Since the beginning of the millennium, the decline (sunset) of the West was expected to be slow and gradual, occurring over several decades from 2020-2060. It was to be accompanied by the smooth, relentless (sun) rise of the East. But 2008 has changed all that. The transition of power now occurring from the West to East is anything but smooth. It has happened much sooner than anyone thought or wished. Neither the West nor East is prepared for it. Like the ending of all eras in history, this one is ultra-messy. Whereas the West is in deep difficulty and certain decline, it is no longer possible to assert confidently?with what is happening in Brazil, Russia, India and China (BRICs) and other emerging markets?that the East is capable of taking up the slack and assuming on its shoulders the transition to global power as it should.
The East is politically, administratively and institutionally too deficient to play an ascendant role in assuming global power with any degree of confidence or comfort. It does not have the human, social or institutional capital needed to do so. The governments of emerging countries are too puerile, immature and incapable of assuming that burden, or exercising it responsibly. The economies of the East remain too dependent on exporting goods and services to the West. A decline in the West?s capacity to absorb their exports and an emerging propensity to reverse-compete with them has not yet entered into the thought processes of emerging eastern powers. Emerging countries are still takers of policies and prices from the West. They are still dependent on the West for most of the intellectual and financial capital that drives the global economy.
Moreover, 2011 has seen the re-emergence of severe political and policy risk in all emerging markets. In India, for example, the explosion of the 2G scam, and the manner in which it has been handled by the media, civil society, government and opposition, has resulted in a massive and sudden loss of global reputation. The spotlighting of corruption as a key failing in Indian public and corporate life (surprising when corruption has been around for so long and accepted by Indians as part and parcel of the fabric of everyday life), has raised much larger issues about the quality and integrity of governance?public as well as corporate. To assert today that India has a ?government??in any substantive sense?is to stretch to the limits both the English language and human imagination. That has come as a shock to the rest of the world.
But India?s unexpected implosion and dizzying descent from its self-image as future emerging superpower to dysfunctional global laughing stock is not the only example at hand. Serious problems are emerging in China with over-borrowing by municipal entities; the blowing up of a property bubble; the influence of political princelings in the ownership of key economic entities; and the egregious mistakes in credit extension that an inefficient, dysfunctional state-owned and directed financial system keeps making. These are obscured by the relentless accumulation of massive international reserves resulting from a manipulated and tightly controlled currency regime?itself an indication of how dysfunctional such a system is. The effective annual cost to China of maintaining such a system has recently been estimated at around $240 billion annually. It is absurd to suggest therefore, as many Indian commentators educated in the Nehruvian idiom seem to, that the world or India should learn from China?except about what NOT to do.
Brazil, too, is going backwards following the recent change of presidency. Russia remains content to be the largest emerging kleptocracy in the world. It is now emitting signs of political distress with internal resentment at the cosy Putin-Medvedev deal on ruling Russia indefinitely in the future. That is not too different a problem from the one India has with the Nehru-Gandhis. And that list can be infinitely extended with similar deficiencies in Indonesia, Vietnam, South Africa, Turkey and just about every other emerging market. Let?s leave alone the likely disruptions that are bound to ensue in the aftermath of the Arab spring; despite the false hopes and great expectations that recent events in Libya seem to be engendering.
So the sun is setting in the West but not rising as it should in the East. The US, as an effectively bankrupt nation, remains for the time being the world?s largest economic and military power. But it is a hesitant, diffident and unconfident one that shocks and awes no one any more. China as a self-appointed fledgling successor hegemonic superpower is flexing its military muscles prematurely, in its own neighbourhood and beyond. With its recent behaviour in the South China Seas, on the Indian border, in the Indian Ocean, and with neighbours like Vietnam, China is doing everything it can to make everyone around it as uncomfortable and uneasy as possible.
Add to that list its disrespect for democracy, its callous disregard for human rights, and its ruthless repression of minorities like the Tibetans and Uighurs. That belies its oft-repeated claims to be a benevolent, peaceful, friendly neighbour and well-behaved global citizen. China has also become the sponsor and financial supporter of first-resort for every rogue, terrorist state that has been ostracised by the community of civilised nations and condemned by the UN. Pakistan is foremost on a list that includes Iran, Myanmar, Zimbabwe and a host of other repugnant tyrannies. What exactly are China?s strategic and tactical objectives in taking on that role with such enthusiasm? Clarity and transparency on that issue would be educational to have.
At least with the US as global hegemon the average global citizen could be mildly reassured with the checks and balances exerted by its hyperactive regime of Congressional oversight (ignorant and uncaring about the rest of the world though it was) in preventing excessive or careless abuses of power. That, of course, did not prevent the US from doing what it did in Vietnam, Grenada, Iraq, Afghanistan, Guantanamo Bay or exercising extraordinary renditions. Nor did it stop the US from indiscriminately ?kicking ass? all over the world, as the much missed Dubya so loved doing. Yet, despite these excesses, it would be otiose for anyone reasonable to assert that the US did not exercise a sense of restraint or did not know its limits.
With a regime like China’s, there are no such checks and balances. Does China have any idea of what limits might apply to its arbitrary exercise of hard power with self-interest being its only goal? History reminds us too well of what can happen when undemocratic, autocratic, dictatorial, single-party regimes posture and preen with their military might to assert regional or global authority; ostensibly to protect their growing global trade and investment interests. The world is beginning to resonate eerily now with the same echoes that bothered people like Winston Churchill in 1931, when everyone thought such people to be incurably paranoid.
We need go no further back than 1939 to recall what happened then. But then the 1939-45 interlude of WW-II also ended the Great Depression decisively, with more effect than the New Deal ever had. The Chinese proverb has come true that ?we live in interesting times?. These are perhaps times when we need to guard not only our wallets, but our principles, values, democracies, as well as our universal commitments to human rights, before they are lost in the global fog now being created by relentless western decline and unfulfilled eastern ambition.
The author is chairman, Oxford International Associates Ltd. This concludes a two-part series