their malicious lies and propaganda over the Internet like a horde of virtual locusts. See IPCC errors: facts and spin at Real Climate for a thorough debunking of their mendacious drivel.

13. Something a bit more encouraging. Old dude beats up pathetic wannabe gangsta on a public bus.

14. An intriguing attempt to rank national naval strengths from Strategy Page – Naval Forces of the World. Unsurprisingly, the US completely dominates with more than half the global naval power. The only other navies of real strength are considered to be the UK, Russia, Japan, China, and France. I more or less agree with this analysis, excpet to note that 1) the importance of specifics – whereas the UK has much better “power projection”, Russia’s strategic naval forces are far ahead and second only to the US, and 2) China’s naval power is growing rapidly, it will soon overtake Japan if it hasn’t already, and by 2020 may even be ahead of the US.

15. China sells $34.2bn of US treasury bonds, indicating its loss of confidence in the credibility of any US promises to ever rein back on its fiscal overstretch. The only nations still buying up US Treasuries are geopolitically-aligned ones (e.g. Japan) and private investors, but the endgame for Pax Americana has begun and the next global credit or geopolitical shock may finish it. Meanwhile, Tokyo welcomes Chinese destroyer. Perhaps this doesn’t mean anything important, or perhaps it is just the beginning of Japan’s road towards bandwagoning with China.

16. Andrey Ternovskiy, a Russian, is behind the site ChatRoulette which anonymously pairs you up with random Internet strangers via webcam. Sounds like the perfect hangout for weirdos… and it is. Wouldn’t recommend it unless you’re interested in live gay porn.

17. Turkish Foreign Minister Calls for Eurasian Union (Leos Tomicek). Turkey is a rising power with energy, cultural, and political interests in Central Asia and the Middle East, and it will be freer to expand once NATO / the West starts becoming irrelevant.

18. Economic catastrophe in Latvia, previously hailed as a “Baltic tiger”. Latvia’s Economy Contracts Almost 18 Percent in Q4 2009 (Ed Hughes). From his Facebook updates:

“Latvia’s GDP fell by 17.7% year on year in the last quarter of 2009,meaning the economy has now shrunk by more than 25 percent in twoyears. The IMF projects another 4 percent drop this year and predictsthat the total loss of output from peak to bottom will reach 30percent. This would make Latvia’s loss more than that of the U.S. Great Depression downturn of 1929-1933.”

“The consequence of this strong recession in Latvia – more and moreLatvians are leaving in search of work elsewhere, while fewer andfewer young people feel confident enough to have children, making thelong term future of the country even more uncertain.”

There follows a graph of Latvia’s birth rates plummeting by around 8% in 2009 y/y, with the rate of decline accelerating to 12% by December 2009.

Perhaps a timely reminder of the dangers of too much economic openness, the (prior?) dogma of our times? In comparison, Russia’s GDP fell by 7.9% and Belarus’ GDP actually grew 0.2% in 2009, and both saw continuing demographic improvements.

19. On my reading list:

The Lucifer Principle – Nietzschean book by Howard Bloom. (h/t Lou).

The Sea of Fertility – Yukio Mishima, my new hero, whose ritual suicide consitutes the epitome of artistic holism.

The Rediscovery of the Mind – Cognitive science is ”the ongoing research program of showing Searle’s Chinese Room Argument to be false”, and it’s not hard to see why.

Towards a New Socialism – Haven’t started reading this year, but looking forwards to it since it’s connected with many of my own ideas about how advances in cybernetics and computer science is making central planning feasible, even for highly complex and advanced economic systems.

Getting ready to post reviews of The Peak Oil Books, When the Rivers Run Dry (Pearce), and The Singularity is Near (Kurzweil).

Meadows, Donella & J. Randers, D. Meadows – Limits to Growth: The 30-Year Update (2004). BUY THE BOOK!
Category: world systems, resource depletion, pollution; Rating: 5*/5
Summary: wiki; synopsis; WSJ story.

The first book was published in 1972, commissioned by a circle of statesmen, businesspeople, and scientists called the Club of Rome. The LTG models, using the latest advances in systems theory and computer modeling, suggested that business-as-usual economic growth on a finite planet would eventually lead to stagnating and then falling living standards, as ever more industrial capital has to be diverted towards mitigating the consequences of growth, e.g. soil degradation, resource depletion, and runaway pollution.

Cornucopians and establishment “experts” have tried to discredit LTG by claiming that its predictions of global apocalypse failed to materialize; instead, hasn’t the world seen remarkable economic growth since 1972? These criticisms are unfounded. First, the LTG modelers did not make any concrete forecasts, but merely a range of scenarios based on varying initial conditions (e.g. global resource endowments) and future political choices. Not all the scenarios led to collapse – a reasonable global standard of living is preserved under scenarios in which humanity makes a transition back below the limits towards sustainable development.  Second, none of those scenarios projected a collapse before 2015 at the earliest, so the claim is invalidated even if you treat the worst case scenario as a prediction. As such, we can only conclude that these critics are either liers or haven’t actually read the book.

In this 30-year update, the authors note that their more pessimistic conclusions are already coming true – for instance, in per capita terms, global grain production peaked in 1984 and the marine catch reached an all-time high in 1988. Both have been on a slow, downward plateau since. (This finally culminated in the global foot riots of 2008 and rising “food protectionism” on the part of agricultural net exporters). Contrary to the hype surrounding globalization, the “new economy”, the flat world, etc, global GDP growth rates peaked in the 1960′s, and have since settled down to a lower level practically everywhere outside emerging Asia (and they may yet go into outright stagnation in the 2010′s due to the convergence of peak oil, geopolitical stresses, and the decline of the West). Furthermore, this slowdown was accompanied by rising inequality, between and within countries. Overall, the authors believe that humanity’s ecological footprint overtook the carrying capacity of the Earth sometime around 1980, ushering in “overshoot”.

A few things we should note before going further. LTG is not about particular phenomena, such as peak oil – though in itself very important, it is but a symptom of much deeper, underlying trends (the limits to growth). Second, the models indicate that growth will only begin to really falter once the system is in severe overshoot, so for the 1970-2010 period the LTG authors did not expect any major divergence between the unending growth predicted by neo-classical macroeconomics, and their own biophysical / systems dynamics models which account for the vital role of energy and ecological factors to sustaining growth. As the authors note, “we must all wait another decade for conclusive evidence about who has the better understanding” (and so far the economists are off to a bad start).

Exponential Growth, Limits, and Overshoot

The definition of exponential growth from the Sublime Glossary.

Exponential growth: Occurs when the growth rate of a mathematical function is proportional to the function’s current value, e.g. x = exp(t). In other words, self-reproducing entities exhibit exponential growth, as do any further entities driven by them. When you have both exponential growth and limits to growth, the eventual result is overshoot and collapse. (AK, see Wiki fables for allegories)

The human population naturally exhibits exponential growth. Whenever total fertility rates are substantially above the 2.1 children per woman needed for simple population replacement, the population will usually grow very rapidly. In Malthusian, pre-industrial societies, this population growth typically exceeded the rate of growth of the carrying capacity; when the two drew level, population growth ceased as lower wages, elite predation, and food dearth raised mortality rates and lowered fertility rates. This increasing brittleness of the system, which made it vulnerable to shocks like poor harvests or peasant uprisings, is the single most convincing explanation for the cyclical emergence and collapse of empires.

In modern industrial societies, the effects of exponential population growth are modulated by the demographic transition, the tendency for fertily rates to transition to or below population replacement rates with increasing wealth. However, the effects of these gains on reducing the human impact on the environment is more than balanced out by the growth of the stock of industrial capital. This growth is inherently exponential, because the machine tool building sector that constitutes the base of the industrial ecosystem essentially reproduces itself, i.e. you need machines to build more machines. Labor and capital factor inputs, in their turn, are the motors of exponential growth in all other spheres of the human economy – food production, goods production, resource extraction, pollution emissions, services provision, etc.

[Representation of the industrial system].

Therefore, population and industrial capital can be said to have “an inherent system structure to produce the behavior of exponential growth”, which in turn drive increases in the food, energy, goods, and services needed to sustain that same growing population and industrial system. This increases the system’s level of physical throughput, the “continuous flows of energy and materials needed to keep people, cars, houses, and factories functioning”. However, both the materials-providing planetary sources (hydrocarbons, metals, minerals, etc) and the pollution-absorbing planetary sinks (soils, oceans, air, etc) needed to sustain a certain level of physical throughput are limited (the former can be depleted, the latter can be overfilled). There are hard planetary limits to the “rate at which humanity can extract resources (crops, grass, wood, fish) and emit wastes (greenhouse gases, toxic substances) without exceeding the productive or absorptive capacities of the world”. Once those limits are breached, development becomes unsustainable and we enter a state of overshoot.

To overshoot means to go too far, to grow so large so quickly that limits are exceeded. When an overshoot occurs, it induces stresses that begin to slow and stop growth. The three causes of overshoot are always the same, at any scale from personal to planetary. First, there is growth, acceleration, rapid change. Second, there is some form of limit or barrier, beyond which the moving system may not safely go. Third, there is a delay or mistake in the perceptions and the responses that try to keep the system within its limits. The delays can arise from inattention, faulty data, a false theory about how the system responds, deliberate efforts to mislead, or from momentum that prevents the system from being stopped quickly.

Although the planetary sources usually appear large on paper, only a small fraction of them tend to be economically recoverable due to the law of diminishing returns. All the low-hanging fruit are picked first, such as “supergiant” oil fields, rich copper ore deposits, etc, or in other words energy sources with high energy return on energy invested (EROEI), thus leaving only remoter, deeper and more dilute resources such as polar oil, unconventional liquids, etc. Their extraction costs soar exponentially and requisition an ever greater share of the industrial base, leaving less room for consumer products (vital for political stability), the agricultural base (to prevent starvation), investment in capital stock renewal (to prevent the depreciation of the industrial base), and environmental mitigation (to prevent runaway pollution from wrecking other sectors).

Due to the dropping EROEI of newer energy sources, ever greater volumes have to be excavated and processed just to keep standing in place (e.g. coal’s gross energy content peaked in 1998 in the US, despite that volumes have continued increasing since). These diminishing returns per unit of capital employed towards resource extraction lead to rising pollution, which negatively feeds back into the agricultural base and human health. We could divert resources from other sectors to combat this pollution, e.g. through emissions reductions or geoengineering. Alternatively, rapid climate change coupled with declining oil and fertiliser output may lead to catastrophic falls in agricultural output, which could only be mitigated for a time by diverting capital and energy into this vital sector – but which would hurt the long-term prospects for renewal in the energy extraction and industrial sectors! And so goes our Faustian trap…

Below are four examples of these phenomena in action.

An example of diminishing returns / lowest fruit being picked first. The quality of copper ore being mined is falling, and more and more energy needs to be expended to get the same quantity of copper. Eventually, the returns may become so low that mining it will no longer be at all profitable, at which point the system collapses to a lower level of complexity and salvage becomes an attrative strategy.

PS. Note the counter-intuitive spike in the early 1930′s, correlating to the Great Depression. Economic retreat forces the shutdown of the least efficient mines, because the efforts they have to expend on extraction now surpass what they get back in profits. Unless the state takes increasingly coercive measure to maintain physical output at all costs, requisitioning labor and capital in a last-ditch Stakhanovite effort to prolong industrialism in a game of “last man standing”, the end of the industrial age will see the same general pattern.

As the ore grade falls, more and more material has to be extracted and processed to get the same amount of copper. This naturally results in soaring pollution emissions, which will put increasing stress on regional and global biocapacity.

An explanation for the drastic improvements in air quality, river health, fuel economy, etc, in advanced industrial nations in the 1970′s-1980′s – picking the lowest-hanging fruit is pretty cheap. But beyond a certain point, reducing pollution becomes without a direct fall in physical output becomes prohibitively expensive.

One more example of limits (the main ones, resource depletion and CO2 pollution, are covered elsewhere in this blog) - arable land availability. The amount of land devoted to agriculture has remained constant in recent decades, though its quality has decreased as good land becomes exhausted and more marginal lands were brought into exploitation. Crop yields have risen and continue to rise, but 1) they are overly dependent on the intensification of farming, e.g. using (natural-gas dependent) fertilizers that mask the decline in natural soil fertility and 2) as noted above, they have not kept up with population growth since the 1980′s.

The graph shows possible food futures: if no more land is lost and crop yields double, then the world’s 8bn people can be fed on a comfortable West European diet. If on the other hand “erosion, climate change, costly fossil fuels, falling water tables… reduce yields from present levels”, then there will be a global Malthusian crisis. Possible solutions: “farming methods that conserve and enhance soil – such as terracing, contour plowing, composting, cover cropping, polyculture, and crop rotation”, and in the tropics, “alley cropping and agroforestry” – all methods that achieve high yields, improve the soil, and don’t require prodigious fossil fuel and fertilizer inputs.

Basically, LTG gives one a valuable sense of how interconnected all these global systems are, about just how universal the law of diminishing returns is, and how the failure to move decisively towards a sustainable economy now will lead to collapse further down the road (and the later we postpone this transition, the greater will be the eventual collision).

The most important thing is to make the human industrial ecosystem a closed loop, in which population ceases to grow, and a recycling sector feeds back wastes as inputs into the system instead of continuing drawdown to maintain an unsustainably-high “phantom” carrying capacity.

Why recycling matters: “undiscovered reserves” (sources) and the sinks for “solid waste” are both limited; hence, a high standard of living can only be preserved by 1) redirecting most wastes back within the loop and 2) directly reducing material throughput by technological innovation (energy efficiency, ecotechnology, informatics).

The World3 Scenarios

All of these are feedback loops that I’ve described form the basis of the World3 computer models that the LTG authors used in making their scenarios. They are reproduced below, in concise detail.

The central feedback loops of the World3 model govern the growth of population and of industrial capital. Two positive feedback loops involving births and investment generate the exponential growth behavior of population and capital. The two negative feedback loops involving deaths and depreciation tend to regulate this exponential growth. The relative strengths of the various loops depend on many other factors in the system.

Some of the interconnections between population and industrial capital operate through agricultural capital, cultivated land, and pollution. Each arrow indicates a casual relationship, which may be immediate or delayed, large or small, positive or negative, depending on the assumptions included in each model run.

Population and industrial capital are also influenced by the levels of service capital (such as health and education services) and of non-renewable resources.

The “initial conditions” and assumptions are overall rather optimistic, for instance, the ones dealing with the power of the environment to clean up toxic pollution.  The model leaves out corruption, military expenditures, wars and political disruptions – although vital, they are too hard to model with any degree of rigor (I write about these in my posts on Collapse Ethics and Ecotechnic Dictatorship). Chronic food and energy shortages will lead to civil unrest and political instability, necessitating greater expenditures on law enforcement and assorted populist gimmicks (e.g. the tinpot dictatorships that will rise up in the pre-Collapse period), taking away industrial capital and managerial resources from the industrial base, agriculture, and other critical sectors.

Statistical bodies will manipulate inflation and GDP growth figures to preserve an image of stability, even as creeping normalcy converges to an ever darker reality. There will be a scramble to secure the world’s remaining sources of high-density resources, which will lead to a greater share of the industrial base being devoted to (unproductive) military production. Elites will mobilize support for permanent war and surveillance by citing the moral imperative of fighting freedom-hating terrorists, evil empires, and/or maintaining global peace, security and stability. And so on.

Basically, by excluding these political and geopolitical variables, the World3 model presents the uppermost possibilities for the “real” world, even in the standard run which leads to collapse. This standard run is reproduced below.

[LTG standard run. Click to enlarge.]

As you can see, it leads to overshoot and collapse. Why? Because signals and responses to problems are delayed, and limits are erodable.

Examples of erosion – 1) as hunger returns, resources are concentrated into intensifying agricultural exploitation at the cost of preserving longterm soil fertility, 2) as more industrial capital is needed to maintain a certain level of resource extraction, pollution abatement, and agricultural production, less is left over to counteract the depreciation of the industrial capital stock, which begins to wither away, 3) worst of all, increasing pollution can erode the pollution absorption mechanisms themselves, thus increasing the rate of pollution buildup – this is already evident in the reduced ability of the biosphere (forests, oceans, etc) to soak up human carbon emissions.

Symptoms of overshoot, many of which are already becoming self-evident:

Primary Physical Symptoms – Resource stocks fall, and wastes and pollution accumulate.

• Capital, resources, and labor diverted to activities compensating for the loss of services that were formerly provided without cost by nature (for example, sewage treatment, air purification, water purification, flood control, pest control, restoration of soil nutrients, pollination, or the preservation of species) – AK: In the worst case scenario, geoengineering would mean that the most basic function previously performed by Gaia, maintaining planetary homeostasis, becomes a human responsibility.
• Capital, resources, and labor diverted from final goods production to exploitation of scarcer, more distant, deeper, or more dilute resources. – AK: See the declining EROEI of oil sources, talk of seabed mining, the increasing emphasis on unconventional & remote energy sources like tar sands, deep-sea, polar oil, shale gas, coal seam gas, etc…
• Technologies invented to make use of lower-quality, smaller, more dispersed, less valuable resources, because the higher-value ones are gone. – AK: See greentech (greenwash?), the “hydrogen economy”, electric batteries, etc.
• Failing natural pollution cleanup mechanisms; rising levels of pollution. – AK: See climate change.

Resulting Physical Symptoms - As resource stocks fall and wastes accumulate the behavior of natural systems may change with consequences for ecosystems and human communities.

• Growing chaos in natural systems, with “natural” disasters more frequent and more severe because of less resilience in the environmental system. – AK: More heatwaves, droughts, hurricanes, etc, are already observed.

Resulting Social Symptoms - Society tries to live with, compensate for, and adapt to the primary physical symptoms  (note: these symptoms do not include responses that address the decline of the resource base in the first place,  such responses are catalogued in Signs of Life Within Limits).

• Capital depreciation exceeding investment, and maintenance deferred, so there is deterioration in capital stocks, especially long-lived infrastructure. - AK: See US infrastructure problems, paralleling that of the late Soviet Union.
• Growing demands for capital, resources, and labor used by the military or industry to gain access to, secure, and defend resources that are increasingly concentrated in fewer, more remote, or increasingly hostile regions. - AK: See resource wars, of which Iraq 2003 is one of the first in a long series to come; the US, China, and Russia have all ramped up military spending since about 2000.
• Investment in human resources (education, health care, shelter) postponed in order to meet immediate consumption, investment, or security needs, or to pay debts. - AK: We’ll see plenty of that in the next few years as Western states fall into insolvency like dominoes.
• Debts a rising percentage of annual real output. – AK: Debt levels have exploded throughout the developed world since 2000, and went into overdrive following the 2008 economic crisis & bailouts of politically-connected corporate groups.
• Eroding goals for health and environment.
• Increasing conflicts, especially conflicts over sources or sinks. - AK: Conflicts over sources = resource wars (see above), over sinks = “ecological warfare” (PLA colonels Qiao Liang and Wang Xiangsui wrote about this in their prophetic book on Unrestricted Warfare).
• Shifting consumption patterns as the population can no longer pay the price of what it really wants and, instead, purchases what it can afford. – AK: That is basically another way of saying people will become poorer.
• Declining respect for the instruments of collective government as they are used increasingly by the elites to preserve or increase their share of a declining resource base. - AK: Predatory elites always become a heavy burden on the peasantry and middle classes during times of imminent Malthusian dearth. Applied to the modern world, see the rise of the “surveillance state”, the emphasis on waging a (by definition endless) “war on terror”, the creeping militarization of internal security forces, universal databases, etc… Meanwhile, internal inequality has risen in every major region of the world – the US, Eastern Europe, Japan, China, India, etc – since 1970.

Do you observe any of these symptoms in your “real world?” If you do, you should suspect that your society is in advanced stages of overshoot.

Finally, here are the central assumptions in World3 that give it the tendency to overshoot and collapse: 1) growth in the physical economy is considered desirable and central to our socio-political systems; this growth tends to be exponential, 2) there are “physical limits to the sources of materials and energy that sustain the population and economy, and there are limits to the sinks that absorb the waste products of human activity”, 3) the world system receives signals about these physical limits that are “distorted, noisy, delayed, confused, or denied”, and responses are hence delayed and non-optimal, and 4) the “system’s limits are not only finite, but erodable when they are overstresses or overused”, and furthermore, there are “thresholds beyond which damage rises quickly and can become irreversible” (e.g. see tipping points in climate change). The authors note that if you want to refute LTG, you will have to show that one of the statements above is invalid.

Markets and Technology to the Rescue?

Maybe not. Here are three explanations. First from one of my older posts.

The criticisms from markets and technology also fall flat on their faces. Markets are implicitly modeled in World3 as resource allocations are typically automatically transferred to the sector of most pressing need. (Actually, if anything the models are more market-driven than our own world, since we don’t have perfect information and instant responses in the real world, as opposed to the model). As for technology, unless concrete steps are taken to reduce material throughput, improvements are simply soaked up by the Jevons paradox. Unless technological progress is extremely rapid (e.g. as envisioned by singularitarians), there will sometime come a tipping point when efficiency improvements no longer make up for decling agricultural and resource yields and soaring pollution, and world population and human welfare collapse.

Second from Limits to Growth synopsis.

The most common criticisms of the original World3 model were that it underestimated the power of technology and that it did not represent adequately the adaptive resilience of the free market. Impressive —and even sufficient— technological advance is conceivable, but only as a consequence of determined societal decisions and willingness to follow up such decisions with action and money.

Technological advance and the market are reflected in the model in many ways. The authors assume in World3 that markets function to allocate limited investment capital among competing needs, essentially without delay. Some technical improvements are built into the model, such as birth control, resource substitution, and the green revolution in agriculture. But even with the most effective technologies and the greatest economic resilience that seems possible, if those are the only changes, the model tends to generate scenarios of collapse.

One reason technology and markets are unlikely to prevent over shoot and collapse is that technology and markets are merely tools to serve goals of society as a whole. If society’s implicit goals are to exploit nature, enrich the elites, and ignore the long term, then society will develop technologies and markets that destroy the environment, widen the gap between rich and poor, and optimize for short‑term gain. In short, society develops technologies and markets that hasten a collapse instead of preventing it.

The second reason for the vulnerability of technology is that adjustment mechanisms have costs. The costs of technology and the market are reckoned in resources, energy, money, labor, and capital.

Third from my post on ecotechnic dictatorship to criticize the technology element of Korotayev’s cliodynamics model, but which happens to apply somewhat to LTG as well.

However, a closer examination shows that 1) their models of technological growth are flawed – they do not account for the diminishing returns seen for technological progress in recent decades, nor 2) do they note that in most cases post-industrial technology has not been in the form of low-maintenance knowledge, but embodied in the (fossil fuel-dependent) machines of industrial civilization.

I.e., 1) to get technological growth, you have to divert resources from industrial capital and services to sustain it, 2) many spheres of technological growth themselves show diminishing returns on investment, e.g. electricity-generating turbine efficiency has more or less plateaued, electric batteries are showing signs of plateauing, etc, 3) a lot of the technology we did create in the fossil fuel age is not even at all suitable for sustainable development and are thus essentially worse than useless, i.e. only ecotechnologies can be sustainably supported, and 4) technology requires a electro-industrial base for its very sustenance: if the latter gives way, so will technology, and we will see a collapse in spheres like energy efficiency, made even worse by the fact that the available energy sources would be increasingly depleted and low-EROEI.

Conclusion. Since technology itself relies on a material base for its sustenance, which in turn requires energy inputs to sustain itself. Thus, it will probably be one of the first things to be downsized when physical limits start pressing down on the economy. The hen that lays the golden eggs will probably be the first to get cooked. Second, there may be sudden and catastrophic increases in pollution. Climate change may be abrupt and catastrophic. A collapse of the West Antarctic ice sheet would raise sea levels by several meters and wipe the world’s ports and more importantly, much of its prime agricultural land. The Amazon is increasingly vulnerable to a conflagration that will turn it into desert, releasing more CO2 than I care to look up in the scientific literature. Increasing temperatures may unleash uncontrolled methane emissions from melting Siberian permafrost and oceanic clathrates.

Past the point of irreversible decline a controlled retreat to sustainability becomes ever more and more unlikely, because of a) the inertia of past pollution emissions and capital investments, b) political crisis in a society predicated on permanent growth will lead to short-term thinking and ever more exclusively stopgap solutions and c) eventually institutional collapse will make it impossible to fund and implement new energy-efficiency or pollution-control technologies on any sufficiently large scale or even maintain already existing infrastructure devoted for those purposes.

That is why we need an ecotechnic transition to begin now.

Further Reading:

• A Comparison of `The Limits to Growth` with Thirty Years of Reality (Graham Turner) – It adds up.
• Peak Oil and “The Limits to Growth”: two parallel stories (Ugo Bardi) – explores the parallels.
• A New World Model Including Energy and Climate Change Data (Dolores García) – model run incorporating more detail on climate change in particular on Vensim, conclusion: ”if the world continues behaving as we have so far, decline is inevitable in the long run”.
• New World Model – EROEI issues (Dolores García) – explains how to incorporate EROEI with the World3 model, update of above post.
• Mind-sized Hubbert (Ugo Bardi) – LTG without too many graphs.
• Environmental and Natural Resource Economics (Tom Tietenberg)
• Russia and Limits to Growth – my old post on LTG.
• Qu’y a-t-il donc dans le “Rapport du Club de Rome” ? – synopsis of LTG and World3 for Francophones.