Wednesday, November 26, 2014

UNITED STATES, NATO STRATEGIC FATIGUE SPAWNS DANGEROUS ALTERNATIVES

Introductory Observations

Afghanistan my be passing through a critically testing military stage presently but what is disconcerting is that there seems to be an inspired campaign underway in the Western media and think- thanks to project that strategic fatigue has set-in in the United States and NATO policy establishments. Such projections would lead one to believe that the United States/NATO combine is exploring exit strategies from Afghanistan.

Available indicators suggest that while strategic fatigue may have set-in in some NATO participants in Afghanistan due to domestic pressures, the same cannot be said of the United States.

United States military operations in recent times have acquired added vigor after a review of United States operational strategy this year. The year 2008 marks the final denouement in United States – Pakistan military coalition (so-called) against global terror. While strategic analysts, including this Author, were constantly pointing out that Pakistan was double-timing the United States all along, it took the United States policy establishment six years to finally recognize it.

In fact what we are witnessing today in Afghanistan is not an Afghan civil war but a puny state like Pakistan (its nuclear weapons notwithstanding) challenging the military might of the global only superpower, namely the United States, through asymmetric war through its proxy insurgent outfit – the Taliban.

The aim of United States military intervention in Afghanistan in 2001-2002 was to evict the brutal medieval Islamic Jehadi regime from Kabul for its role in brutally converting Afghanistan into the Mecca of Islamic Jehad which acted as a magnet for the Al Qaeda and other terrorist groups from the Islamic world. At the time of its military intervention in Afghanistan, the United States was aware that Pakistan was criminally culpable for 9/11 events and the hosting of Taliban and Al Qaeda in Afghanistan. The United States ignored all that and finds itself in the present strategic quagmire that Pakistan’s treachery generated for USA.

Post-9/11 and up till now, Pakistan nurtured and regrouped the Taliban within Pakistan hoping that with strategic fatigue eventually creeping in US-NATO combine the Taliban could be used once again as an instrument of its strategic objective to enslave Afghanistan.

The armed conflict turbulence in Afghanistan today is a violent contest between the US-NATO combine to stabilize Afghanistan and the Taliban (with Pakistani support) attempting to regain control over tracts of territory in Southern Afghanistan, more specificall, before a final push to Kabul.

With the Taliban unable to make major strategic gains, an inspired campaign is underway, exploiting the gullibility of highly paid Western journalists in Kabul and also some Western think tanks and intellectuals to over-hype and over-sensationalize Taliban gains in Afghanistan and minimize the tactical successes of US-NATO military forces.

This inspired campaign has spawned in its wake some dangerous alternatives detrimental to United States strategic interests, namely to explore an exit strategy from Afghanistan and secondly to co-opt the Taliban in a dialogue with the Karzai Government with the ultimate aim of Taliban sharing political power in Kabul.

While the first dangerous alternative is not being seriously considered, the second dangerous alternative of dialogue with the Taliban has made some tentative gains with Afghan-Taliban dialogue in Saudi Arabia engineered by Pakistan and British intelligence agencies with a grudging nod by USA.

It is amazing and the height of strategic naivety for the United States to have given a nod to the second dangerous alternative by pressuring Afghan President Karzai for Afghan participation in a dialogue with the Taliban in Saudi Arabia.

Can it be forgotten that 9/11 would have never taken place had “The Other Axis of Evil” of Pakistan and Saudi Arabia were pre-empted by the United States from the creation of Taliban and ensconcing of Al Qaeda and Osama bin Laden in Afghanistan.

Can it also be forgotten that the inclusion of “moderate Taliban” in the Kabul Government in 2002 was mooted by Pakistan’s General Musharraf to ensure Pakistan’s hold in Kabul and was wisely rejected by USA. A Taliban has no shades; the Taliban are a fundamentalist Islamic armed insurgent militia believing in medieval brutality.

How come that the inclusion of the Taliban in an Afghan-Taliban political dialogue has been brought about? Reports indicate that this has been advocated by European countries, and particularly Britain.

The United States policy establishment should take this as a wake-up call and prevent such dangerous alternatives taking shape which are grossly in contradiction and capable if endangering United States global and regional strategic interests.

To highlight the dangers to US national security interests by advocacy of dangerous and defeatist alternatives, this Paper intends to examine the following perspectives:

  • * United States Strategic Interests in Afghanistan
  • * Taliban No Strategic Asset for United States
  • * Taliban is a Strategic Asset for Pakistan and Saudi Arabia
  • * Afghanistan is a Strategic Asset for United States and Not Pakistan
  • * Afghanistan Can be Reclaimed by United States as a Moderate, Democratic Islamic State
  • * US Intellectuals Must Disabuse Their Minds that Pakistan’s Sensitivities are Paramount in Solution of Afghanistan Conflict

United States Strategic Interests in Afghanistan

United States strategic Interests in Afghanistan should determine the centrality of all United States policies and strategies in the securement of Afghanistan as a stable state and its protection against Islamic fundamentalist onslaughts.

The United States when it entered Afghanistan in its military intervention and secured Kabul in 2002 with the assistance of Northern Alliance Forces had a two pronged strategy, namely (1) Regime change in Afghanistan by evicting the Taliban occupation of Afghanistan and (2) Dismantle the Islamic Jihadi terrorist infrastructure in Afghanistan of the Taliban and Al Qaeda.

The United States succeeded in both its strategic aims except that Pakistan pre-empted the capture of Taliban and Al Qaeda leadership and cadres by spiriting them away to sanctuaries within Pakistan, out of reach of US Forces.

In gross contradiction to US strategic aims the United States airlifted nearly 12,000 Pakistan Army operatives who provided the backbone of the Taliban from Kunduz away from retribution by Afghan tribesmen whom they had brutalized for nearly six years. This was a strategic blunder which is now costing heavily to the United States.

Notwithstanding the strategic blunders above, with the passage of time, United States strategic interests in Afghanistan today can be assessed as follows (1) Afghanistan’s emergence as a stable, democratic and moderate Islamic state contributing to regional stability (2) Afghanistan as a base for extension of American influence in Central Asia (3) Afghanistan as a possible springboard for neutralizing Iran (4) Afghanistan as a base for any future neutralization of Pakistan’s nuclear arsenal (5) In any future confrontation with China, Afghanistan’s territory touching China and Afghan air bases can be crucial pivots for US military operations.

The United States therefore must cultivate and craft a long term strategic vision to ensure its presence in Afghanistan coupled with transformation and build-up of Afghanistan as a stable nation immune to Pakistani and Taliban covetous designs.

Taliban No Strategic Asset for United States

The strong advocacy of those favoring entering into a political dialogue with the Taliban and their inclusion in political power-sharing in Kabul would have been logical and understandable had there been even a remotest chance that the Taliban could be transformed into a strategic interest for the United States. The picture, however, is otherwise.

The Taliban are mercenary free-booters with no stake in the stability of Afghanistan. The Taliban are a creation and an instrument of the Pakistan Army tasked with the forcible subjugation of Afghanistan as a client state of Pakistan. Their operational strategies are pronouncedly medieval Islamic brutalism which is alien to the Afghan psyche

With such credentials the Taliban hardly qualify to be a strategic asset for the United States in any future US plans for Afghanistan. More frankly, the Taliban are the very anti-thesis of whatever the United States stands for in Afghanistan and their cooption would be an insult to all US-NATO lives lost in Afghanistan in defense of democracy and freedom.

Taliban is a Strategic Asset for Pakistan and Saudi Arabia

As a follow-up of the above, the United States needs to recognize that the Taliban and Al Qaeda were strategic assets of the “Other Axis of Evil” namely Pakistan and Saudi Arabia. Both were instrumental in spawning the Taliban and Al Qaeda in Afghanistan and for 9/11 too. Please refer to the Author’s Paper No. 548 dated 12/11/2002 entitled “United State and the Other Axis of Evil”.

The above position continues today. Pakistan ensconced the Afghan Taliban hierarchy and the Taliban Shura under direct protection of the Pakistan Army in Quetta where it continues untouched till today. Surprisingly, the United States which has now become active in attacking Pakistani Taliban and Al Qaeda hide-outs within Pakistan in FATA has not touched Quetta where Mullah Omar and the Afghan Taliban are housed and from where all Taliban major operations in Southern Afghanistan are launched from.

Pakistan’s obsession with Afghan Taliban persists became it still remains as the only instrument to ensure Afghanistan’s subjugation as a client state of Pakistan subservient to its Pakistani strategic designs.

It needs to be recorded that Pakistan views the Pakistani Taliban as a threat to its security, but views and nurtures the Afghan Taliban as a strategic asset to be used for forcing the exit of USA from Afghanistan.

Is it not diabolical that the Pak-Saudi-sponsored Afghan-Taliban dialogue in Saudi Arabia should have the notorious Mujahideen leaders like Haqqani and Hekmatyar present there the same time? It does not augur well for the United States.

Saudi Arabia’s interest in the Taliban associated with the Al Qaeda as a strategic asset has been re-invented. In the words of Fareed Zakaria, Editor of News week: “Bin Laden began his struggle hoping to topple the Saudi regime. He is now aligned with the Saudi monarchy as it organizes against Shiite domination.”

Can it be over-looked that today Pakistan and Saudi Arabia are more closer to China than the United States. Can it be overlooked that both also are not on the best of terms with Iran.

Both Pakistan and Saudi Arabia have plans to use the Afghan Taliban and Al Qaeda in their future strategic blueprints. Convergence exists again between Pakistan and Saudi Arabia to place a Taliban Government in Kabul.

Afghanistan is a Strategic Asset for Untied States and Not Pakistan

The United States today is at strategic cross-roads in Greater South West Asia. It has a stark choice in deciding what are going to be its priorities in the region.

Pakistan is once again headed for state failure or worse state-disintegration as a result of its internal contradictions, exploiting Islamic Jehadi impulses as a foreign policy and strategic instrument and divisive tendencies within Pakistan.

Afghanistan on the other hand is reeling under a proxy jihadi onslaught launched not only against Afghanistan but also against United States-NATO combine intent on stabilizing Afghanistan. The Taliban are the proxies.

The United States therefore is confronted with a fateful choice, namely to save Pakistan or Afghanistan. The United States cannot save both as was argued in this Author’s SAAG Paper No. 2585 dated 13 Feb 2008 entitled “United States Fateful Choices: Save Afghanistan or Save Pakistan”.

The major conclusion that was offered was that if USA chooses to save Afghanistan it has the chance of saving Pakistan as a follow-up. On the other hand if USA elects to save Pakistan at the cost of Afghanistan it could face the danger of losing both to disorder and fragmentation.

That Afghanistan is a prized strategic asset for the United States is even recognized by Pakistan. It is for nothing that Pakistan has persisted in the last six years to undermine the United States control of Afghanistan by utilizing the Taliban insurgency.

It is for nothing that Pakistan has audaciously dared to militarily challenge the United States as a global super- power through asymmetric warfare utilizing the Islamic fundamentalist Taliban insurgents. This is an ample indicator as to high the stakes are for Pakistan in Afghanistan.

A stabilized Afghanistan will share many strategic convergences with the United States. Pakistan if ever stabilized would never share any strategic convergences with the United States and moreso now with a growing US-India strategic partnership and its strategic alliance with China.

The new bogey raised by Pakistan Army against the United States is that it is intent on circumcising the only nuclear weapons arsenal in the Islamic world with the clandestine assistance of Israel. The United States is painted as a Christian power at war with the Islamic World.

It is amazing therefore as to how US intellectuals and strategic analysts discover strategic convergences with Pakistan where all indicators indicate otherwise.

Afghanistan Can be Reclaimed by United States as a Moderate, Democratic Islamic State

American analysts overlook many of the following indicators which suggest that Afghanistan can be reclaimed by the United States as a stable moderate, democratic Islamic state (1) The Afghan people are not anti-American like those in Pakistan (2) The Afghan people especially the Northern Alliance assisted and facilitated the
Taliban regime change by the United States (3) Following displacement of Taliban from Afghanistan there were no large-scale uprisings by Afghans against the United States (4) Afghan people took part in democratic elections to elect US-favored President Karzai (5) The Taliban has had limited successes in Afghanistan only in areas where US-NATO military presence in scarce. The major deduction here being that the Afghan people do not favor the Taliban.

More importantly, Northern and Western Afghanistan distantly located from Pakistan are relatively more peaceful, stabilized and have developed in the last six years. Southern Afghanistan was always troubled and become more troubled in the last six years as in the initial years after 2002, the United States militarily neglected it in the vain hope that Pakistan Army would play its part in controlling the Taliban on its behalf in this region. Pakistan however treacherously did otherwise.

In the last six years of US-NATO assisted Karzai regime, appreciable progress and reconstruction has taken place including in the social sectors like Afghan women emerging once again in the liberal mould.

Afghanistan and the Afghan people are ready to assist the United State to stabilize Afghanistan and re-build it into a progressive state, only if the United States does not display weakening of resolve in this direction and stops exploring dangerous alternatives like exit strategies and dialogue with the much Afghan-hated Taliban. The Afghan people look to USA for steely resolve in eliminating the Taliban threat to Afghanistan.

US Intellectuals Must Disabuse Their Minds that Pakistan’s Sensitivities are Paramount in Solution of Afghanistan Conflict

This Author has argued in earlier Papers on Afghanistan that the most glaring contributory failure of United States policy and strategies in Afghanistan was due to (1) Linkage of US policies in Afghanistan with Pakistan (2) Over-importance given to Pakistan’s sensitivities over Afghanistan (3) Over reliance on Pakistan by United States for intelligence and logistics support.

Sadly, this trend still persists as if the United States would collapse in Afghanistan without Pakistan. This trend has led to the acceptance of a dialogue with Taliban in Saudi Arabia. This trend leads to avoidable pressures, at times counter productive in Indian’s eyes that India must give concessions to Pakistan on Kashmir and keep the peace process going Suggestion keep surfacing that Afghanistan must not cozy up to India in deference to Palestinian sensitivities.

Similarly, there are pressures on President Karzai to recognize the Durand Line and talk with the Taliban.

All this talk is utterly ridiculous and especially when it comes from personages who have held important official positions in the US establishment.

Illustrative of this line of thought and which persists till today was a joint articles by Karl Inderfurth former US Assistant Secretary of State and Dennis Kux former US diplomat in the Baltimore Sun in December 2006. Main points made were

* USA and key allies should prevail over Afghanistan to recognize the Durand Line.
* Urged Washington to use influence with Karzai Government “to take greater account of Islamabad sensitivities in dealing with India”.
* “Even though India continues to provide generous economic assistance to Afghanistan, Kabul would be wise to address Pakistani concerns”.

Such wise men should have recommended otherwise, namely (1) USA should liquidate the Taliban from Quetta and its surroundings (2) US aid should be conditional on the same (3) US will militarily intervene in Pakistan to achieve the foregoing if Taliban continues to operate from Quetta and elsewhere (4) US will not enter into any dialogue with Taliban and nor will the Karzai regime.

In this connection one would like to quote the remarks of the Australian Defense Minister Fitzgibbon who was quoted in ‘The Australia’ December 17, 2007 that while NATO had been successfully “stomping on lots of ants, we have not been dealing with the ant’s nests”.

Need it be said that the ant’s nests are in Quetta area of Pakistan and it is only the Al Qaeda and Pakistani Taliban that are in FATA. Quetta Taliban are the major threat to Afghanistan.

Concluding Observations

Afghanistan is a prized strategic asset by virtue of its geo-political setting adjoining West Asia, Central Asia, China and South Asia. It is also of great strategic value to Russia.

With such a strategic setting it would be strategically disastrous for the United States to forego its strategic and political gains of the last six years in Afghanistan just to humour Pakistani sensitivities.

The United States must recognize that Pakistan aided by Saudi Arabia and with the tacit support of China, is the root of all strategic turbulence that afflicts Afghanistan. Pakistan therefore cannot be the part of the solution to stabilize Afghanistan.

The United States can only stabilize Afghanistan if America’s Afghan policies are delinked from Pakistan and America warns Pakistan of retribution if it persists in disruptive policies in Afghanistan through proxy use of the Taliban.

By Dr. Subhash Kapila
October 29, 2008

(The author is an International Relations and Strategic Affairs analyst. He is the Consultant, Strategic Affairs with South Asia Analysis Group.

Don’t forget to reform the UN

Zahir Tanin
guardian.co.uk

–After the focus on the G20 and the financial crisis, we must remember the security council is also in dire need of change

After a week during which the eyes of the world were on the G20 summit and the state of the world economy, we should not forget that our international peace and security institutions are in equal need of reform – first and foremost the UN security council. After all, the next emergency calling for a global response could be in foreign rather than financial affairs.

Away from the cameras and under the public radar so far, diplomats at the UN in New York are quietly working towards strengthening multilateralism’s muscle, the security council. This February finally saw the successful launch of real reform negotiations, which I have the privilege of chairing on behalf of the president of the UN general assembly. While differences on, for instance, the size and composition of a revamped security council remain, all delegations have agreed to work them out at the negotiating table and all aspire to forge a council that reflects the global realities of the 21st century, not the mid-20th century.

The international economic institutions now under intense scrutiny were set up during the Bretton Woods conference back in 1944. Only slightly younger and just as stuck in a timewarp is the security council, the most powerful multilateral political body. When they signed the UN charter at the 1945 San Francisco conference, world leaders entrusted the maintenance of international peace and security to the council, with the ultimate goal of, in the words of the charter, saving succeeding generations from the scourge of war.

Special rights and responsibilities were assumed by the big three second world war allies, Russia (then still the Soviet Union), the UK and the US, plus China and France. These five took up permanent seats around the horseshoe-shaped table and secured the right to veto any resolution tabled in the council.

From those post-war days to our post-cold war era, the council did not change much, even if the world did. With many African and Asian nations throwing off the shackles of colonialism, the UN’s membership nearly quadrupled from 51 to 192. We saw not just new countries but also new powers emerge outside the west, as “the rise of the rest” created our contemporary multipolar world.

Yet while the times were changing at breakneck speed, the security council remained more or less the same, with the sole exception of the addition of four non-permanent seats in the 1960s. The current composition of five permanent (the P5 in UN-speak) and 10 non-permanent members, drawn from different regions and elected for two-year terms by all countries in the UN, is the enduring result of that 1963 tweak.

In the same year, a young and charismatic American president made the case for ongoing change at the UN when he addressed the entire UN membership: “The United Nations cannot survive as a static organisation … Its charter must be changed as well as its customs. The authors of that charter did not intend that it be frozen in perpetuity.” But ever since the year John F Kennedy spoke those words at the height of the cold war, the security council, the UN’s most powerful body, has actually remained frozen in time.

Fortunately, it seems that we are now finally heeding his words. All the UN’s 192 member states have signed up to the current negotiation effort to create a more legitimate and effective security council. Arguably, today’s general public is more often dissatisfied with the UN because it has done too little, such as in Rwanda in the 1990s or Darfur, rather than too much. The security council can become more effective and save more lives if it is widely perceived as a more representative and thus more legitimate body. Harvard professor Joseph Nye, who coined the now oft-used term “soft power”, has stated that legitimacy, an important part of soft power, is in fact the main tool the UN has to carve out a place for itself in the international order.

Most high-level actors in that international order are now understandably preoccupied with putting out the economic fire raging in the global village. But they neglect the need to also modernise international peace and security institutions, especially the security council, at their own peril. The world needs to be vigilant in both financial and foreign affairs and ready to deal with not just incomes falling down but also peace falling apart in the blink of an eye. Only a few blocks from the ground zero of this recession, Wall Street, we find a strong and stark reminder of that imperative: the gaping hole of the World Trade Centre site, the real Ground Zero.

A wider order comes into view

It may take months to discover whether the actions taken by last week’s Group of 20 summit in London are enough to rescue the world economy from a prolonged recession, if not depression. The substance of its conclusions will have to convince capital markets, global financial institutions, investors and humble consumers that they can start to spend, borrow or lend again.

But the symbolism of the event may be more important than the substance. For even if the G20 countries are a strange ad hoc selection, initially brought together by the Asian financial crisis in 1997, they represent a whole new element in the world order. They are not the Group of Seven – the club of western powers and Japan – or the G8 (the G7 plus Russia). The use of the G20 at this moment of global crisis is a clear indication that the old order has outlived its time.

Another pointer came four months ago when the US National Intelligence Council, part of Washington’s security apparatus, published a startling forecast. The international system as constructed after the second world war would, it predicted, be “unrecognisable” by 2025, thanks to globalisation, the rise of emerging powers and “an historic transfer of relative wealth and economic power from west to east”.

“The next 20 years of transition to a new system are fraught with risks,” the document declared. “Strategic rivalries are most likely to revolve around trade, investments and technological innovation and acquisition, but we cannot rule out a 19th-century scenario of arms races, territorial expansion, and military rivalries.”

That report was largely written before the full force of the financial and economic crisis had become apparent. Nevertheless, its authors were convinced that the “unipolar moment” of unchallenged US hegemony after the Berlin Wall came down was already drawing to an end. The future world order would be “multipolar”.

The extraordinary thing about the present moment is that several fundamental adjustments are taking place at the same time. That is what makes the outcome so unpredictable.

The end of the cold war, with the fall of the Wall in 1989, cleared the way for new powers to rise – China and India in particular – and removed ideological obstacles to globalisation. Cross-border migration has surged. The technological revolution of the internet has transformed international communications, the flow of information, financial trading and political awareness.

The breakdown in the global financial system, caused not just by the bubble that burst in the US subprime mortgage market but also the explosion of financial speculation across world markets, has rapidly turned into a recession in the real economy. No one has been spared. Credit has frozen up in markets from Africa to eastern Europe.

A massive rebalancing is starting to take place in world trade flows between the unsustainable US trade deficit and the equally unsustainable surpluses of China and other big exporters. US consumers are no longer going to be the engine for Chinese export-led growth, but nor can Chinese savers continue to finance American borrowing.

Finally there is the underlying adjustment – one that would normally still take decades to be realised – that the NIC report identifies, of the switch in power from west to east, especially the rise of China and India to reassume the prominence they held when Europe was in the Dark Ages.

There is an assumption in many parts of the world that the “crisis of capitalism” represented by the freezing up of the financial system will accelerate the long-term geopolitical shift, heralding the decline of US power and European influence. Last year’s choice of the G20 as the forum to tackle the crisis was a belated recognition that China, India and Brazil, at the very least, must be at the table. But will the G20 provide lasting leadership? It smacks of an emergency solution, not a considered construction.

For a start, it has no permanent secretariat. Gordon Brown, UK prime minister, as current chairman struggled for months with a tiny team of British civil servants to forge a consensus. There were divisions between the US and Europe. More important, there were different priorities for the industrialised countries and emerging economies. It was remarkable they managed to agree on a communiqué.

“It is an arrangement that works for finance ministers and central bank governors to meet once a year,” says Trevor Manuel, the South African finance minister. “When you take it up to heads of state and government, the imbalances are accentuated.”

But at least there were few signs of schadenfreude in London. Expectations in 2007 and 2008 of a “decoupling” between the crisis-hit economies of the west and the less exposed emerging markets have vanished. The pain is global and the solution had to be, too.

The real economic effect of the financial crisis has hit emerging markets harder than the developed economies, with a collapse in trade flows and a dramatic fall in commodity prices. It is clear that those worst hit will be the poorest – especially in Africa – who have the least to fall back on.

Second hardest hit are those commodity producers that have always faced big social and demographic challenges, such as energy-rich Russia, Iran, Nigeria and Venezuela. Even Gulf oil producers have been affected. All had become used to swollen export and tax revenues and face readjustment.

Finally, emerging economies still in transition from poverty to prosperity – or from communism to democracy – have been caught by the economic crunch before they could build stable systems of governance and root out endemic corruption. They include many in central and eastern Europe that emerged from the Soviet empire.

Some observers are sceptical about the geopolitical fallout from any financial crisis. “Geopolitical events like the disappearance of Mao in China, or the fall of the Berlin Wall, have far greater consequences than financial shocks,” says Robert Cooper, director-general of external affairs at the Council of the European Union . “Look at the technology bubble in the 1990s. There were no obvious consequences. Or the 1970s crisis with oil prices. Any geopolitical consequences rapidly disappeared.”

Yet he admits that two financial crises of the 20th century – the Depression of the 1930s and economic collapse in Europe after the second world war – did have important results. The former led to the rise of Nazi Germany, the isolationism of America and the outbreak of war. The latter, far more positive, resulted in the Marshall Plan that financed the German Wirtschafts­wunder and economic revival across the rest of the continent, which led to the eventual establishment of the EU.

The lessons of the 1930s also led to the setting up of the Bretton Woods institutions – the World Bank and International Monetary Fund – to bring monetary order to the main industrialised states and a system of crisis management that has survived for more than 60 years. But today their legitimacy and representativeness are being called into question.

The central nation in the ongoing geopolitical transformation is China. It is also the most difficult to read. “They want everything and nothing,” says a senior IMF official. “What they really want is just to be among the big players. The coming 20 to 30 years will be the era of the US and China. They are preparing for this game.”

Beijing wants a bigger share of votes at the IMF, to reflect its rapidly growing economy. But before the G20, it did not want to contribute from its massive foreign reserves to increasing the Fund’s resources because China is still, per capita, a poor country. In the end, Mr Brown announced that Beijing would contribute $40bn, alongside $100bn each from the EU and Japan, as part of a $500bn total. “The crisis emphasises that China is a pivotal world player,” says Bobo Lo of the Centre for European Reform in London. “It might not be a global superpower yet, but it has accelerated that trend.”

If China is a cautious winner, Russia is the most obvious loser from the upheaval. The choice of the G20 as the crisis forum rather than the G8 has abolished Russia’s privileged position as the only outsider at the same table as the wealthiest countries. At the G20 it is one of many middle-sized economies, such as South Korea and Turkey.

But Russia’s weakness is more fundamental. The oil price may rise and fall but the crisis has exposed its failure to diversify beyond the energy sector. Its financial institutions are inefficient, its judicial system corrupt. In the longer term, it faces a chronic demographic crisis likely to result in severe labour shortages in the next two decades.

What of the rest of Europe in the new world order? Like Russia, the continent has an ageing, shrinking population. Slow growth is inevitable, although most west European economies have the reserves and the social safety net to cope with the recession. That is not true of eastern Europe.economy1

For the EU, the risk is that solidarity within the Union will crack, as sneaking protectionism undermines the single market and the old member states show reluctance to bail out the new ones that face acute social crises, with a freeze on bank credit and investment.

The outcome of the G20 – reinforcement of the international financial institutions and a big emphasis on regulation – is what Europe wanted. But it may be a mixed blessing. On the one hand, Europeans have a strong voice in the institutions, especially the IMF. But they will have to give up some of that influence in exchange for China’s contribution and the representation of other developing countries.

As for the G20 itself, the chemistry of the group is unstable. But what seems clear is that without a firm line from Barack Obama’s new US administration, the outcome would have been more feeble. It was Washington that wanted to triple IMF resources. The EU was happy just to double them. Mr Obama played the role of mediator.

France’s Nicolas Sarkozy was the only one who insisted last week that the crisis spelt the demise of “Anglo-Saxon capitalism”. Yet experience suggests that of all the countries affected, the US has the greatest resilience and capacity to recover quickly. The EU and Japan seem stuck in sluggish growth and declining demographics.

As for China, the requirement to adapt from export-led growth to a radical expansion of domestic demand could be a huge political challenge. The Communist party will have to countenance a much faster growth of the middle classes than it has prepared for.

A new world order may be replacing the old – but it will be a bumpy ride.

By Quentin Peel
FT.com