Asia faces natural barriers as West's fortunes dim

PUBLISHED : Tuesday, 29 December, 2009, 12:00am
UPDATED : Tuesday, 29 December, 2009, 12:00am

Decades don't usually have the courtesy to begin and end on the right year. The social and cultural revolution that Western countries think of when they talk of the 'Sixties' only got underway in 1962-63, and didn't end until the Middle East war and oil embargo of 1973-74. But this one has been quite neat: the 'noughties' began with Islamist terrorist attacks on the United States in 2001, and ended with a global financial melt down.

The terrorist threat to the West was minor, but the West's hugely disproportionate and ill-considered response was a key factor in the great shift that defines the decade. The 'war on terror' and all the rest did not deter a Muslim Nigerian student from trying to blow up an airliner over Detroit last Saturday. It motivated him to do so. But it also accelerated the rise of Asia and the relative decline of the West.

That shift was happening anyway. When China and India are growing economically three to four times as fast as the West, it's only a matter of time until they catch up with the older industrial economies.

In 2003, however, researchers at Goldman Sachs predicted that the Chinese economy would surpass that of the US by the mid-2040s. By the middle of this year, they were predicting that it would happen in the mid-2020s - and this year, for the first time, China built more cars than the US. That acceleration is in large part a consequence of the huge diversion of Western attention and resources that was caused by the 'war on terror'.

Prestige is a quality that cannot be measured or quantified, but a reputation for competence in the use of power is a great asset in international affairs. After the centuries-old European empires wasted their wealth and the lives of millions of their citizens in two 'world wars' in only 30 years, their empires just melted away. Nobody was still in awe of them, and they lacked the resources to hold onto their colonies by force.

Something similar has happened in the past decade to the US. Unwinnable wars fought for the wrong reasons always hurt a great power's reputation, and wars fought amid needless tax cuts, burgeoning deficits and financial anarchy are more damaging if the country's power depends heavily on a global financial empire.

The US spent the past decade cutting its own throat financially, ending with the near-death experience of the 2008-09 financial meltdown. The Europeans made all the same mistakes, only more timidly, and the Japanese sat the decade out on the sidelines, mired in a seemingly endless recession. The old order is passing, the US dollar is on its way out as the sole global currency, and the real power is shifting to mainland Asia.

Or is it? There are two trends that could slow or even stop this shift. They seemed quite distant at the start of the decade, but now they look very big and frightening. One is peak oil; the other is global warming.

In Europe, North America and Japan, energy consumption is growing slowly or not at all, and it is relatively cheap and easy to reduce dependence on imported oil. Just the fuel efficiency standards already mandated by the Obama administration could reduce American oil imports by half by 2020. Meanwhile, Chinese and Indian dependence on imported oil is soaring. So is their use of coal.

That's unfortunate, because for purely geographical reasons these countries are far more vulnerable to high temperatures than the older industrial nations. At even 2 degrees Celsius higher average global temperature, they face floods, droughts and storms on a massive scale, probably accompanied by a steep fall in food production. That sort of thing could abort even the Chinese and Indian economic miracles.

So we're back in the old world where the future is uncertain. But, what else did you expect? We can only observe trends, and try to remember they are always contingent. But at the moment, it looks like the decade when the West lost its domination over the world's economy.

Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries