The End of the 'American Century' Is Here

By Conn Hallinan, Foreign Policy in Focus. Posted January 30, 2008.

Rather than the "American Century" the Bush administration neo-conservatives predicted, it is increasingly a world where regional alliances and trade associations in Europe and South America have risen to challenge Washington's once undisputed domination.

When Argentina thumbed its nose at the U.S.-dominated World Bank and International Monetary Fund, it had the powerful Mercosur trade association to back it up. When the United States tried to muscle Europe into ending agricultural subsidies (while keeping its own) the European Union refused to back down.

And now India, China, and Russia are drifting toward a partnership -- alliance is too strong a word -- that could transform global relations and shift the power axis from Washington to New Delhi, Beijing, and Moscow. It is a consortium of convenience, as the interests of the three countries hardly coincide on all things.

Partners in Energy

In security matters, for instance, the Chinese look east toward Taiwan, the Indians north to Pakistan, and the Russians west at an encroaching North Atlantic Treaty Organization (NATO). There are still tensions between China and India over their 1962 border war, and bad feelings between Russia and China go all the way back to the Vietnam War.

But growing trade, convergent security concerns, and an almost insatiable hunger for energy have brought the three together in what Russian President Vladimir Putin calls a "trilateral" relationship.

The initial glue was a common interest in the gas and oil supplies of Central Asia.

In 2001, China, Russia, Uzbekistan, Kazakhstan, Turkmenistan, Tajikistan, and Kyrgyzstan formed the Shanghai Cooperation Organization (SCO) to challenge U.S. moves to corner Central Asia's gas and oil reserves and to counter the growing presence of NATO in the Pacific Basin. SCO has since added India and given observer status to Iran, Pakistan, Mongolia, and Afghanistan.

Access to energy is almost an existential issue for China and India. China imports half its oil, and energy shortages could derail the highflying Chinese economy. India imports 70 percent of its oil, and, unlike China, has no strategic reserves. Both nations have made energy a foreign policy cornerstone. China is pumping billions of dollars into developing Caspian Sea oil and gas fields and building pipelines, while India is busy negotiating a pipeline deal with Iran.

The India-Iran deal has come under considerable pressure from Washington. Nicholas Burns, U.S. undersecretary of state for political affairs, told the Council on Foreign Relations that Washington hoped "very much that India will not conclude any long-term oil and gas agreements with Iran."

However, Indian Finance Minister Palaniappan Chidambaram says, "We should do it -- Iran has the gas and we need the gas." India is estimated to have up to $40 billion in gas and oil interests in Iran, and the pipeline is projected to cost $10 billion.

To much unhappiness in Washington, China just inked a $2 billion deal to develop Iran's Yadavaran gas and oil field.

The International Energy Agency predicts that energy needs will be 50 percent higher in 2030 than they are today, and that developing countries will soak up 74 percent of that rise. China and India will account for 45 percent of those energy needs, and by sometime after 2010, China will be the largest energy user in the world.

Ties of Security and Trade

Trade is increasing among China, India, and Russia. For instance, trade between India and China was $24 billion in 2007, the same as trade between India and the U.S., and is projected to jump to $40 billion by 2010. Both nations have agreed to reopen an overland route through the Himalayas that has been closed for 44 years. In 1992 India launched its "Look East" policy, and Asia now constitutes 45 percent of India's trade. India is the third largest economy in the region, followed by China and Japan.

India desperately needs up to $500 billion in investments to upgrade its infrastructure. South Korea and Singapore are already major investors, and the Russians have shown interest as well. India would love a piece of Russia's $1 trillion in foreign exchange reserves.

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Conn Hallinan is a Foreign Policy In Focus (www.fpif.org) columnist.