Pepe Escobar, Inside China’s “New Normal”

 

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Pepe Escobar

 

Sometimes this planet changes right under your nose and you still don’t notice.  This sentence, buried in a New York Times piece on the Greek debt crisis, caught my attention the other day: “Greece, meanwhile, has suggested that it could turn to Russia or China for help if its talks on debt relief and a rollback of austerity measures break down.”  Russia is, of course, an unlikely bulwark, being on distinctly shaky economic grounds itself right now, but I’m not surprised by the thought — at least from Syriza, the lefty party now in power in Greece.  But China?  Not since tiny Albania joined the Chinese camp in the Cold War have we seen a sentence that in any way resembled that one.  And yet it certainly catches something of the changing face of our planet.  After all, as time goes by, the magnetic power of the Chinese economy is moving ever closer to Europe.  Just two years ago, the Chinese became the Middle East’s largest trading partner, leaving the European Union in second place and the United States in third.  By then, China was already Africa’s largest trading partner, having displaced the U.S. some years earlier.

This may not be making headlines here, but it’s no small thing.  The economic rise of China, especially in areas where the U.S. had committed so much in blood, sweat, and drones, should take anyone’s breath away.  Fortunately, TomDispatch’s peripatetic Eurasian correspondent Pepe Escobar (the man who invented the termPipelineistanfor the web of energy conduits that crisscross that vast continental area) arrives in the nick of time to offer us a view from Beijing of an economy still staggeringly on the rise and the plans of the Chinese leadership, from Asia to Europe, for knitting together what, if it happened, might indeed someday be seen as a new world economic order. Tom

Year of the Sheep, Century of the Dragon?
New Silk Roads and the Chinese Vision of a Brave New (Trade) World
By Pepe Escobar

BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.

To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.

And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.

Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.

China as a Mega-City

If you are following this frenzy of economic planning from Beijing, you end up with a perspective not available in Europe or the U.S. Here, red-and-gold billboards promote President Xi Jinping’s much ballyhooed new tagline for the country and the century, “the Chinese Dream” (which brings to mind “the American Dream” of another era). No subway station is without them. They are a reminder of why 40,000 miles of brand new high-speed rail is considered so essential to the country’s future. After all, no less than 300 million Chinese have, in the last three decades, made a paradigm-breaking migration from the countryside to exploding urban areas in search of that dream.

Another 350 million are expected to be on the way, according to a McKinsey Global Institute study. From 1980 to 2010, China’s urban population grew by 400 million, leaving the country with at least 700 million urban dwellers. This figure is expected to hit one billion by 2030, which means tremendous stress on cities, infrastructure, resources, and the economy as a whole, as well as near-apocalyptic air pollution levels in some major cities.

Already 160 Chinese cities boast populations of more than one million. (Europe has only 35.) No less than 250 Chinese cities have tripled their GDP per capita since 1990, while disposable income per capita is up by 300%.

These days, China should be thought of not in terms of individual cities but urban clusters — groupings of cities with more than 60 million people. The Beijing-Tianjin area, for example, is actually a cluster of 28 cities. Shenzhen, the ultimate migrant megacity in the southern province of Guangdong, is now a key hub in a cluster as well. China, in fact, has more than 20 such clusters, each the size of a European country. Pretty soon, the main clusters will account for 80% of China’s GDP and 60% of its population. So the country’s high-speed rail frenzy and its head-spinning infrastructure projects — part of a $1.1 trillion investment in 300 public works — are all about managing those clusters.

Not surprisingly, this process is intimately linked to what in the West is considered a notorious “housing bubble,” which in 1998 couldn’t have even existed. Until then all housing was still owned by the state. Once liberalized, that housing market sent a surging Chinese middle class into paroxysms of investment. Yet with rare exceptions, middle-class Chinese can still afford their mortgages because both rural and urban incomes have also surged.

The Chinese Communist Party (CCP) is, in fact, paying careful attention to this process, allowing farmers to lease or mortgage their land, among other things, and so finance their urban migration and new housing. Since we’re talking about hundreds of millions of people, however, there are bound to be distortions in the housing market, even the creation of whole disastrous ghost towns with associated eerie, empty malls.

The Chinese infrastructure frenzy is being financed by a pool of investments from central and local government sources, state-owned enterprises, and the private sector. The construction business, one of the country’s biggest employers, involves more than 100 million people, directly or indirectly. Real estate accounts for as much as 22% of total national investment in fixed assets and all of this is tied to the sale of consumer appliances, furnishings, and an annual turnover of 25% of China’s steel production, 70% of its cement, 70% of its plate glass, and 25% of its plastics.

So no wonder, on my recent stay in Beijing, businessmen kept assuring me that the ever-impending “popping” of the “housing bubble” is, in fact, a myth in a country where, for the average citizen, the ultimate investment is property. In addition, the vast urbanization drive ensures, as Premier Li Keqiang stressed at the recent World Economic Forum in Davos, a “long-term demand for housing.”

Markets, Markets, Markets

China is also modifying its manufacturing base, which increased by a multiple of 18 in the last three decades. The country still produces 80% of the world’s air conditioners, 90% of its personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of its shoes. Manufacturing accounts for 44% of Chinese GDP, directly employing more than 130 million people. In addition, the country already accounts for 12.8% of global research and development, well ahead of England and most of Western Europe.

Yet the emphasis is now switching to a fast-growing domestic market, which will mean yet more major infrastructural investment, the need for an influx of further engineering talent, and a fast-developing supplier base. Globally, as China starts to face new challenges — rising labor costs, an increasingly complicated global supply chain, and market volatility — it is also making an aggressive push to move low-tech assembly to high-tech manufacturing. Already, the majority of Chinese exports are smartphones, engine systems, and cars (with planes on their way). In the process, a geographic shift in manufacturing is underway from the southern seaboard to Central and Western China. The city of Chengdu in the southwestern province of Sichuan, for instance, is now becoming a high-tech urban cluster as it expands around firms like Intel and HP.

So China is boldly attempting to upgrade in manufacturing terms, both internally and globally at the same time. In the past, Chinese companies have excelled in delivering the basics of life at cheap prices and acceptable quality levels. Now, many companies are fast upgrading their technology and moving up into second- and first-tier cities, while foreign firms, trying to lessen costs, are moving down to second- and third-tier cities. Meanwhile, globally, Chinese CEOs want their companies to become true multinationals in the next decade. The country already has 73 companies in the Fortune Global 500, leaving it in the number two spot behind the U.S.

In terms of Chinese advantages, keep in mind that the future of the global economy clearly lies in Asia with its record rise in middle-class incomes. In 2009, the Asia-Pacific region had just 18% of the world’s middle class; by 2030, according to the Development Center of the Organization for Economic Cooperation and Development, that figure will rise to an astounding 66%. North America and Europe had 54% of the global middle class in 2009; in 2030, it will only be 21%.

Follow the money, and the value you get for that money, too. For instance, no less than 200,000 Chinese workers were involved in the production of the first iPhone, overseen by 8,700 Chinese industrial engineers. They were recruited in only two weeks. In the U.S., that process might have taken more than nine months. The Chinese manufacturing ecosystem is indeed fast, flexible, and smart — and it’s backed by an ever more impressive education system. Since 1998, the percentage of GDP dedicated to education has almost tripled; the number of colleges has doubled; and in only a decade, China has built the largest higher education system in the world.

Strengths and Weaknesses

China holds more than $15 trillion in bank deposits, which are growing by a whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion. A definitive study of how this torrent of funds circulates within China among projects, companies, financial institutions, and the state still does not exist. No one really knows, for instance, how many loans the Agricultural Bank of China actually makes. High finance, state capitalism, and one-party rule all mix and meld in the realm of Chinese financial services where realpolitik meets real big money.

The big four state-owned banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China — have all evolved from government organizations into semi-corporate state-owned entities. They benefit handsomely both from legacy assets and government connections, or guanxi, and operate with a mix of commercial and government objectives in mind. They are the drivers to watch when it comes to the formidable process of reshaping the Chinese economic model.

As for China’s debt-to-GDP ratio, it’s not yet a big deal. In a list of 17 countries, it lies well below those of Japan and the U.S., according to Standard Chartered Bank, and unlike in the West, consumer credit is only a small fraction of total debt. True, the West exhibits a particular fascination with China’s shadow banking industry: wealth management products, underground finance, off-the-balance-sheet lending. But such operations only add up to around 28% of GDP, whereas, according to the International Monetary Fund, it’s a much higher percentage in the U.S.

China’s problems may turn out to come from non-economic areas where the Beijing leadership has proven far more prone to false moves. It is, for instance, on the offensive on three fronts, each of which may prove to have its own form of blowback: tightening ideological control over the country under the rubric of sidelining “Western values”; tightening control over online information and social media networks, including reinforcing “the Great Firewall of China” to police the Internet; and tightening further its control over restive ethnic minorities, especially over the Uighurs in the key western province of Xinjiang.

On two of these fronts — the “Western values” controversy and Internet control — the leadership in Beijing might reap far more benefits, especially among the vast numbers of younger, well educated, globally connected citizens, by promoting debate, but that’s not how the hyper-centralized Chinese Communist Party machinery works.

When it comes to those minorities in Xinjiang, the essential problem may not be with the new guiding principles of President Xi’s ethnic policy. According to Beijing-based analyst Gabriele Battaglia, Xi wants to manage ethnic conflict there by applying the “three Js”: jiaowang, jiaoliu, jiaorong (“inter-ethnic contact,” “exchange,” and “mixage”). Yet what adds up to a push from Beijing for Han/Uighur assimilation may mean little in practice when day-to-day policy in Xinjiang is conducted by unprepared Han cadres who tend to view most Uighurs as “terrorists.”

If Beijing botches the handling of its Far West, Xinjiang won’t, as expected, become the peaceful, stable, new hub of a crucial part of the silk-road strategy. Yet it is already considered an essential communication link in Xi’s vision of Eurasian integration, as well as a crucial conduit for the massive flow of energy supplies from Central Asia and Russia. The Central Asia-China pipeline, for instance, which brings natural gas from the Turkmen-Uzbek border through Uzbekistan and southern Kazakhstan, is already adding a fourth line to Xinjiang. And one of the two newly agreed upon Russia-China pipelines will also arrive in Xinjiang.

The Book of Xi

The extent and complexity of China’s myriad transformations barely filter into the American media. Stories in the U.S. tend to emphasize the country’s “shrinking” economy and nervousness about its future global role, the way it has “duped” the U.S. about its designs, and its nature as a military “threat” to Washington and the world.

The U.S. media has a China fever, which results in typically feverish reports that don’t take the pulse of the country or its leader. In the process, so much is missed. One prescription might be for them to read The Governance of China, a compilation of President Xi’s major speeches, talks, interviews, and correspondence. It’s already a three-million-copy bestseller in its Mandarin edition and offers a remarkably digestible vision of what Xi’s highly proclaimed “China Dream” will mean in the new Chinese century.

Xi Dada (“Xi Big Bang” as he’s nicknamed here) is no post-Mao deity. He’s more like a pop phenomenon and that’s hardly surprising. In this “to get rich is glorious” remix, you couldn’t launch the superhuman task of reshaping the Chinese model by being a cold-as-a-cucumber bureaucrat. Xi has instead struck a collective nerve by stressing that the country’s governance must be based on competence, not insider trading and Party corruption, and he’s cleverly packaged the transformation he has in mind as an American-style “dream.”

Behind the pop star clearly lies a man of substance that the Western media should come to grips with. You don’t, after all, manage such an economic success story by accident. It may be particularly important to take his measure since he’s taken the measure of Washington and the West and decided that China’s fate and fortune lie elsewhere.

As a result, last November he made official an earthshaking geopolitical shift. From now on, Beijing would stop treating the U.S. or the European Union as its main strategic priority and refocus instead on China’s Asian neighbors and fellow BRICS countries (Brazil, Russia, India, and South Africa, with a special focus on Russia), also known here as the “major developing powers” (kuoda fazhanzhong de guojia). And just for the record, China does not consider itself a “developing country” anymore.

No wonder there’s been such a blitz of Chinese mega-deals and mega-dealings across Pipelineistan recently. Under Xi, Beijing is fast closing the gap on Washington in terms of intellectual and economic firepower and yet its global investment offensive has barely begun, new silk roads included.

Singapore’s former foreign minister George Yeo sees the newly emerging world order as a solar system with two suns, the United States and China. The Obama administration’s new National Security Strategy affirms that “the United States has been and will remain a Pacific power” and states that “while there will be competition, we reject the inevitability of confrontation” with Beijing. The “major developing powers,” intrigued as they are by China’s extraordinary infrastructural push, both internally and across those New Silk Roads, wonder whether a solar system with two suns might not be a non-starter. The question then is: Which “sun” will shine on Planet Earth?  Might this, in fact, be the century of the dragon?

Pepe Escobar is the roving correspondent for Asia Times, an analyst for RT and Sputnik, and a TomDispatch regular. His latest book is Empire of Chaos. Follow him on Facebook by clicking here.

Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Book, Rebecca Solnit’s Men Explain Things to Me, and Tom Engelhardt’s latest book, Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World.

Copyright 2015 Pepe Escobar

Lame-duck Obama’s brave new world

THE ROVING EYE
Lame-duck Obama’s brave new world
By Pepe Escobar

Fresh out of his latest Congressional election shellacking delivered by the minority who bothered to vote in the United States, the formerly most powerful leader in the world, US President Barack Obama, will star in a thriller this weekend, appearing in the same room with China’s Xi Jinping, Japan’s Shinzo Abe and – fasten your seat belts – Russia’s Vladimir Putin.

What a drag – the Bomber-In-Chief must be musing. The global economy is mostly a disaster. China, even growing at “only” 7% a year, keeps eroding his “indispensable nation” aura. Japan has decided to copy the Federal Reserve and embark on its own kamikaze version of quantitative easing. Numerous Southeast Asian nations keep freaking out about a few rocks in the South China Sea.

And last but not least, Obama’s nemesis, pesky Vlad “the Hammer” Putin, has just been crowned Most Powerful Leader in the world – even if for the most stupid reasons (“unpredictable” head of a “rogue state”) [1] – while he, the Nobel Peace Prize leader of the exceptionalist, indispensable nation, is now nothing but a pitiful lame duck.

The get-together, extended to Monday and Tuesday, will be the highlight of the Asia-Pacific Economic Cooperation (APEC) summit in Beijing – actually, outside of Beijing, so presumably unpolluted blue skies may also have a chance at the photo op. This is APEC’s 25th birthday. And the 20th birthday of the Indonesian summit in Bogor – I happened to be there – which, under Bill Clinton’s flowery charm, set the 21-member APEC nations a goal of “free” and open trade and investment by 2020. “Free” as in US corporations dictating the rules, of course.

What the whole planet really wants to know about APEC is whether The Lame Duck with meet The Bear face to face, one on one. The White House remains mum. The Kremlin did not rule it out. Well, there’s always Plan B: the Group of 20 summit on November 15-16 in Brisbane, Australia.

What the whole planet already knows is that the new slimy show premiering on Capitol Hill on January 2015 has a top priority: the Republicans will do everything in their power to make the lame duck cry for mercy over and over again. So what will this mean in terms of Obama’s self-styled “Don’t Do Stupid Stuff” foreign policy doctrine, which that 2016 juggernaut known as “The Hillarator” has already derided as a “non-organizational principle”? Just extra layers of cosmic stupidity, or something more substantial?

That old axis of evil
Let’s start with The Caliph, aka Islamic State (IS) leader Abu Bakr al-Baghdadi. Obama already said, after his shellacking, he is going to seek Congressional authorization for his coalition of the cowards bombing IS – aka Islamic State of Iraq and Syria, Islamic State of Iraq and the Levant, or Daesh, the jiahdi outfit’s Arabic acronym

Now that’s not a dumb move. If Republican-ruled Congress says “yes”, they will be responsible for the fiasco (and it’s already a fiasco). If they say “no”, the fiasco can be attributed to their irresponsibility.

Republicans are immersed in their own internal split – the boots-on-the-ground favored by the establishment against the non-interventionist Tea Party. So in the end, the lame duck may profit from it after all.

Iran is a much dicier proposition. It all depends on a nuclear deal between Iran and the P5+1 (the five permanent members of the UN Security Council plus Germany) being reached in a little over two weeks, on November 24. That’s a taller-than-the-Himalayas order, although feasible. The Obama administration is desperate for a deal – as the leak of a “secret letter” from Obama to Iran’s Supreme Leader Ayatollah Khamenei attests. But a deal under Washington’s terms, which for Tehran is unacceptable. [2]

The new US Senate only takes over in January. Obama has already stressed he won’t ask the Senate to ratify the deal. Once again, the problem is what deal? Obama’s idea of a grand design in the Middle East is to use a “responsible” – according to US standards – Tehran to balance the Sunni-Shi’ite divide and get rid of the current proxy wars, the whole thing arbitrated by Washington. This is a pipe dream. But it’s what the lame duck wants.

Needless to say, Republicans – for whom Tehran never left the “axis of evil” – will try to bomb the dream, pipelines and all, for instance by passing legislation preventing the lifting of key sanctions. Sparks will fly. Tehran won’t accept a nuclear deal where Washington just says “take my word for it, we will lift sanctions”; this has to be in the letter of the agreement. After all they have vast experience of dealing with gun-crazy Republicans in power.

Nothing will change on Russia – even as the Obama administration needs Moscow to get a deal with Tehran. The relentless demonization of Putin and the resurgence of the same old Cold War meme, “The Russians are Coming”, are guaranteed to keep propelling stupidity 24/7 to intergalactic spheres.

Capitol Hill will go on overdrive. After all, Russia demonization is a bipartisan sport in Washington. The only “solution” would be regime change. Not only is Putin not going anywhere, but he’s ratcheting up his defiance of the Empire of Chaos. This implies increased problems with Germany, where Chancellor Angela Merkel keeps appeasing the Americans while German businesses want increased trade with Russia and Eurasia as a whole.

Another China win-win?
On trade, here’s where APEC collides with the two-pronged US version of an economic NATO: the proposed Transatlantic Trade and Investment Partnership (TTIP) with Europe and the proposed Trans-Pacific Partnership (TPP) with Asia.

What the Obama administration is fighting for is nothing less than a totally unregulated global marketplace. Imagine the “free” market – as Bill “Bubba” Clinton was already parading in Indonesia two decades ago – setting all sorts of standards on everything from working conditions to the environment. In theory, that’s exactly what Republicans love. So here Obama would be right in their alley, which implies an easy Senate ratification.

It’s actually way more complicated. Republicans simply cannot stomach an Obama victory. That means this upcoming Senate won’t give him the fast track he needs to clinch the TPP deal.

That happens to be exactly what China wants. Beijing will use APEC to promote the road map for its own, anti-TPP trade deal, the Free Trade Area of the Asia-Pacific (FTAAP). TPP involves 12 APEC members – but not China. And even inside TPP there’s a monster revolt; Tokyo is battling the US because they Japan is sure its auto industry and agriculture may be devoured by US corporations.

So we’re right into a titanic Transformer-style Battle of the Deals. In fact any deal is problematic, as China, Japan and South Korea may want, in principle, broader economic cooperation. But on trade, in so many levels, they are fiercely competing against each other – as in the auto industry and agriculture, for instance – not to mention that heavy historical baggage between Japan and China and Japan and South Korea.

The Chinese charm offensive at APEC in Beijing is all about “innovative development”, “building infrastructure investment” and “comprehensive connectivity”. It’s all a mirror image of the extremely ambitious New Silk Roads proposed by President Xi to connect Eurasia.

Beijing is proposing a new “connectivity framework” into three key areas – “physical connectivity, institutional connectivity, and people-to-people connectivity”. But still no one knows how this will work out in practice towards Asia integration. Washington doesn’t care; it just wants a “free” unregulated mega-market for US corporations.

Beijing sees Asian economic integration as APEC facilitating an FTAAP by 2025. Needless to say, the US and a few vassals aboard the TPP have been adamant that no regional deal jeopardizes TPP. Washington was betting on TPP being signed before APEC. It didn’t happen. So Plan B is to boycott FTAAP until TPP is signed. And that Beijing won’t allow. The lame duck will have to duck a lot on his one-on-one with Xi in Beijing.

Finally, what about the Obama-Capitol Hill battle on the climate-change field? For the absolute majority of Republicans, climate change and global warming are nothing but an evil conspiracy. End of story.

The lame duck and Capitol Hill at least may agree on – what else – the Global War on Terror. Pentagon supremo Defense Secretary Chuck Hagel recently said the US should get ready for endless wars, as “tyranny”, “terrorism”, national security challenges and – surprise! – climate change pose a substantial “threat”.

Since 2002, the Pentagon has been saying to anyone who was bothered to listen that Endless War is the only deal in town – or the universe, for that matter. The lame duck might even fraternize about it with his Republican nemeses over the odd round of golf. What a wonderful (lame duck) world this would be.

Notes:
1. Putin Vs. Obama: The World’s Most Powerful People 2014, Forbes, November 5, 2014.
2. Obama Wrote Secret Letter to Iran’s Khamenei About Fighting Islamic State, Wall Street Journal Online (subscription).

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

He may be reached at pepeasia@yahoo.com.

 

Can China and Russia Squeeze Washington Out of Eurasia? By Pepe Escobar

 

The Future of a Beijing-Moscow-Berlin Alliance
By Pepe Escobar

PepeEscobar_AT

 

 

A specter haunts the fast-aging “New American Century”: the possibility of a future Beijing-Moscow-Berlin strategic trade and commercial alliance. Let’s call it the BMB.

Its likelihood is being seriously discussed at the highest levels in Beijing and Moscow, and viewed with interest in Berlin, New Delhi, and Tehran. But don’t mention it inside Washington’s Beltway or at NATO headquarters in Brussels. There, the star of the show today and tomorrow is the new Osama bin Laden: Caliph Ibrahim, aka Abu Bakr al-Baghdadi, the elusive, self-appointed beheading prophet of a new mini-state and movement that has provided an acronym feast — ISIS/ISIL/IS — for hysterics in Washington and elsewhere.

No matter how often Washington remixes its Global War on Terror, however, the tectonic plates of Eurasian geopolitics continue to shift, and they’re not going to stop just because American elites refuse to accept that their historically brief “unipolar moment” is on the wane. For them, the closing of the era of “full spectrum dominance,” as the Pentagon likes to call it, is inconceivable. After all, the necessity for the indispensable nation to control all space — military, economic, cultural, cyber, and outer — is little short of a religious doctrine. Exceptionalist missionaries don’t do equality. At best, they do “coalitions of the willing” like the one crammed with “over 40 countries” assembled to fight ISIS/ISIL/IS and either applauding (and plotting) from the sidelines or sending the odd plane or two toward Iraq or Syria.

NATO, which unlike some of its members won’t officially fight Jihadistan, remains a top-down outfit controlled by Washington. It’s never fully bothered to take in the European Union (EU) or considered allowing Russia to “feel” European. As for the Caliph, he’s just a minor diversion. A postmodern cynic might even contend that he was an emissary sent onto the global playing field by China and Russia to take the eye of the planet’s hyperpower off the ball.

Divide and Isolate

So how does full spectrum dominance apply when two actual competitor powers, Russia and China, begin to make their presences felt? Washington’s approach to each — in Ukraine and in Asian waters — might be thought of as divide and isolate.

In order to keep the Pacific Ocean as a classic “American lake,” the Obama administration has been “pivoting” back to Asia for several years now. This has involved only modest military moves, but an immodest attempt to pit Chinese nationalism against the Japanese variety, while strengthening alliances and relations across Southeast Asia with a focus on South China Sea energy disputes. At the same time, it has moved to lock a future trade agreement, the Trans-Pacific Partnership (TPP), in place.

In Russia’s western borderlands, the Obama administration has stoked the embers of regime change in Kiev into flames (fanned by local cheerleaders Poland and the Baltic nations) and into what clearly looked, to Vladimir Putin and Russia’s leadership, like an existential threat to Moscow. Unlike the U.S., whose sphere of influence (and military bases) are global, Russia was not to retain any significant influence in its former near abroad, which, when it comes to Kiev, is not for most Russians, “abroad” at all.

For Moscow, it seemed as if Washington and its NATO allies were increasingly interested in imposing a new Iron Curtain on their country from the Baltic to the Black Sea, with Ukraine simply as the tip of the spear. In BMB terms, think of it as an attempt to isolate Russia and impose a new barrier to relations with Germany. The ultimate aim would be to split Eurasia, preventing future moves toward trade and commercial integration via a process not controlled through Washington.

From Beijing’s point of view, the Ukraine crisis was a case of Washington crossing every imaginable red line to harass and isolate Russia. To its leaders, this looks like a concerted attempt to destabilize the region in ways favorable to American interests, supported by a full range of Washington’s elite from neocons and Cold War “liberals” to humanitarian interventionists in the Susan Rice and Samantha Power mold. Of course, if you’ve been following the Ukraine crisis from Washington, such perspectives seem as alien as any those of any Martian. But the world looks different from the heart of Eurasia than it does from Washington — especially from a rising China with its newly minted “Chinese dream” (Zhongguo meng).

As laid out by President Xi Jinping, that dream would include a future network of Chinese-organized new Silk Roads that would create the equivalent of a Trans-Asian Express for Eurasian commerce. So if Beijing, for instance, feels pressure from Washington and Tokyo on the naval front, part of its response is a two-pronged, trade-based advance across the Eurasian landmass, one prong via Siberia and the other through the Central Asian “stans.”

In this sense, though you wouldn’t know it if you only followed the American media or “debates” in Washington, we’re potentially entering a new world. Once upon a time not so long ago, Beijing’s leadership was flirting with the idea of rewriting the geopolitical/economic game side by side with the U.S., while Putin’s Moscow hinted at the possibility of someday joining NATO. No longer. Today, the part of the West that both countries are interested in is a possible future Germany no longer dominated by American power and Washington’s wishes.

shadowgovengelhardtMoscow has, in fact, been involved in no less than half a century of strategic dialogue with Berlin that has included industrial cooperation and increasing energy interdependence. In many quarters of the Global South this has been noted and Germany is starting to be viewed as “the sixth BRICS” power (after Brazil, Russia, India, China, and South Africa).

In the midst of global crises ranging from Syria to Ukraine, Berlin’s geostrategic interests seem to be slowly diverging from Washington’s. German industrialists, in particular, appear eager to pursue unlimited commercial deals with Russia and China. These might set their country on a path to global power unlimited by the EU’s borders and, in the long term, signal the end of the era in which Germany, however politely dealt with, was essentially an American satellite.

It will be a long and winding road. The Bundestag, Germany’s parliament, is still addicted to a strong Atlanticist agenda and a preemptive obedience to Washington. There are still tens of thousands of American soldiers on German soil. Yet, for the first time, German chancellor Angela Merkel has been hesitating when it comes to imposing ever-heavier sanctions on Russia over the situation in Ukraine, because no fewer than 300,000 German jobs depend on relations with that country. Industrial leaders and the financial establishment have already sounded the alarm, fearing such sanctions would be totally counterproductive.

China’s Silk Road Banquet

China’s new geopolitical power play in Eurasia has few parallels in modern history. The days when the “Little Helmsman” Deng Xiaoping insisted that the country “keep a low profile” on the global stage are long gone. Of course, there are disagreements and conflicting strategies when it comes to managing the country’s hot spots: Taiwan, Hong Kong, Tibet, Xinjiang, the South China Sea, competitors India and Japan, and problematic allies like North Korea and Pakistan. And popular unrest in some Beijing-dominated “peripheries” is growing to incendiary levels.

The country’s number one priority remains domestic and focused on carrying out President Xi’s economic reforms, while increasing “transparency” and fighting corruption within the ruling Communist Party. A distant second is the question of how to progressively hedge against the Pentagon’s “pivot” plans in the region — via the build-up of a blue-water navy, nuclear submarines, and a technologically advanced air force — without getting so assertive as to freak out Washington’s “China threat”-minded establishment.

Meanwhile, with the U.S. Navy controlling global sea lanes for the foreseeable future, planning for those new Silk Roads across Eurasia is proceeding apace. The end result should prove a triumph of integrated infrastructure — roads, high-speed rail, pipelines, ports — that will connect China to Western Europe and the Mediterranean Sea, the old Roman imperial Mare Nostrum, in every imaginable way.

In a reverse Marco Polo-style journey, remixed for the Google world, one key Silk Road branch will go from the former imperial capital Xian to Urumqi in Xinjiang Province, then through Central Asia, Iran, Iraq, and Turkey’s Anatolia, ending in Venice. Another will be a maritime Silk Road starting from Fujian province and going through the Malacca strait, the Indian Ocean, Nairobi in Kenya, and finally all the way to the Mediterranean via the Suez canal. Taken together, it’s what Beijing refers to as the Silk Road Economic Belt.

China’s strategy is to create a network of interconnections among no less than five key regions: Russia (the key bridge between Asia and Europe), the Central Asian “stans,” Southwest Asia (with major roles for Iran, Iraq, Syria, Saudi Arabia, and Turkey), the Caucasus, and Eastern Europe (including Belarus, Moldova, and depending upon its stability, Ukraine). And don’t forget Afghanistan, Pakistan, and India, which could be thought of as Silk Road plus.

Silk Road plus would involve connecting the Bangladesh-China-India-Myanmar economic corridor to the China-Pakistan economic corridor, and could offer Beijing privileged access to the Indian Ocean. Once again, a total package — roads, high-speed rail, pipelines, and fiber optic networks — would link the region to China.

Xi himself put the India-China connection in a neat package of images in an op-ed he published in the Hindu prior to his recent visit to New Delhi. “The combination of the ‘world’s factory’ and the ‘world’s back office,’” he wrote, “will produce the most competitive production base and the most attractive consumer market.”

The central node of China’s elaborate planning for the Eurasian future is Urumqi, the capital of Xinjiang Province and the site of the largest commercial fair in Central Asia, the China-Eurasia Fair. Since 2000, one of Beijing’s top priorities has been to urbanize that largely desert but oil-rich province and industrialize it, whatever it takes. And what it takes, as Beijing sees it, is the hardcore Sinicization of the region — with its corollary, the suppression of any possibility of ethnic Uighur dissent.  People’s Liberation Army General Li Yazhou has, in these terms, described Central Asia as “the most subtle slice of cake donated by the sky to modern China.”

Most of China’s vision of a new Eurasia tied to Beijing by every form of transport and communication was vividly detailed in “Marching Westwards: The Rebalancing of China’s Geostrategy,” a landmark 2012 essay published by scholar Wang Jisi of the Center of International and Strategic Studies at Beijing University. As a response to such a future set of Eurasian connections, the best the Obama administration has come up with is a version of naval containment from the Indian Ocean to the South China Sea, while sharpening conflicts with and strategic alliances around China from Japan to India. (NATO is, of course, left with the task of containing Russia in Eastern Europe.)

An Iron Curtain vs. Silk Roads

The $400 billion “gas deal of the century,” signed by Putin and the Chinese president last May, laid the groundwork for the building of the Power of Siberia pipeline, already under construction in Yakutsk.  It will bring a flood of Russian natural gas onto the Chinese market.  It clearly represents just the beginning of a turbocharged, energy-based strategic alliance between the two countries. Meanwhile, German businessmen and industrialists have been noting another emerging reality: as much as the final market for made-in-China products traveling on future new Silk Roads will be Europe, the reverse also applies. In one possible commercial future, China is slated to become Germany’s top trading partner by 2018, surging ahead of both the U.S. and France.

A potential barrier to such developments, welcomed in Washington, is Cold War 2.0, which is already tearing not NATO, but the EU apart. In the EU of this moment, the anti-Russian camp includes Great Britain, Sweden, Poland, Romania, and the Baltic nations. Italy and Hungary, on the other hand, can be counted in the pro-Russian camp, while a still unpredictable Germany is the key to whether the future will hold a new Iron Curtain or “Go East” mindset.  For this, Ukraine remains the key.  If it is successfully Finlandized (with significant autonomy for its regions), as Moscow has been proposing — a suggestion that is anathema to Washington — the Go-East path will remain open. If not, a BMB future will be a dicier proposition.

It should be noted that another vision of the Eurasian economic future is also on the horizon.  Washington is attempting to impose a Transatlantic Trade and Investment Partnership (TTIP) on Europe and a similar Trans-Pacific Partnership (TPP) on Asia.  Both favor globalizing American corporations and their aim is visibly to impede the ascent of the BRICS economies and the rise of other emerging markets, while solidifying American global economic hegemony.

Two stark facts, carefully noted in Moscow, Beijing, and Berlin, suggest the hardcore geopolitics behind these two “commercial” pacts. The TPP excludes China and the TTIP excludes Russia. They represent, that is, the barely disguised sinews of a future trade/monetary war.  On my own recent travels, I have had quality agricultural producers in Spain, Italy, and France repeatedly tell me that TTIP is nothing but an economic version of NATO, the military alliance that China’s Xi Jinping calls, perhaps wishfully, an “obsolete structure.”

There is significant resistance to the TTIP among many EU nations (especially in the Club Med countries of southern Europe), as there is against the TPP among Asian nations (especially Japan and Malaysia).  It is this that gives the Chinese and the Russians hope for their new Silk Roads and a new style of trade across the Eurasian heartland backed by a Russian-supported Eurasian Union. To this, key figures in German business and industrial circles, for whom relations with Russia remain essential, are paying close attention.

After all, Berlin has not shown overwhelming concern for the rest of the crisis-ridden EU (three recessions in five years). Via a much-despised troika — the European Central Bank, the International Monetary Fund, and the European Commission — Berlin is, for all practical purposes, already at the helm of Europe, thriving, and looking east for more.

Three months ago, German chancellor Angela Merkel visited Beijing. Hardly featured in the news was the political acceleration of a potentially groundbreaking project: an uninterrupted high-speed rail connection between Beijing and Berlin. When finally built, it will prove a transportation and trade magnet for dozens of nations along its route from Asia to Europe. Passing through Moscow, it could become the ultimate Silk Road integrator for Europe and perhaps the ultimate nightmare for Washington.

“Losing” Russia

In a blaze of media attention, the recent NATO summit in Wales yielded only a modest “rapid reaction force” for deployment in any future Ukraine-like situations. Meanwhile, the expanding Shanghai Cooperation Organization (SCO), a possible Asian counterpart to NATO, met in Dushanbe, Tajikistan. In Washington and Western Europe essentially no one noticed.  They should have. There, China, Russia, and four Central Asian “stans” agreed to add an impressive set of new members: India, Pakistan, and Iran.  The implications could be far-reaching. After all, India under Prime Minister Narendra Modi is now on the brink of its own version of Silk Road mania. Behind it lies the possibility of a “Chindia” economic rapprochement, which could change the Eurasian geopolitical map. At the same time, Iran is also being woven into the “Chindia” fold.

So the SCO is slowly but surely shaping up as the most important international organization in AsiaIt’s already clear that one of its key long-term objectives will be to stop trading in U.S. dollars, while advancing the use of the petroyuan and petroruble in the energy trade. The U.S., of course, will never be welcomed into the organization.

All of this lies in the future, however.  In the present, the Kremlin keeps signaling that it once again wants to start talking with Washington, while Beijing has never wanted to stop. Yet the Obama administration remains myopically embedded in its own version of a zero-sum game, relying on its technological and military might to maintain an advantageous position in EurasiaBeijing, however, has access to markets and loads of cash, while Moscow has loads of energy. Triangular cooperation between Washington, Beijing, and Moscow would undoubtedly be — as the Chinese would say — a win-win-win game, but don’t hold your breath.

Instead, expect China and Russia to deepen their strategic partnership, while pulling in other Eurasian regional powers. Beijing has bet the farm that the U.S./NATO confrontation with Russia over Ukraine will leave Vladimir Putin turning east. At the same time, Moscow is carefully calibrating what its ongoing reorientation toward such an economic powerhouse will mean. Someday, it’s possible that voices of sanity in Washington will be wondering aloud how the U.S. “lost” Russia to China.

In the meantime, think of China as a magnet for a new world order in a future Eurasian century.  The same integration process Russia is facing, for instance, seems increasingly to apply to India and other Eurasian nations, and possibly sooner or later to a neutral Germany as well. In the endgame of such a process, the U.S. might find itself progressively squeezed out of Eurasia, with the BMB emerging as a game-changer. Place your bets soon.  They’ll be called in by 2025.

Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT, and a TomDispatch regular. His new book, Empire of Chaos, will be published in November by Nimble Books. Follow him on Facebook

The Birth of a Eurasian Century – By Pepe Escobar

Yes, We Can!  No, he can't!

Yes, We Can! — No, he can’t!

 

Russia and China Do Pipelineistan

 

A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass — at the expense of the United States.

And no wonder Washington is anxious.  That alliance is already a done deal in a variety of ways: through the BRICS group of emerging powers (Brazil, Russia, India, China, and South Africa); at the Shanghai Cooperation Organization, the Asian counterweight to NATO; inside the G20; and via the 120-member-nation Non-Aligned Movement (NAM). Trade and commerce are just part of the future bargain.  Synergies in the development of new military technologies beckon as well. After Russia’s Star Wars-style, ultra-sophisticated S-500 air defense anti-missile system comes online in 2018, Beijing is sure to want a version of it. Meanwhile, Russia is about to sell dozens of state-of-the-art Sukhoi Su-35 jet fighters to the Chinese as Beijing and Moscow move to seal an aviation-industrial partnership.

This week should provide the first real fireworks in the celebration of a new Eurasian century-in-the-making when Russian President Vladimir Putin drops in on Chinese President Xi Jinping in Beijing.  You remember “Pipelineistan,” all those crucial oil and gas pipelines crisscrossing Eurasia that make up the true circulatory system for the life of the region.  Now, it looks like the ultimate Pipelineistan deal, worth $1 trillion and 10 years in the making, will be inked as well.  In it, the giant, state-controlled Russian energy giant Gazprom will agree to supply the giant state-controlled China National Petroleum Corporation (CNPC) with 3.75 billion cubic feet of liquefied natural gas a day for no less than 30 years, starting in 2018. That’s the equivalent of a quarter of Russia’s massive gas exports to all of Europe. China’s current daily gas demand is around 16 billion cubic feet a day, and imports account for 31.6% of total consumption.

Gazprom may still collect the bulk of its profits from Europe, but Asia could turn out to be its Everest. The company will use this mega-deal to boost investment in Eastern Siberia and the whole region will be reconfigured as a privileged gas hub for Japan and South Korea as well. If you want to know why no key country in Asia has been willing to “isolate” Russia in the midst of the Ukrainian crisis — and in defiance of the Obama administration — look no further than Pipelineistan.

Exit the Petrodollar, Enter the Gas-o-Yuan

And then, talking about anxiety in Washington, there’s the fate of the petrodollar to consider, or rather the “thermonuclear” possibility that Moscow and Beijing will agree on payment for the Gazprom-CNPC deal not in petrodollars but in Chinese yuan. One can hardly imagine a more tectonic shift, with Pipelineistan intersecting with a growing Sino-Russian political-economic-energy partnership. Along with it goes the future possibility of a push, led again by China and Russia, toward a new international reserve currency — actually a basket of currencies — that would supersede the dollar (at least in the optimistic dreams of BRICS members).

Right after the potentially game-changing Sino-Russian summit comes a BRICS summit in Brazil in July. That’s when a $100 billion BRICS development bank, announced in 2012, will officially be born as a potential alternative to the International Monetary Fund (IMF) and the World Bank as a source of project financing for the developing world.

More BRICS cooperation meant to bypass the dollar is reflected in the “Gas-o-yuan,” as in natural gas bought and paid for in Chinese currency. Gazprom is even considering marketing bonds in yuan as part of the financial planning for its expansion. Yuan-backed bonds are already trading in Hong Kong, Singapore, London, and most recently Frankfurt.

Nothing could be more sensible for the new Pipelineistan deal than to have it settled in yuan. Beijing would pay Gazprom in that currency (convertible into rubles); Gazprom would accumulate the yuan; and Russia would then buy myriad made-in-China goods and services in yuan convertible into rubles.

It’s common knowledge that banks in Hong Kong, from Standard Chartered to HSBC — as well as others closely linked to China via trade deals — have been diversifying into the yuan, which implies that it could become one of the de facto global reserve currencies even before it’s fully convertible. (Beijing is unofficially working for a fully convertible yuan by 2018.)

The Russia-China gas deal is inextricably tied up with the energy relationship between the European Union (EU) and Russia. After all, the bulk of Russia’s gross domestic product comes from oil and gas sales, as does much of its leverage in the Ukraine crisis. In turn, Germany depends on Russia for a hefty 30% of its natural gas supplies. Yet Washington’s geopolitical imperatives — spiced up with Polish hysteria — have meant pushing Brussels to find ways to “punish” Moscow in the future energy sphere (while not imperiling present day energy relationships).

There’s a consistent rumble in Brussels these days about the possible cancellation of the projected 16 billion euro South Stream pipeline, whose construction is to start in June.  On completion, it would pump yet more Russian natural gas to Europe — in this case, underneath the Black Sea (bypassing Ukraine) to Bulgaria, Hungary, Slovenia, Serbia, Croatia, Greece, Italy, and Austria.

Bulgaria, Hungary, and the Czech Republic have already made it clear that they are firmly opposed to any cancellation.  And cancellation is probably not in the cards.  After all, the only obvious alternative is Caspian Sea gas from Azerbaijan, and that isn’t likely to happen unless the EU can suddenly muster the will and funds for a crash schedule to construct the fabled Baku-Tblisi-Ceyhan (BTC) oil pipeline, conceived during the Clinton years expressly to bypass Russia and Iran.

In any case, Azerbaijan doesn’t have enough capacity to supply the levels of natural gas needed, and other actors like Kazakhstan, plagued with infrastructure problems, or unreliable Turkmenistan, which prefers to sell its gas to China, are already largely out of the picture. And don’t forget that South Stream, coupled with subsidiary energy projects, will create a lot of jobs and investment in many of the most economically devastated EU nations.

Nonetheless, such EU threats, however unrealistic, only serve to accelerate Russia’s increasing symbiosis with Asian markets. For Beijing especially, it’s a win-win situation. After all, between energy supplied across seas policed and controlled by the U.S. Navy and steady, stable land routes out of Siberia, it’s no contest.

Pick Your Own Silk Road

Of course, the U.S. dollar remains the top global reserve currency, involving 33% of global foreign exchange holdings at the end of 2013, according to the IMF. It was, however, at 55% in 2000. Nobody knows the percentage in yuan (and Beijing isn’t talking), but the IMF notes that reserves in “other currencies” in emerging markets have been up 400% since 2003.

The Fed is arguably monetizing 70% of the U.S. government debt in an attempt to keep interest rates from heading skywards. Pentagon adviser Jim Rickards, as well as every Hong Kong-based banker, tends to believe that the Fed is bust (though they won’t say it on the record). No one can even imagine the extent of the possible future deluge the U.S. dollar might experience amid a $1.4 trillion Mount Ararat of financial derivatives.  Don’t think that this is the death knell of Western capitalism, however, just the faltering of that reigning economic faith, neoliberalism, still the official ideology of the United States, the overwhelming majority of the European Union, and parts of Asia and South America.

As far as what might be called the “authoritarian neoliberalism” of the Middle Kingdom, what’s not to like at the moment? China has proven that there is a result-oriented alternative to the Western “democratic” capitalist model for nations aiming to be successful. It’s building not one, but myriad new Silk Roads, massive webs of high-speed railways, highways, pipelines, ports, and fiber optic networks across huge parts of Eurasia. These include a Southeast Asian road, a Central Asian road, an Indian Ocean “maritime highway” and even a high-speed rail line through Iran and Turkey reaching all the way to Germany.

In April, when President Xi Jinping visited the city of Duisburg on the Rhine River, with the largest inland harbor in the world and right in the heartland of Germany’s Ruhr steel industry, he made an audacious proposal: a new “economic Silk Road” should be built between China and Europe, on the basis of the Chongqing-Xinjiang-Europe railway, which already runs from China to Kazakhstan, then through Russia, Belarus, Poland, and finally Germany. That’s 15 days by train, 20 less than for cargo ships sailing from China’s eastern seaboard. Now that would represent the ultimate geopolitical earthquake in terms of integrating economic growth across Eurasia.

Keep in mind that, if no bubbles burst, China is about to become — and remain — the number one global economic power, a position it enjoyed for 18 of the past 20 centuries. But don’t tell London hagiographers; they still believe that U.S. hegemony will last, well, forever.

Take Me to Cold War 2.0

Despite recent serious financial struggles, the BRICS countries have been consciously working to become a counterforce to the original and — having tossed Russia out in March — once again Group of 7, or G7. They are eager to create a new global architecture to replace the one first imposed in the wake of World War II, and they see themselves as a potential challenge to the exceptionalist and unipolar world that Washington imagines for our future (with itself as the global robocop and NATO as its robo-police force). Historian and imperialist cheerleader Ian Morris, in his book War! What is it Good For?, defines the U.S. as the ultimate “globocop” and “the last best hope of Earth.” If that globocop “wearies of its role,” he writes, “there is no plan B.”

Well, there is a plan BRICS — or so the BRICS nations would like to think, at least. And when the BRICS do act in this spirit on the global stage, they quickly conjure up a curious mix of fear, hysteria, and pugnaciousness in the Washington establishment. Take Christopher Hill as an example. The former assistant secretary of state for East Asia and U.S. ambassador to Iraq is now an advisor with the Albright Stonebridge Group, a consulting firm deeply connected to the White House and the State Department. When Russia was down and out, Hill used to dream of a hegemonic American “new world order.”  Now that the ungrateful Russians have spurned what “the West has been offering” — that is, “special status with NATO, a privileged relationship with the European Union, and partnership in international diplomatic endeavors” — they are, in his view, busy trying to revive the Soviet empire. Translation: if you’re not our vassals, you’re against us.  Welcome to Cold War 2.0.

The Pentagon has its own version of this directed not so much at Russia as at China, which, its think tank on future warfare claims, is already at war with Washington in a number of ways. So if it’s not apocalypse now, it’s Armageddon tomorrow. And it goes without saying that whatever’s going wrong, as the Obama administration very publicly “pivots” to Asia and the American media fills with talk about a revival of Cold War-era “containment policy” in the Pacific, it’s all China’s fault.

Embedded in the mad dash toward Cold War 2.0 are some ludicrous facts-on-the-ground: the U.S. government, with $17.5 trillion in national debt and counting, is contemplating a financial showdown with Russia, the largest global energy producer and a major nuclear power, just as it’s also promoting an economically unsustainable military encirclement of its largest creditor, China.

Russia runs a sizeable trade surplus. Humongous Chinese banks will have no trouble helping Russian banks out if Western funds dry up. In terms of inter-BRICS cooperation, few projects beat a $30 billion oil pipeline in the planning stages that will stretch from Russia to India via Northwest China. Chinese companies are already eagerly discussing the possibility of taking part in the creation of a transport corridor from Russia into Crimea, as well as an airport, shipyard, and liquid natural gas terminal there. And there’s another “thermonuclear” gambit in the making: the birth of a natural gas equivalent to the Organization of the Petroleum Exporting Countries that would include Russia, Iran, and reportedly disgruntled U.S. ally Qatar.

The (unstated) BRICS long-term plan involves the creation of an alternative economic system featuring a basket of gold-backed currencies that would bypass the present America-centric global financial system. (No wonder Russia and China are amassing as much gold as they can.) The euro — a sound currency backed by large liquid bond markets and huge gold reserves — would be welcomed in as well.

It’s no secret in Hong Kong that the Bank of China has been using a parallel SWIFT network to conduct every kind of trade with Tehran, which is under a heavy U.S. sanctions regime. With Washington wielding Visa and Mastercard as weapons in a growing Cold War-style economic campaign against Russia, Moscow is about to implement an alternative payment and credit card system not controlled by Western finance. An even easier route would be to adopt the Chinese Union Pay system, whose operations have already overtaken American Express in global volume.

I’m Just Pivoting With Myself

No amount of Obama administration “pivoting” to Asia to contain China (and threaten it with U.S. Navy control of the energy sea lanes to that country) is likely to push Beijing far from its Deng Xiaoping-inspired, self-described “peaceful development” strategy meant to turn it into a global powerhouse of trade.  Nor are the forward deployment of U.S. or NATO troops in Eastern Europe or other such Cold-War-ish acts likely to deter Moscow from a careful balancing act: ensuring that Russia’s sphere of influence in Ukraine remains strong without compromising trade and commercial, as well as political, ties with the European Union — above all, with strategic partner Germany. This is Moscow’s Holy Grail; a free-trade zone from Lisbon to Vladivostok, which (not by accident) is mirrored in China’s dream of a new Silk Road to Germany.

Increasingly wary of Washington, Berlin for its part abhors the notion of Europe being caught in the grips of a Cold War 2.0. German leaders have more important fish to fry, including trying to stabilize a wobbly EU while warding off an economic collapse in southern and central Europe and the advance of ever more extreme rightwing parties.

On the other side of the Atlantic, President Obama and his top officials show every sign of becoming entangled in their own pivoting — to Iran, to China, to Russia’s eastern borderlands, and (under the radar) to Africa. The irony of all these military-first maneuvers is that they are actually helping Moscow, Tehran, and Beijing build up their own strategic depth in Eurasia and elsewhere, as reflected in Syria, or crucially in ever more energy deals. They are also helping cement the growing strategic partnership between China and Iran. The unrelenting Ministry of Truth narrative out of Washington about all these developments now carefully ignores the fact that, without Moscow, the “West” would never have sat down to discuss a final nuclear deal with Iran or gotten a chemical disarmament agreement out of Damascus.

When the disputes between China and its neighbors in the South China Sea and between that country and Japan over the Senkaku/Diaoyou islands meet the Ukraine crisis, the inevitable conclusion will be that both Russia and China consider their borderlands and sea lanes private property and aren’t going to take challenges quietly — be it via NATO expansion, U.S. military encirclement, or missile shields. Neither Beijing nor Moscow is bent on the usual form of imperialist expansion, despite the version of events now being fed to Western publics.  Their “red lines” remain essentially defensive in nature, no matter the bluster sometimes involved in securing them.

Whatever Washington may want or fear or try to prevent, the facts on the ground suggest that, in the years ahead, Beijing, Moscow, and Tehran will only grow closer, slowly but surely creating a new geopolitical axis in Eurasia. Meanwhile, a discombobulated America seems to be aiding and abetting the deconstruction of its own unipolar world order, while offering the BRICS a genuine window of opportunity to try to change the rules of the game.

Russia and China in Pivot Mode

In Washington’s think-tank land, the conviction that the Obama administration should be focused on replaying the Cold War via a new version of containment policy to “limit the development of Russia as a hegemonic power” has taken hold. The recipe: weaponize the neighbors from the Baltic states to Azerbaijan to “contain” Russia. Cold War 2.0 is on because, from the point of view of Washington’s elites, the first one never really left town.

Yet as much as the U.S. may fight the emergence of a multipolar, multi-powered world, economic facts on the ground regularly point to such developments.  The question remains: Will the decline of the hegemon be slow and reasonably dignified, or will the whole world be dragged down with it in what has been called “the Samson option”?

While we watch the spectacle unfold, with no end game in sight, keep in mind that a new force is growing in Eurasia, with the Sino-Russian strategic alliance threatening to dominate its heartland along with great stretches of its inner rim. Now, that’s a nightmare of Mackinderesque proportions from Washington’s point of view.  Think, for instance, of how Zbigniew Brzezinski, the former national security adviser who became a mentor on global politics to President Obama, would see it.

In his 1997 book The Grand Chessboard, Brzezinski argued that “the struggle for global primacy [would] continue to be played” on the Eurasian “chessboard,” of which “Ukraine was a geopolitical pivot.” “If Moscow regains control over Ukraine,” he wrote at the time, Russia would “automatically regain the wherewithal to become a powerful imperial state, spanning Europe and Asia.”

That remains most of the rationale behind the American imperial containment policy — from Russia’s European “near abroad” to the South China Sea. Still, with no endgame in sight, keep your eye on Russia pivoting to Asia, China pivoting across the world, and the BRICS hard at work trying to bring about the new Eurasian Century.

Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT, and a TomDispatch regular. With a chapter on Iran, he is a contributing editor to The Global Obama: Crossroads of Leadership in the 21st Century. Follow him on Facebook.

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