The year 2020 could emerge as the start of the era of relative global chaos or major upheaval. It is the era we have been anticipating, as the impact of core population decline meets economic dislocation, and security and structural uncertainty.
Changes in the fundamental sociological framework of global society, due to the end of the population growth cycle - and with it the end of the economic growth cycle based on expanding market size - were beginning to become evident by the beginning of 2020. It was apparent that 2020 was likely to see a major evolution in this transformation.
The three “inevitable” trends which had been promoted in recent decades - the “inevitable” rise of the People’s Republic of China; the “inevitable” decline of the United States of America; and the “inevitable” consolidation of the European Union into a strategic superpower — had all, by 2020, retreated into the swamps of vainglory.
A broad-brush landscape view of 2020 must include at least the following:
The People’s Republic of China and the BRI Framework:
The Communist Party of China (CPC) should be expected to face unprecedented challenge in 2020-21, not only for its control of the economy of the People’s Republic of China (PRC), but to its ability to project the PRC’s physical power in its immediate region, and across its suzerain empire, expressed through the Belt & Road Initiative (BRI) network of states.
The PRC economy has been faltering for several years, and growth in gross domestic product (GDP) figures have only been sustained by artificial construction transactions, which are now becoming unsustainable. It is now estimated that the PRC was in actual economic decline at a time, which will lead to a faltering in its foreign investment and loan capacity to sustain the BRI program.
The BRI concept has become an ideology for the projection of the CPC’s influence, far more than an economic platform, but it is one which has a real financial cost to the PRC and which is expressed in monetary terms. It was created as a de facto ideology to buy strategic space globally when traditional maoist-marxist ideology could not make any meaningful penetration.
The CPC’s ability to “buy hearts and minds” was made possible by the Chinese economic growth, which had been funded by the Chinese private sector, unleashed by PRC leader Deng Xiaoping (1978-92) after the death of Mao Zedong. The state economic sector did not contribute to this rise. Related: Can OPEC+ Rescue Oil Markets Once Again?
By 2019, and even earlier, Pres. Xi Jinping had begun to curb the private sector and favor the state-owned enterprises (SOEs, which had not contributed to the “economic miracle”), in order to gain more control over society. It was a de facto return to maoism and economic stagnation at a time when urbanization and other factors were already stressing the PRC’s capability to sustain growth.
Moreover, the PRC has almost 20 percent of the global population and only seven percent of its water (and that water supply is decreasing due to consistently declining snowfall on the Tien Shan mountain range), and what water it does have is heavily polluted. Its food production is now totally compromised.
The PRC has extensive foreign exchange holdings and holdings of US debt paper, but these are now beginning to erode as Beijing is forced to now expand its imports of foreign foodstuffs. The reason for the PRC’s total capitulation to the US in the so-called trade war with the signing of “Phase One” of January 15, 2020 was (a) for the PRC to begin to cope with its growing food and economic crises, and (b) to ensure, for US Pres. Donald Trump, that the PRC’s economy would not completely collapse in 2020, the year of pivotal US elections.
So the PRC was already on economic life-support by the time the coronavirus pandemic began to become known by the end of January 2020. It was clear that the CPC was already well aware of the reality that the coronavirus had begun its broad contagion - with the consequent impact on the PRC economy - when it signed the “trade deal” with Pres. Trump.
All of this, coupled with the economic impact of the revolt of Hong Kong against the PRC - effectively removing Hong Kong as one of the key economic contributors to the PRC’s “economic miracle” - meant that the PRC’s already-delicate economic condition was now in an unavoidable and dramatic decline. At the same time, the Hong Kong example meant that Beijing’s steady pressure to dominate the elections in the Republic of China (ROC: Taiwan) collapsed, resulting in a severe loss of prestige for the CPC.
The Taiwanese “intransigence” meant that “two Chinas” continued to exist. The CPC could not claim total victory in the Chinese Civil War when the original state - albeit now reduced to a rump geography on Taiwan and other islands - continued to exist as a taunt to the legitimacy of Chinese maoism.
The question was, then, what Beijing would do about the situation to prevent a domestic backlash and the collapse of the substantial BRI infrastructure which had developed throughout Eurasia and Africa, and through the Pacific. Pres. Xi must do something, if only to contain the unrest within the CPC, let alone within the PRC population.
Was it possible that he would initiate military action against Taiwan? Or against Vietnam (perceptionally, an easier target, but one which embarrassed the PRC in 1979)? Or elsewhere? Xi must do something, and it will be disruptive, and possibly have significant negative impact on his own rule.
US Pres. Trump, assuming he wins re-election in November 2020, may decide in 2021 to take the PRC off life support and re-start the trade war. The downstream ramifications are significant.
Western Europe After Brexit, and the Re-Shaping of the Heartland/Maritime Balance:
The myth of the European Union (EU) was finally shattered when the United Kingdom - despite ruthless pressures from the EU - left the EU on January 31, 2020. The EU was already in a delicate economic condition before that occurred, and would now lose significant traction as a result of the UK departure (Brexit). This raises questions:
1. Would the economic malaise which was likely to deepen in the EU in 2021 (unless it could achieve a tariff-free trade deal with the UK before that time) cause other EU members to question the value of the alliance?
2. Would the rump EU become more susceptible to influence from Moscow because of energy dependency on Russia? [And come under greater PRC pressure because of an economic dependency on PRC loans and investments?]
3. Would the EU attempt rapid increases in “state-building” to create an actual sovereign entity out of the Union? This approach, which had been the long course of action by EU leaders, defies the fact that the EU lacks a coherent defense capability as a requisite for actual superpower influence. The ideology of Brussels has been that the EU would build a “third way” of “soft power”, something which indicates that the proponents of this do not actually comprehend the necessity to have a comprehensive arsenal of “soft” and “hard” power resources.
The EU has moved into a position, particularly with Brexit, of massively reduced influence globally. On the other hand, the move by the UK back to fully sovereign status means a re-galvanized position for the community of maritime powers, and for the Commonwealth. Despite a period of “sorting out” in 2020, the maritime powers (the UK, US, Canada, Australasia, possibly Japan, India, Taiwan, and so on) and the Commonwealth, have now begun to re-coalesce. Related: The Jet Fuel Crack Killing Oil Won’t Last
The ongoing weakness of the EU, however, has significant ramifications for stability in the Mediterranean Basin, and particularly related to actions by Turkey toward Cyprus, Greece, Libya (and by stealth, toward Egypt), and the Levant. There is an increasing likelihood of France continuing to take a sovereign view of strategic issues, and work closely with the UK. Moreover, some EU states - particularly Greece, Poland, and the Baltic States - will reinforce a new momentum in NATO, which should be expected to re-orient away from a purely “North Atlantic” context to become the basis of a global capability.
The United States Moving To and Through Pivotal Elections:
The US continues to be a nation divided at levels of polarization not seen since 1860. This is likely to worsen until (and beyond) the November 3, 2020, Presidential and Congressional elections.
The internal US schism profoundly hampers both the attention which the US President can devote to strategic issues, and the prestige which gives the office influence. Thus, most of the strategic actions by the incumbent President fail to get attention in the US polity, such as initiatives to cement a new economic and power framework in Central Asia, extending through a resolution of the Afghanistan conflict, and linking to the Indian Ocean via Pakistan. And attempts since 2017 to break up PRC strategies (BRI) to control Eurasia and Africa.
Of primary importance, then, is whether the US misses great opportunities in 2020 and possibly fails to start to regain unity in 2021, and whether the US can itself regain cohesion at all. It is not inconceivable that the US could see greater moves toward secession by some states, or toward violence between urban-controlled state structures against nationalist elements.
In the US, it is the society-level schism which could work profoundly against the success of the state, as opposed to the PRC where it is the state which is now moving (again) against society.
A Turning Point for Africa:
The collapse of the PRC’s suzerainty over much of Africa has meant a collapse of security there, and a return to corruption at a leadership level in those particular states.
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The absence of accountability or major-power pressure means that rapid decline should be expected in 2020 in South Africa, Nigeria, Zimbabwe, and elsewhere on the Continent. Problems persist in the Horn of Africa and North Africa. This instability is being exploited substantially by Turkey, working alone and through Muslim Brotherhood (Ikhwan) conduits, and by Iran.
The fundamental decline in PRC investment and loans (and the pressure by Beijing for African states to deliver resources and other outcomes), as well as a tapering off of PRC purchases of resources from African states, will mean growing economic malaise in Africa. This will lead to an impetus toward mass migration to Europe (in particular) at a time when the EU states are increasingly less able to cope economically with this.
A similar scenario could apply to much of Latin America and for similar reasons.
The Transformation of the Middle East-Mediterranean:
There was, as 2020 dawned, a kind of “calm before the storm” emerging in the Middle East. Iran’s clerics, after a period of panic after the death (long anticipated) of Quds Force leader Qasem Soleimani, were now looking more soberly at whether they could carry through with their planned new war against Israel. After initial euphoria about possible victory against Israel, there was the start of sober evaluation as to whether Iran could prevail.
Meanwhile, Saudi Arabia and the UAE, which had briefly abandoned the US in 2019 to seek Moscow’s and Beijing’s support in keeping Iran from attacking them, had by 2020 begun to rebuild their relations with the US. Internal challenges in Saudi Arabia remained, and the task of restructuring Yemen in the wake of a collapse of the Saudi-UAE war there was beginning, but without Saudi influence.
Meanwhile, Turkey continued to lash out with initiatives in Libya designed to help Ankara get access to the Egyptian-Israeli-Cypriot gasfields of the Mediterranean. Turkey, facing growing economic and social challenges, became the principal area of instability, which was likely to cause its President to undertake precipitate action in 2020.
Is Chaos Likely to be Expressed as Paralysis and Distraction?
As very real crises begin to emerge, what is significant is that urban societies tend to avoid all consideration of them and turn to the distractions of belief systems, particularly climate change politics (which is separate from actual climate change science). These drive internal societal passions, but paralyze capabilities to deal with actual strategic challenges.
A sense of “social distress” is likely to become exacerbated in major urban societies as the economic decline of the PRC begins to bite the global economy. This will further polarize societies and impact funding for technological evolution.
We are entering the period of uncertainty.
By Gregory R. Copley via GIS/Defense & Foreign Affairs
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All fun aside, this should be a warning to us all. It appears we may be entering a very disruptive decade indeed.
I bet a similar report was presented to Rome's last emperor, Romulus Augustulus.
Views on China
The coronavirus outbreak is an aberration to the rise of China and its economy. It distracts Chinese leaders from pursuing the expansion of their economy as they focus all their efforts on containing the outbreak. However, it will soon be contained by the strict measures China has taken so far. And contrary to the author’s claim, an aberration is normally short-lived by definition and doesn’t therefore make the year 2020 the start of the era of relative global chaos or major upheaval.
China’s economy at $27.31trillion in 2019 is 27% larger than the United States’ at $21.44 trillion based on purchasing power parity (PPP) which is the real yardstick both the World Bank and the International Monetary Fund (IMF) use to compare world’s economies.
China’s economy grew at a healthy 6.1% in 2019 compared with 2.1% for the US and 1.0%-1.5% for the European Union (EU). It is the envy of the world. Therefore China’s economy is not declining as the author mistakenly claimed.
China’s policy of financing infrastructure projects in developing countries under the Belt and Road Initiative (BRI) is helping countries grow economically by enabling them to secure cheap finance which they wouldn’t otherwise have secured from most western sources. Moreover, China doesn’t impose its financial loans on countries of the world. China contrasts the intentions of the BRI with those of the post-second war Marshall Plan, which had clear geopolitical and ideological objectives. Even the World Bank has acknowledged that China’s investments in Africa have contributed to higher economic growth in the continent.
The author is self-deluding himself when he claims that China capitulated to the United States in the trade war with the signing of ‘Phase 1’ of January 2020. Everyone except perhaps the author knows that China won the trade war hands down. It was President Trump who capitulated by lifting tariffs on more than $120 bn worth of Chinese exports as per china’s insistence before it agreed to sign the Phase 1. China has yet to announce lifting tariffs on US energy exports. President Trump was forced to agree to de-escalate the trade war against China because of the adverse impact on the manufacturing and agricultural sectors of the US economy.
China is the world leader and largest investor in renewable energy. It is more than capable of using state-of-the-art solar-powered water desalination plants to satisfy its water needs. Therefore, the author’s claims that what water China has is heavily polluted and its food production is now totally compromised are pure malice and politically-motivated.
While the United States’ involvement in stirring trouble in Hong Kong and eventually in the Taiwan campaign for independence is well known, nothing on earth could change the fact that Taiwan and Hong Kong are and will always be an integral part of mainland China. The US knows that it will cross a red line if it ever tries to undermine this fact.
China’s strategic alliance with Russia is already emerging as the world’s most dominant force and it is destined to shape the globe in the next two decades.
Views on the US
There is a growing disenchantment of the United States all over the Middle East and the world at large.
Iran’s strategy in coming days and months will aim to force the eviction of American forces from Iraq. Losing Iraq will be a significant strategic victory for Iran. This will be eventually followed by the withdrawal of all American forces from the Middle East leaving it to China and Russia, Iran and Turkey to fill the political vacuum that will ensue.
Iran will re-emerge as the policeman of the Gulf region as was the case in the days of the Shah.
Brexit
Nothing shows how adept the author is in twisting the facts more than when he talks about Brexit. It is not the myth of the European Union (EU) that was finally shattered when the UK left the EU. It is the UK’s economy, influence and pound sterling that are being shattered.
Brexit is Britain’s second Suez. It has already led to a 17% devaluation of the pound sterling, a shrinking of 2% of the UK economy and a loss of political influence the UK may have at one point derived from the EU.
The EU is till the world’s largest economic bloc accounting for 22% of the global economy followed by 20% for China and 16% for the US. It is however, an economic giant with feet of clay.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London