Dilip Hiro

Biden's agenda on China needs a reality check

Like his immediate predecessor, Joe Biden is committed to a distinctly anti-China global strategy and has sworn that China will not "become the leading country in the world, the wealthiest country in the world, and the most powerful country in the world… on my watch." In the topsy-turvy universe created by the Covid-19 pandemic, it was, however, Jamie Dimon, the CEO and chairman of JP Morgan Chase, a banking giant with assets of $3.4 trillion, who spoke truth to Biden on the subject.

While predicting an immediate boom in the U.S. economy "that could easily run into 2023," Dimon had grimmer news on the future as well. "China's leaders believe that America is in decline," he wrote in his annual letter to the company's shareholders. While the U.S. had faced tough times in the past, he added, today "the Chinese see an America that is losing ground in technology, infrastructure, and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals." He was forthright enough to say, "Unfortunately, recently, there is a lot of truth to this."

As for China, Dimon could also have added, its government possesses at least two powerful levers in areas where the United States is likely to prove vulnerable: dominant control of container ports worldwide and the supplies of rare earth metals critical not just to the information-technology sector but also to the production of electric and hybrid cars, jet fighters, and missile guidance systems. And that's only a partial list of the areas where China is poised to become dominant in the foreseeable future. Here's a likely scenario.

The Digital Yuan Versus the (Missing) Digital Dollar

Within the broad headline of the globe's "second-largest economy," China has already either surpassed the United States or is running neck-and-neck with it in certain specific sectors.

With a global smartphone market share of 20% in the second quarter of 2020, China's Huawei Technologies topped the charts, marginally exceeding South Korea's Samsung, and well ahead of Apple, according to the International Data Corporation. This happened despite a concerted drive by President Donald Trump's administration to damage Huawei that culminated, in May 2020, with Washington barring companies worldwide from using U.S.-made machinery or software to design or produce chips for that company or its entities from that September on. Nonetheless, with a 47% share of China's booming 5G smartphone market, Huawei topped the list there while it kept up its investment in future-oriented, cutting-edge technologies and basic research to the tune of a striking $3 billion to $5 billion annually.

Broadly speaking, China continues to make impressive strides when it comes to developing its information and communications technology sector. Its Fintech (Financial Technology) report, published in October 2020, showed that an estimated 87% of Chinese consumers used fintech services. With a vast mobile-payment system that hit $29 trillion (200 trillion yuan) worth of payments in 2019, China is shaping up to become the globe's first "cashless society" and its largest financial-technology ecosystem by the end of this decade.

Less than 10% of Americans use mobile payments, which means a similar scenario for the United States is nowhere on the horizon. With mobile transactions in China already accounting for at least four out of every five payments and more than half the value of all non-cash retail payments, that country is poised to leave the U.S., a comparative laggard in fintech, shackled to a cash-dominated system.

In their relentless drive for innovation, the Chinese authorities started pushing the development of a digital currency in certain regions in August 2020. Their specific goals were to make daily life easier for citizens and digital payments more secure. While non-bank payment platforms like Alipay and WeChat Pay required users to link to bank accounts, a digital wallet with an e-currency deposit could be opened with a unique personal identification — a driver's license or a mobile phone number — enabling the un-banked population of China to embrace the digital world.

As a result, the People's Bank of China became the first major central bank to issue a virtual currency. A broader roll-out is expected for the Winter Olympics in Beijing in February 2022, which will give the digital yuan international exposure.

This has alarmed the Biden administration. Officials at the Treasury Department, the State Department, the Pentagon, and the National Security Council are frantically trying to comprehend the potential implications of a virtual yuan system. They are particularly eager to understand how it would be distributed, and whether it could be used to bypass Washington's international sanctions as applied to Iran. What distresses some American officials and experts is the notion that someday China's virtual yuan could replace the U.S. dollar as the world's dominant reserve currency.

At the Federal Reserve, Chairman Jerome Powell insisted that the central bank was involved in a large-scale research and development project on a possible future digital dollar, though pointing out that such a project could only be launched via a law that would have to be passed by a deeply divided Congress. In short, irrespective of the future of China's virtual currency, a digital dollar is not likely, not in the near future anyway.

Building Infrastructure (or Not)

As for recent economic history, even a cursory look at the performances of the United States and China in combating the 2008 financial meltdown tells a striking tale.

China made an indelible mark in meeting that financial challenge. Its government sharply increased its infrastructure spending, resulting in higher imports that helped counter flagging global demand. While this move increased Beijing's debt, it also helped build a foundation to further transform the country's economy into a productivity-led growth model. A decade after that great recession, according to the World Economic Forum's Global Competitiveness Report, China's infrastructure ranking jumped from 66th place to 36th place out of 152 countries.

Although infrastructure building on a large scale requires significant upfront investment, it's guaranteed to yield productivity gains in the long run. Time and cost savings for commuters, improved market access, healthier competition, increased exchange of ideas, and enlarged innovation capacity, all aided by modern infrastructure, are a springboard for economic development.

During the decade following the 2008 crisis, the number of Chinese cities with metro services jumped from 10 to 34 and 1.1 million kilometers of highways were built, raising the total to 4.8 million kilometers. The length of its high-speed rail system shot up by 52,000 kilometers to 132,000 kilometers. Introduced on the eve of the 2008 Olympics in Beijing, it's now by far the world's longest system, accounting for two-thirds of the globe's high-speed rail. Its advances in information-and computer-technology were equally impressive. On average, mobile-phone subscriptions came to exceed one per person — about the same as in the United States.

High-speed rail (of which the United States has none) reduces journey times, while linking dense urban areas with less crowded cities. In doing so, it allows for a more balanced distribution of labor and business development without sacrificing the benefits of an increasingly urbanized economy. Economies of scale in turn mean that productivity rises as rail usage increases.

Little wonder, then, that President Barack Obama and his team promoted the $787 billion American Recovery and Reinvestment Act of 2009 as an infrastructure-building program in response to the 2008 economic crisis. In reality, however, only $80 billion, a tenth of the money Congress sanctioned, would be devoted to actual infrastructure. Of that, about a third was spent on roads and bridges, improving about 67,600 kilometers of roads and 2,700 bridges. The program also included investment in modern infrastructure like smart grids and broadband development.

In 2010, Obama announced what was to be the "largest investment in infrastructure since the Interstate Highway System," the creation of a high-speed rail network that would rival China's. More than a decade later, the only visible progress is a much-delayed and still incomplete 275-kilometer Central Valley California line from Bakersfield to Merced. And in the Trump years, when essentially no government money went into such projects, "infrastructure week" became a standing joke. President Biden seems determined to rectify this, but how successful he'll be with his $2 trillion infrastructure proposal in the face of a rigidly divided Congress remains to be seen.

For its part, the Chinese government combined its program of rapid infrastructure development with upgrading of the labor force. It did so by implementing an educational system that stressed science, technology, engineering, and math, known as STEM. By achieving higher productivity in this way, the government planned to compensate for a projected shrinkage in its work force.

To promote STEM, the government issued guidelines in 2016 to create a national development strategy aimed at advancing China to the forefront of innovative countries by 2030. In February 2017, the Ministry of Education officially added STEM education to the primary-school curriculum. Since then, encouraged by official policies, schools in both the public and private sectors have implemented such programs.

In 2019, the government allocated 100% of its research funding to top universities to the ones that concentrated on STEM disciplines. By comparison, South Korea allocated 62% of such funding that way. By contrast, U.S. universities ranked in the top 100 maintained a greater balance in funding among STEM fields, humanities, and social sciences.

In October 2019, three of China's biggest mobile-phone carriers launched advanced 5G services, giving it the world's largest 5G mobile network. A year later, the Wall Street Journal reported that China had more 5G subscribers than the U.S., not just in total but per capita.

Given the ubiquity of smartphones, the news that America seemed to be losing the tech race to China was widely noted. Mostly ignored, however, was the extent to which the U.S. had become vulnerable to Chinese pressure in international trade.

America's Vulnerabilities

In testimony before Congress in October 2019, Carolyn Bartholomew, chairwoman of the U.S.-China Economic and Security Review Commission, revealed that at least two-thirds of the world's top 50 maritime container ports were directly owned and managed by the Chinese or supported by that country's investments (up from roughly 20% a decade ago). These included terminals at major American container ports in Los Angeles and Seattle. When it came to such ports, it led the world with seven of the 10 largest ones.

A year earlier, officials at the state-owned China Ocean Shipping Company, one of the globe's largest container shipping lines, acknowledged that the company had connected its routes along what was officially called the Maritime Silk Road, linking regional markets in West Africa, Northern Europe, the Caribbean, and the U.S. to form a more comprehensive and balanced globalized trading network. "By owning and/or operating a network of logistical nodes across Asia, Europe, and Africa, China can control a significant portion of its inbound supply chain for essential commodities and outbound trade routes for its exports," Bartholomew explained. "In the event of conflict, China could use its control over these and other ports to hinder trade access to other countries."

In the manufacturing sector, China finds itself in a privileged position by virtue of its special mineral deposits, called rare earth elements. A group of 17 rare earth metals, including lanthanum, cerium, yttrium, europium, and gadolinium, often called "industrial gold," are critical components of such high-technology and clean-energy products as wind turbines, solar panels, and electric cars, because of their magnetism, luminescence, and strength. They are also used in a wide variety of weapons from jet fighters to nuclear submarines.

Unsurprisingly, in recent years, there has been a rapid rise in the demand for these minerals in advanced economies. They are dispersed in low concentrations and are costly to extract from ore, an industry in which China has invested a great deal since the 1970s.

According to the U.S. Geological Survey, in 2020, China accounted for 58% of rare earth minerals production, down from around 90% four years earlier, as the United States and Australia boosted their own mining of them. Still, as of 2018, the United States imported 80.5% of its rare earth metals from China. In May of that year, the Trump administration added these to a list of minerals deemed critical to American economic and national security. And in July 2019, it declared them "essential to the national defense," which freed up resources for the Department of Defense to take action to secure a domestic rare earth production capability.

Even if the mining of these ores increased in the U.S., refining them requires specialist technology and trained personnel as well as high upfront investment. Due to the lack of these in the U.S. so far, China continues to enjoy a near monopoly in processing the ore, with the raw material containing the prized metal mined outside China shipped to the Chinese sites. The refining process also generates large amounts of radioactive waste and pollutes the environment. As a result, developed countries usually opt for getting the refining done in emerging economies.

All in all, when you view the globe in the throes of a once-in-a-century pandemic, you find an authoritarian state, wedded to centralized planning, initiating programs with long-term benefits for its citizens and seeing them through. You also see a politically riven democratic republic operating primarily on an ad hoc basis.

The stark truth is that an American president cannot even bet on his policies, however laudable or otherwise, surviving his four-year term. Trump's succession after the Obama era illustrated this dramatically, as has that of Trump's successor, Biden. When judged purely on the basis of final results, centralized planning clearly beats short-term programming, even if it is viewed with a mixture of derision and condemnation by the Western governments that Biden is attempting to coopt to challenge China. The reality of our moment: that country is now rising on a distinctly wounded planet.

Copyright 2021 Dilip Hiro

Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Books, John Feffer's new dystopian novel Frostlands (the second in the Splinterlands series), Beverly Gologorsky's novel Every Body Has a Story, and Tom Engelhardt's A Nation Unmade by War, as well as Alfred McCoy's In the Shadows of the American Century: The Rise and Decline of U.S. Global Power and John Dower's The Violent American Century: War and Terror Since World War II.

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The primary evidence indicating that the Bush administration coveted Iraqi oil from the start comes from two diverse but impeccably reliable sources: Paul O'Neill, the Treasury Secretary (2001-2003) under President George W. Bush; and Falah Al Jibury, a well-connected Iraqi-American oil consultant, who had acted as President Ronald Reagan's "back channel" to Iraqi President Saddam Hussein during the Iraq-Iran War of 1980-88. The secondary evidence is from the material that can be found in such publications as the New York Times and the Wall Street Journal.

According to O'Neill's memoirs, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill, written by journalist Ron Suskind and published in 2004, the top item on the agenda of the National Security Council's first meeting after Bush entered the Oval Office was Iraq. That was January 30, 2001, more than seven months before the 9/11 attacks. The next National Security Council (NSC) meeting on February 1st was devoted exclusively to Iraq.

Advocating "going after Saddam" during the January 30 meeting, Defense Secretary Donald Rumsfeld said, according to O'Neill, "Imagine what the region would look like without Saddam and with a regime that's aligned with U.S. interests. It would change everything in the region and beyond. It would demonstrate what U.S. policy is all about." He then discussed post-Saddam Iraq - the Kurds in the north, the oil fields, and the reconstruction of the country's economy. (Suskind, p. 85)

Among the relevant documents later sent to NSC members, including O'Neill, was one prepared by the Defense Intelligence Agency (DIA). It had already mapped Iraq's oil fields and exploration areas, and listed American corporations likely to be interested in participating in Iraq's petroleum industry.

Another DIA document in the package, entitled "Foreign Suitors for Iraqi Oilfield Contracts," listed companies from 30 countries - France, Germany, Russia, and Britain, among others - their specialties and bidding histories. The attached maps pinpointed "super-giant oil field," "other oil field," and "earmarked for production sharing," and divided the basically undeveloped but oil-rich southwest of Iraq into nine blocks, indicating promising areas for future exploration. (Suskind., p. 96)

According to high flying, oil insider Falah Al Jibury, the Bush administration began making plans for Iraq's oil industry "within weeks" of Bush taking office in January 2001. In an interview with the BBC's Newsnight program, which aired on March 17, 2005, he referred to his participation in secret meetings in California, Washington, and the Middle East, where, among other things, he interviewed possible successors to Saddam Hussein.

By January 2003, a plan for Iraqi oil crafted by the State Department and oil majors emerged under the guidance of Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University. It recommended maintaining the state-owned Iraq National Oil Company, whose origins dated back to 1961 - but open it up to foreign investment after an initial period in which U.S.-approved Iraqi managers would supervise the rehabilitation of the war-damaged oil infrastructure. The existence of this group would come to light in a report by the Wall Street Journal on March 3, 2003.

Unknown to the architects of this scheme, according to the same BBC Newsnight report, the Pentagon's planners, apparently influenced by powerful neocons in and out of the administration, had devised their own super-secret plan. It involved the sale of all Iraqi oil fields to private companies with a view to increasing output well above the quota set by the Organization of the Petroleum Exporting Countries (OPEC) for Iraq in order to weaken, and then destroy, OPEC.

Secondary Evidence

On October 11, 2002 the New York Times reported that the Pentagon already had plans to occupy and control Iraq's oilfields. The next day the Economist described how Americans in the know had dubbed the waterway demarcating the southern borders of Iraq and Iran "Klondike on the Shatt al Arab," while Ahmed Chalabi, head of the U.S.-funded Iraqi National Congress and a neocon favorite, had already delivered this message: "American companies will have a big shot at Iraqi oil - if he gets to run the show."

On October 30, Oil and Gas International revealed that the Bush administration wanted a working group of 12 to 20 people to (a) recommend ways to rehabilitate the Iraqi oil industry "in order to increase oil exports to partially pay for a possible U.S. military occupation government," (b) consider Iraq's continued membership of OPEC, and (c) consider whether to honor contracts Saddam Hussein had granted to non-American oil companies.

By late October 2002, columnist Maureen Dowd of the New York Times would later reveal, Halliburton, the energy services company previously headed by Vice President Dick Cheney, had prepared a confidential 500-page document on how to handle Iraq's oil industry after an invasion and occupation of Iraq. This was, commented Dowd, "a plan [Halliburton] wrote several months before the invasion of Iraq, and before it got a no-bid contract to implement the plan (and overbill the U.S.)." She also pointed out that a Times' request for a copy of the plan evinced a distinct lack of response from the Pentagon.

In public, of course, the Bush administration built its case for an invasion of Iraq without referring to that country's oil or the fact that it had the third largest reserves of petroleum in the world. But what happened out of sight was another matter. At a secret NSC briefing for the President on February 24, 2003, entitled, "Planning for the Iraqi Petroleum Infrastructure," a State Department economist, Pamela Quanrud, told Bush that it would cost $7-8 billion to rebuild the oil infrastructure, if Saddam decided to blow up his country's oil wells, according to Washington Post reporter Bob Woodward in his 2004 book, Plan of Attack (pp. 322-323). Quanrud was evidently a member of the State Department group chaired by Amy Myers Jaffe.

When the Anglo-American troops invaded on March 20, 2003, they expected to see oil wells ablaze. Saddam Hussein proved them wrong. Being a staunch nationalist, he evidently did not want to go down in history as the man who damaged Iraq's most precious natural resource.

On entering Baghdad on April 9th, the American troops stood by as looters burned and ransacked public buildings, including government ministries - except for the Oil Ministry, which they guarded diligently. Within the next few days, at a secret meeting in London, the Pentagon's scheme of the sale of all Iraqi oil fields got a go-ahead in principle.

The Bush administration's assertions that oil was not a prime reason for invading Iraq did not fool Iraqis though. A July 2003 poll of Baghdad residents - who represented a quarter of the Iraqi national population - by the London Spectator showed that while 23% believed the reason for the Anglo-American war on Iraq was "to liberate us from dictatorship," twice as many responded, "to get oil". (Cited in Dilip Hiro, Secrets and Lies: Operation "Iraqi Freedom" and After, p. 398.)

As Iraq's principal occupier, the Bush White House made no secret of its plans to quickly dismantle that country's strong public sector. When the first American proconsul, retired General Jay Garner, focused on holding local elections rather than privatizing the country's economic structure, he was promptly sacked.

Hurdles to Oil Privatization Prove Impassable

Garner's successor, L. Paul Bremer III, found himself dealing with Philip Carroll - former Chief Executive Officer of the American operations of (Anglo-Dutch) Royal Dutch Shell in Houston - appointed by Washington as the Iraqi oil industry's supreme boss. Carroll decided not to tinker with the industry's ownership and told Bremer so. "There was to be no privatization of Iraqi oil resources or facilities while I was involved," Carroll said in an interview with the BBC's Newsnight program on March 17, 2005.

This was, however, but a partial explanation for why Bremer excluded the oil industry when issuing Order 39 in September 2003 privatizing nearly 200 Iraqi public sector companies and opening them up to 100% foreign ownership. The Bush White House had also realized by then that denationalizing the oil industry would be a blatant violation of the Geneva Conventions which bar an occupying power from altering the fundamental structure of the occupied territory's economy.

There was, as well, the vexatious problem of sorting out the 30 major oil development contracts Saddam's regime had signed with companies based in Canada, China, France, India, Italy, Russia, Spain, and Vietnam. The key unresolved issue was whether these firms had signed contracts with the government of Saddam Hussein, which no longer existed, or with the Republic of Iraq which remained intact.

Perhaps more important was the stand taken by Grand Ayatollah Ali Sistani, the senior Shiite cleric in the country and a figure whom the occupying Americans were keen not to alienate. He made no secret of his disapproval of the wholesale privatization of Iraq's major companies. As for the minerals - oil being the most precious - Sistani declared that they belonged to the "community," meaning the state. As a religious decree issued by a grand ayatollah, his statement carried immense weight.

Even more effective was the violent reaction of the industry's employees to the rumors of privatization. In his Newsnight interview Jibury said, "We saw an increase in the bombing of oil facilities and pipelines built on the premise that privatization is coming."

In the immediate aftermath of the invasion, much equipment was looted from pipelines, pumping stations, and other oil facilities. By August 2003, four months after American troops entered Baghdad, oil output had only inched up to 1.2 million barrels per day, about two-fifths of the pre-invasion level. The forecasts (or dreams) of American planners' that oil production would jump to 6 million barrels per day by 2010 and easily fund the occupation and reconstruction of the country, were now seen for what they were - part of the hype disseminated privately by American neocons to sell the idea of invading Iraq to the public.

With the insurgency taking off, attacks on oil pipelines and pumping stations averaged two a week during the second half of 2003. The pipeline connecting a major northern oil field near Kirkuk - with an export capacity of 550,000-700,000 barrels per day - to the Turkish port of Ceyhan became inoperative. Soon, the only oil being exported was from fields in the less disturbed, predominately Shiite south of Iraq.

In September 2003, President Bush approached Congress for $2.1 billion to safeguard and rehabilitate Iraq's oil facilities. The resulting Task Force Shield project undertook to protect 340 key installations and 4,000 miles (6,400 km) of oil pipeline. It was not until the spring of 2004 that output again reached the pre-war average of 2.5 million barrels per day - and that did not hold. Soon enough, production fell again. Iraqi refineries were, by now, producing only two-fifths of the 24 million liters of gasoline needed by the country daily, and so there were often days-long lines at service stations.

Addressing the 26th Oil and Money conference in London on September 21, 2005, Issam Chalabi, who had been an Iraqi oil minister in the late 1980s, referred to the crippling lack of security and the lack of clear laws to manage the industry, and doubted if Iraq could return to the 1979 peak of 3.5 million barrels per day before 2009, if then.

Meanwhile, the Iraqi government found itself dependent on oil revenues for 90% of its income, a record at a time when corruption in its ministries had become rampant. On January 30, 2005, Stuart W. Bowen, the special inspector general appointed by the U.S. occupation authority, reported that almost $9 billion in Iraqi oil revenue, disbursed to the ministries, had gone missing. A subsequent Congressional inspection team reported in May 2006 that Task Force Shield had failed to meet its goals due to "lack of clear management structure and poor accountability", and added that there were "indications of potential fraud" which were being reviewed by the Inspector General.

The endorsement of the new Iraqi constitution by referendum in October 2005 finally killed the prospect of full-scale oil privatization. Article 109 of that document stated clearly that hydrocarbons were "national Iraqi property". That is, oil and gas would remain in the public sector.

In March 2006, three years after the Anglo-American invasion of Iraq, the country's petroleum exports were 30% to 40% below pre-invasion levels.

Bush Pushes for Iraq's Flawed Draft Hydrocarbon Law

In February 2007, in line with the constitution, the draft hydrocarbon law the Iraqi government presented to parliament kept oil and gas in the state sector. It also stipulated recreating a single Iraqi National Oil Company that would be charged with doling out oil income to the provinces on a per-capita basis. The Bush administration latched onto that provision to hype the 43-article Iraqi bill as a key to reconciliation between Sunnis and Shiites - since the Sunni areas of Iraq lack hydrocarbons - and so included it (as did Congress) in its list of "benchmarks" the Iraqi government had to meet.

Overlooked by Washington was the way that particular article, after mentioning revenue-sharing, stated that a separate Federal Revenue Law would be necessary to settle the matter of distribution - the first draft of which was only published four months later in June.

Far more than revenue sharing and reconciliation, though, what really interested the Bush White House were the mouthwatering incentives for foreign firms to invest in Iraq's hydrocarbon industry contained in the draft law. They promised to provide ample opportunities to America's Oil Majors to reap handsome profits in an oil-rich Iraq whose vast western desert had yet to be explored fully for hydrocarbons. So Bush pressured the Iraqi government to get the necessary law passed before the parliament's vacation in August - to no avail.

The Bush administration's failure to achieve its short-term objectives does not detract from the overarching fact - established by the copious evidence marshaled in this article - that gaining privileged access to Iraqi oil for American companies was a primary objective of the Pentagon's invasion of Iraq.

The World's Sole Superpower in Fast Decline

With the collapse of the Soviet Union in 1991, the United States stood tall -- militarily invincible, economically unrivalled, diplomatically uncontestable, and the dominating force on information channels worldwide. The next century was to be the true "American century," with the rest of the world molding itself in the image of the sole superpower.

Yet, with not even a decade of this century behind us, we are already witnessing the rise of a multipolar world in which new powers are challenging different aspects of American supremacy -- Russia and China in the forefront, with regional powers Venezuela and Iran forming the second rank. These emergent powers are primed to erode American hegemony, not confront it, singly or jointly.

How and why has the world evolved in this way so soon? The Bush administration's debacle in Iraq is certainly a major factor in this transformation, a classic example of an imperialist power, brimming with hubris, over-extending itself. To the relief of many -- in the U. S. and elsewhere -- the Iraq fiasco has demonstrated the striking limitations of power for the globe's highest-tech, most destructive military machine. In Iraq, Brent Scowcroft, national security adviser to two U.S. presidents, concedes in a recent op-ed, "We are being wrestled to a draw by opponents who are not even an organized state adversary."

The invasion and subsequent disastrous occupation of Iraq and the mismanaged military campaign in Afghanistan have crippled the credibility of the United States. The scandals at Abu Ghraib prison in Iraq and Guantanamo in Cuba, along with the widely publicized murders of Iraqi civilians in Haditha, have badly tarnished America's moral self-image. In the latest opinion poll, even in a secular state and member of NATO like Turkey, only 9 percent of Turks have a "favorable view" of the U.S. (down from 52 percent just five years ago).

Yet there are other explanations -- unrelated to Washington's glaring misadventures -- for the current transformation in international affairs. These include, above all, the tightening market in oil and natural gas, which has enhanced the power of hydrocarbon-rich nations as never before; the rapid economic expansion of the mega-nations China and India; the transformation of China into the globe's leading manufacturing base; and the end of the Anglo-American duopoly in international television news.

Many Channels, Diverse Perceptions

During the 1991 Gulf War, only CNN and the BBC had correspondents in Baghdad. So the international TV audience, irrespective of its location, saw the conflict through their lenses. Twelve years later, when the Bush administration, backed by British Prime Minister Tony Blair, invaded Iraq, Al Jazeera Arabic broke this duopoly. It relayed images -- and facts -- that contradicted the Pentagon's presentation. For the first time in history, the world witnessed two versions of an ongoing war in real time. So credible was the Al Jazeera Arabic version that many television companies outside the Arabic-speaking world -- in Europe, Asia and Latin America -- showed its clips.

Though, in theory, the growth of cable television worldwide raised the prospect of ending the Anglo-American duopoly in 24-hour TV news, not much had happened due to the exorbitant cost of gathering and editing TV news. It was only the arrival of Al Jazeera English, funded by the hydrocarbon-rich emirate of Qatar -- with its declared policy of offering a global perspective from an Arab and Muslim angle -- that, in 2006, finally broke the long-established mold.

Soon France 24 came on the air, broadcasting in English and French from a French viewpoint, followed in mid-2007 by the English-language Press TV, which aimed to provide an Iranian perspective. Russia was next in line for 24-hour TV news in English for the global audience. Meanwhile, spurred by Venezuelan President Hugo Chavez, Telesur, a pan-Latin-American TV channel based in Caracas, began competing with CNN in Spanish for a mass audience.

As with Qatar, so with Russia and Venezuela, the funding for these TV news ventures has come from soaring national hydrocarbon incomes -- a factor draining American hegemony not just in imagery but in reality.

Russia, an Energy Superpower

Under President Vladimir Putin, Russia has more than recovered from the economic chaos that followed the collapse of the Soviet Union in 1991. After effectively renationalizing the energy industry through state-controlled corporations, he began deploying its economic clout to further Russia's foreign policy interests.

In 2005, Russia overtook the United States, becoming the second largest oil producer in the world. Its oil income now amounts to $679 million a day. European countries dependent on imported Russian oil now include Hungary, Poland, Germany, and even Britain.

Russia is also the largest producer of natural gas on the planet, with three-fifths of its gas exports going to the 27-member European Union (EU). Bulgaria, Estonia, Finland, and Slovakia get 100 percent of their natural gas from Russia; Turkey, 66 percent; Poland, 58 percent; Germany 41 percent; and France 25 percent. Gazprom, the biggest natural gas enterprise on Earth, has established stakes in sixteen EU countries. In 2006, the Kremlin's foreign reserves stood at $315 billion, up from a paltry $12 billion in 1999. Little wonder that, in July 2006 on the eve of the G8 summit in St Petersburg, Putin rejected an energy charter proposed by the Western leaders.

Soaring foreign-exchange reserves, new ballistic missiles, and closer links with a prospering China -- with which it conducted joint military exercises on China's Shandong Peninsula in August 2005 -- enabled Putin to deal with his American counterpart, President George W. Bush, as an equal, not mincing his words when appraising American policies.

"One country, the United States, has overstepped its national boundaries in every way," Putin told the 43rd Munich Trans-Atlantic conference on security policy in February 2007. "This is visible in the economic, political, cultural and educational policies it imposes on other nations ... This is very dangerous."

Condemning the concept of a "unipolar world," he added: "However one might embellish this term, at the end of the day it describes a scenario in which there is one center of authority, one center of force, one center of decision-making ... It is a world in which there is one master, one sovereign. And this is pernicious." His views fell on receptive ears in the capitals of most Asian, African, and Latin American countries.

The changing relationship between Moscow and Washington was noted, among others, by analysts and policy-makers in the hydrocarbon-rich Persian Gulf region. Commenting on the visit that Putin paid to long-time U.S. allies Saudi Arabia and Qatar after the Munich conference, Abdel Aziz Sagar, chairman of the Gulf Research Center, wrote in the Doha-based newspaper The Peninsula that Russia and Gulf Arab countries, once rivals from opposite ideological camps, had found a common agenda of oil, anti-terrorism, and arms sales. "The altered focus takes place in a milieu where the Gulf countries are signaling their keenness to keep all geopolitical options open, reviewing the utility of the United States as the sole security guarantor, and contemplating a collective security mechanism that involves a host of international players."

In April 2007, the Kremlin issued a major foreign policy document. "The myth about the unipolar world fell apart once and for all in Iraq," it stated. "A strong, more self-confident Russia has become an integral part of positive changes in the world."

The Kremlin's increasingly tense relations with Washington were in tune with Russian popular opinion. A poll taken during the run-up to the 2006 G8 summit revealed that 58 percent of Russians regarded America as an "unfriendly country." It has proved to be a trend. This July, for instance, Major Gen Alexandr Vladimirov told the mass circulation newspaper Komsolskya Pravada that war with the United States was a "possibility" in the next ten to fifteen years.

Chavez Rides High

Such sentiments resonated with Hugo Chavez. While visiting Moscow in June 2007, he urged Russians to return to the ideas of Vladimir Lenin, especially his anti-imperialism. "The Americans don't want Russia to keep rising," he said. "But Russia has risen again as a center of power, and we, the people of the world, need Russia to become stronger."

Chavez finalized a $1 billion deal to purchase five diesel submarines to defend Venezuela's oil-rich undersea shelf and thwart any possible future economic embargo imposed by Washington. By then, Venezuela had become the second largest buyer of Russian weaponry. (Algeria topped the list, another indication of a growing multipolarity in world affairs.) Venezuela acquired the distinction of being the first country to receive a license from Russia to manufacture the famed AK-47 assault rifle.

By channeling some of his country's oil money to needy Venezuelans, Chavez broadened his base of support. Much to the chagrin of the Bush White House, he trounced his sole political rival, Manuel Rosales, in a December 2006 presidential contest with 61 percent of the vote. Equally humiliating to the Bush administration, Venezuela was, by then, giving more foreign aid to needy Latin American states than it was.

Following his reelection, Chavez vigorously pursued the concept of forming an anti-imperialist alliance in Latin America as well as globally. He strengthened Venezuela's ties not only with such Latin countries as Bolivia, Cuba, Ecuador, Nicaragua, and debt-ridden Argentina, but also with Iran and Belarus.

By the time he arrived in Tehran from Moscow (via Minsk) in June 2007, the 180 economic and political accords his government had signed with Tehran were already yielding tangible results. Iranian-designed cars and tractors were coming off assembly lines in Venezuela. "[The] cooperation of independent countries like Iran and Venezuela has an effective role in defeating the policies of imperialism and saving nations," Chavez declared in Tehran.

Stuck in the quagmire of Iraq and lashed by the gusty winds of rocketing oil prices, the Bush administration finds its area of maneuver woefully limited when dealing with a rising hydrocarbon power. To the insults that Chavez keeps hurling at Bush, the American response has been vapid. The reason is the crippling dependence of the United States on imported petroleum which accounts for 60 percent of its total consumed. Venezuela is the fourth largest source of U.S. imported oil after Canada, Mexico, and Saudi Arabia; and some refineries in the U.S. are designed specifically to refine heavy Venezuelan oil.

In Chavez's scheme to undermine the "sole superpower," China has an important role. During an August 2006 visit to Beijing, his fourth in seven years, he announced that Venezuela would triple its oil exports to China to 500,000 barrels per day in three years, a jump that suited both sides. Chavez wants to diversify Venezuela's buyer base to reduce its reliance on exports to the U.S., and China's leaders are keen to diversify their hydrocarbon imports away from the Middle East, where American influence remains strong.

"The support of China is very important [to us] from the political and moral point of view," Chavez declared. Along with a joint refinery project, China agreed to build thirteen oil drilling platforms, supply eighteen oil tankers, and collaborate with the state-owned company, Petroleos de Venezuela S.A. (PdVSA), in exploring a new oilfield in the Orinoco Basin.

China on a Stratospheric Trajectory

So dramatic has been the growth of the state-run company PetroChina that, in mid-2007, it was second only to Exxon Mobil in its market value among energy corporations. Indeed, that year three Chinese companies made it onto the list of the world's ten most highly valued corporations. Only the U.S. had more with five. China's foreign reserves of over $1 trillion have now surpassed Japan's. With its gross domestic product soaring past Germany's, China ranks number three in the world economy.

In the diplomatic arena, Chinese leaders broke new ground in 1996 by sponsoring the Shanghai Cooperation Organization (SCO), consisting of four adjoining countries: Russia and the three former Soviet Socialist republics of Kazakhstan, Kyrgyzstan, and Tajikistan. The SCO started as a cooperative organization with a focus on countering drug-smuggling and terrorism. Later, the SCO invited Uzbekistan to join, even though it does not abut China. In 2003, the SCO broadened its scope by including regional economic cooperation in its charter. That, in turn, led it to grant observer status to Pakistan, India, and Mongolia -- all adjoining China -- and Iran which does not. When the U.S. applied for observer status, it was rejected, an embarrassing setback for Washington, which enjoyed such status at the Association of South-East Asian Nations (ASEAN).

In early August 2007, on the eve of an SCO summit in the Kyrgyz capital of Bishkek, the group conducted its first joint military exercises, codenamed Peace Mission 2007, in the Russian Ural region of Chelyabinsk. "The SCO is destined to play a vital role in ensuring international security," said Ednan Karabayev, foreign minister of Kyrgyzstan.

In late 2006, as the host of a China-Africa Forum in Beijing attended by leaders of 48 of 53 African nations, China left the U.S. woefully behind in the diplomatic race for that continent (and its hydrocarbon and other resources). In return for Africa's oil, iron ore, copper, and cotton, China sold low-priced goods to Africans, and assisted African counties in building or improving roads, railways, ports, hydro-electric dams, telecommunications systems, and schools. "The western approach of imposing its values and political system on other countries is not acceptable to China," said Africa specialist Wang Hongyi of the China Institute of International Studies. "We focus on mutual development."

To reduce the cost of transporting petroleum from Africa and the Middle East, China began constructing a trans-Burma oil pipeline from the Bay of Bengal to its southern province of Yunan, thereby shortening the delivery distance now traveled by tankers. This undermined Washington's campaign to isolate Myanmar. (Earlier, Sudan, boycotted by Washington, had emerged as a leading supplier of African oil to China.) In addition, Chinese oil companies were competing fiercely with their Western counterparts in getting access to hydrocarbon reserves in Kazakhstan and Uzbekistan.

"China's oil diplomacy is putting the country on a collision course with the U.S. and Western Europe, which have imposed sanctions on some of the countries where China is doing business," comments William Mellor of Bloomberg News. The sentiment is echoed by the other side. "I see China and the U.S. coming into conflict over energy in the years ahead," says Jin Riguang, an oil-and-gas advisor to the Chinese government and a member of the Standing Committee of the Chinese People's Political Consultative Council.

China's industrialization and modernization has spurred the modernization of its military as well. The test-firing of the country's first anti-satellite missile, which successfully destroyed a defunct Chinese weather satellite in January 2007, dramatically demonstrated its growing technological prowess. An alarmed Washington had already noted an 18 percent increase in China's 2007 defense budget. Attributing the rise to extra spending on missiles, electronic warfare, and other high-tech items, Liao Xilong, commander of the People's Liberation Army's general logistics department, said: "The present day world is no longer peaceful and to protect national security, stability and territorial integrity we must suitably increase spending on military modernization."

China's declared budget of $45 billion was a tiny fraction of the Pentagon's $459 billion one. Yet, in May 2007, a Pentagon report noted China's "rapid rise as a regional and economic power with global aspirations" and claimed that it was planning to project military farther afield from the Taiwan Straits into the Asia-Pacific region in preparation for possible conflicts over territory or resources.

The Sole Superpower in the Sweep of History

This disparate challenge to American global primacy stems as much from sharpening conflicts over natural resources, particularly oil and natural gas, as from ideological differences over democracy, American style, or human rights, as conceived and promoted by Western policy-makers. Perceptions about national (and imperial) identity and history are at stake as well.

It is noteworthy that Russian officials applauding the swift rise of post-Soviet Russia refer fondly to the pre-Bolshevik Revolution era when, according to them, Tsarist Russia was a Great Power. Equally, Chinese leaders remain proud of their country's long imperial past as unique among nations.

When viewed globally and in the great stretch of history, the notion of American exceptionalism that drove the neoconservatives to proclaim the Project for the New American Century in the late 20th century -- adopted so wholeheartedly by the Bush administration in this one -- is nothing new. Other superpowers have been there before and they, too, have witnessed the loss of their prime position to rising powers.

No superpower in modern times has maintained its supremacy for more than several generations. And, however exceptional its leaders may have thought themselves, the United States, already clearly past its zenith, has no chance of becoming an exception to this age-old pattern of history.

Sharpening Iraq's Fault Lines

An apt headline, summarizing the results of the elections to Iraq's 275-representative-strong National Assembly on Jan. 30, would be: "No surprises, no upsets."

Given a large voter turnout in the Shiite majority areas and an even larger one in the Kurdistan region, it was widely predicted that the Shiite- and Kurdish-dominated alliances would top the polls. They did. As expected, due to the widespread Sunni boycott of the election, the only Sunni-dominated list that managed to win any seats garnered just five – one-eleventh of the seats that the Sunnis should have won.

Overall, the poll has exposed and sharpened the sectarian and ethnic fault lines in Iraqi society. At the same time, bolstered by a popular mandate, the new government seems set on a collision course with the American occupiers regarding the presence of foreign troops in Iraq.

Each of the three major communities has come to nurture a different scenario for the post-Saddam era. Shorn of their long-held power and yet not reconciled to powerlessness, Sunni leaders are still in disarray, focusing merely on expelling the Americans from their country. For minority Kurds, ethnically and linguistically set apart from Arabs, post-Saddam Iraq holds the promise of a sovereign state of Kurdistan with the oil-rich city of Kirkuk as its capital.

Driven by ethnic nationalism, the Kurds outdid the Shiites in their enthusiasm for balloting. The 90 percent-plus voter turnout in the three Kurdish-dominated provinces as well as in the ethnically-mixed provinces of Nineveh (capital, Mosul) and Tamim (capital, Kirkuk) has, not surprisingly, strengthened the bargaining power of the Kurdish leaders. Their Kurdistan Alliance gained 25 extra seats at the expense of Sunni Arabs. This has raised tensions between the two communities, especially in Kirkuk and Mosul, the second largest Iraqi city.

For the long-suppressed Shiite majority, the fall of Saddam's regime opened up for the first time the prospect of a popularly-elected, Shiite-led government in Iraq. Little wonder that Grand Ayatollah Ali Sistani declared that voting was a religious duty for believers. Accepting Sistani's fatwa (religious decree) unquestioningly, Shiite Muslims streamed to the polling centers on Jan. 30. By backing the Sistani-inspired United Iraqi Alliance (UIA), they underscored the UIA's 22-point manifesto, where the demand for "a timetable for the withdrawal of the multinational forces from Iraq" is almost at the top.

As it happens, this Shiite demand is also popular among Sunnis, from moderates to insurgents. It is up to the leaders of the better-organized Shiite community to find ways to end the alienation most Sunnis are feeling.

Once the National Assembly has elected a Presidency Council – a president and two deputies – it will elect an executive prime minister and a cabinet. A Shiite-majority government is mandated to demand immediate negotiations with the Bush administration on the modalities of the withdrawal of the American and other foreign troops from Iraq.

But it won't get far. "We will not set an artificial time table for leaving Iraq, because that would embolden the terrorists and make them believe they can wait us out," said President George W. Bush in his State of the Union speech on Feb. 2. "We are in Iraq to achieve a result: a country that is democratic, representative of all its people, at peace with its neighbors, and able to defend itself." No prizes for guessing how long it will take to realize this over-ambitious set of Bush objectives.

So there is a strong prospect of a crisis in Baghdad soon after the inauguration of an elected government.

Besides administering Iraq, the new government will supervise the drafting of the permanent constitution by the National Assembly. Those charged with this task will face two major problems: defining the relationship between state and mosque and the degree of autonomy the Kurds are to receive (not to mention the boundaries of the region where it is to be exercised).

The Role of Islam

A year ago, when the interim constitution was being drafted by the Iraqi Governing Council (IGC) under the supervision of Paul Bremer, the chief administrator of the Coalition Provisional Authority (CPA), the issue of Islam and the state proved contentious. When IGC President Muhsin Abdul Hamid proposed making the Sharia "the primary basis" of law in the interim constitution, Bremer threatened to veto the document. (The Sharia is a compendium of the Koran and the Hadith, Sayings and Doings of Prophet Muhammad.) In the end, IGC members compromised by describing the Sharia as "a main source" of Iraqi legislation.

Following the recent poll, Shiite religious leaders staked out a demand. On Feb. 6, a spokesman for Grand Ayatollah Muhammad Ishaq al Fayad, said, "All of the ulema [clergy] and marja [religious leaders], and the majority of the Iraqi people want the National Assembly to make Islam the [sole] source of legislation in the permanent constitution and to reject any law that is contrary to Islam." Sistani backed the statement. A week later, Hussein Shahristani, a leader of the UIA, the winner of 51 percent of the National Assembly seats, repeated the demand.

While Shiites overwhelmingly favor specifying the Sharia as the sole source of legislation, the Kurdish leaders are not so keen. And the Americans are decidedly against it. But such a provision in the constitution could be an effective way to conciliate the Sunni militants who want "the flag of Islam to fly in Iraq."

The second intractable problem concerns the Kurdish demand that the present boundaries of the Kurdistan Autonomous Region (KAR) consisting of three provinces – formed during the Baathist rule in 1974 – be expanded to include the oil-rich Tamim province. The fact that the Kurdistan Alliance secured 48 percent of the vote (due to the poll boycott by most Sunni Arabs and many Sunni Turkmen) in the simultaneously held elections to the region's Provincial Council has emboldened the Kurdish leaders.

Any enlargement of the KAR will be opposed bitterly not only by local Arabs and Turkmen but also by neighboring Turkey. It fears that the oil revenue from Tamim will make the KAR economically vibrant and pave the way for the declaration of an independent Kurdistan. That in turn will inspire Turkish Kurds in southeastern Turkey to revive their armed struggle for independence.

But, intoxicated by their electoral success, Iraqi Kurdish leaders are likely to turn a deaf ear to the concerns of Turkey or the fears of their ethnic Arab and Turkmen neighbors. So there is trouble brewing ahead within Iraq on ethnic lines – Kurds versus Arabs and Turkmen – that threatens to spill over into adjoining Turkey. In other words, Bush's much trumpeted electoral turning point is likely to bring in its train even more severe problems than existed before.

Iraq's Electoral Cul-de-sac

Iraq's National Assembly poll on Jan. 30 is already set to become but the latest in a series of "turning points" touted by the Bush administration, which in reality turn out to be cul-de-sacs. Starting with Saddam Hussein's arrest in December 2003, each of Washington's rosy scenarios – in which a diminution of violence is predicted and a path to success declared – has turned to dust. These include the transfer of sovereignty to Iraqis on June 28, 2004, the "Iraqification" of the country's security apparatus (an ongoing theme), and the recapture of Fallujah, described as the prime font of the Sunni insurgency, last November.

Instead of dampening resistance to the Anglo-American occupation, the arrest of Saddam, who was at the time still projected by Washington as the primary source of the growing insurgency, exacerbated it. With the prospect of Saddam's return to power finally dead and gone, Shiites began to focus on the latter part of a popular slogan of the time: "No, no to Saddam; No, no to America." The result – the Shiite uprisings of April 2004.

The highly publicized rushed note Condoleezza Rice slipped to President Bush at the NATO summit in Istanbul on June 28, 2004 – "Mr President, Iraq is sovereign. Letter was passed from [Paul] Bremer at 10:26 a.m. Iraq time" – turned into a sick joke quickly enough when Iyad Allawi, the Interim Prime Minister of "sovereign Iraq," repeatedly called in American forces to curb the guerrillas. The Pentagon's routine use of fighter-bombers and attack helicopters to strike against the insurgents in urban areas soon enough defeated its own campaign to win Iraqis' "hearts and minds."

Dismal failure also greeted – and continues to greet – Washington's claims about the successful Iraqification of local security forces. Six months of relentless efforts and constant announcements of further intensification, further speeding up of the process have so far produced only 5,000 trained and dependable Iraqi soldiers for a prospective 120,000-strong army. In the meantime, a third of the 135,000 policemen on the payrolls never even report for duty. Of those who do, only half are properly trained or armed. Time and again, instead of fighting the guerrillas, most police officers either defected or fled.

Following George Bush's re-election in early November, we were told that the Pentagon's recapture of Fallujah, the epicenter of the insurgency, would finally begin the process of ridding Iraq of the scourge of "terrorists and killers." Instead, the guerrillas scattered to different places and turned Mosul, six times more populous than Fallujah, into their new center of operations.

As we've entered 2005, the run-up to the elections has thrown into relief the long-running tensions between the traditional governing Sunni minority and the governed Shiite majority, a relationship that dates back to the absorption of Mesopotamia into the Sunni Ottoman Turkish Empire in 1638.

Following the defeat of the Ottoman Empire in the 1914-18 World War, the British, detaching the oil-rich Kurdish region (then called Mosul Province) from Ottoman Turkey and attaching it to Mesopotamia to create modern Iraq, added an ethnic factor to the previous sectarian divide. Kurds, belonging to the Indo-European tribal family, are different from Semitic Arabs and they now form about one-sixth of the Iraqi population. Though overwhelmingly Sunni, they do not appear in the Sunni-Shiite equation because their ethnic difference from Arabs overrides their religious fellowship with Sunni Arabs.

The capture of Saddam Hussein, a Sunni and leader of the Sunni-dominated Baath Party, finally ended the 365-year-old Sunni hegemony. History shows, however, that no class, sectarian, or ethnic group gives up power without a fight; and having lost power, the former ruling group invariably tries to regain it by hook or crook. In that context, the behavior of the Sunni minority in Iraq should have been predicted.

That the ruling minority was overthrown by the United States, a foreign superpower, totally alien to Iraqis in religion, language, and culture, is what separates the Iraq situation from others. To make matters more complex, this alien invader has its own agenda – essentially, the transformation of Iraq into a client state to further its own military, strategic, diplomatic, and economic interests in the region. That is what grates on the staunch nationalism of Mesopotamians, rooted in 6,000 years of history.

This is true of Shiite as well as Sunni Mesopotamians. "We do not accept the continuation of the American troops in Iraq," said Ayatollah Abdul Aziz al Hakim, leader of the (Shiite) Supreme Council of Islamic Revolution in Iraq (SCIRI). "We regard these forces to have committed many mistakes in the handling of various issues, the first and foremost being security, which in turn has contributed to the massacres, crimes, and calamities that have taken place in Iraq against the Iraqis."

His views are echoed across the sectarian divide. Most Sunnis, whether religious or secular, are no less eager than Hakim to see the American troops depart. Polls show that two-thirds of Iraqis want the foreign soldiers to leave immediately.

The members of the two sects differ, however, about the means to be used to achieve this aim. Hakim and other Shiite leaders by and large want to participate in the Jan. 30 poll, win a majority of seats in the National Assembly, and then negotiate with the Americans for a phased withdrawal. Most Sunnis – from secular nationalists to Islamist militants – view elections conducted in a country under occupation by foreign, infidel troops as illegitimate. The call for a poll boycott has come not only from the insurgent groups but also from the Association of Muslim Scholars, which claims the affiliation of 3,000 mosques. The Iraqi Islamic Party, which had been part of the U.S.-sponsored Iraqi Governing Council and the subsequent Interim Government, decided to boycott the poll when its demand for a postponement of the vote was rejected.

To deter violence on the polling day, the Election Commission has so far withheld the names of 5,600 polling centers, and the participating parties have not disclosed full lists of their candidates. While voters may be unaware of the locations of their polling centers, guerrilla groups are not. By infiltrating the Election Commission, their agents have already evidently leaked such confidential information to them. One insurgent leader in Baghdad claimed that his resistance cells had stockpiled extra amounts of rocket-propelled grenades (RPGs) and missiles, which they had prepositioned in places where they will be able to hit the polling centers known to them.

"The Americans and Allawi insisted on having these elections to prove they are in control of Iraq," said an unnamed guerrilla leader. "We intend to prove them wrong. The resistance will intensify after the elections and will never cease until the American occupiers leave Iraq."

So the forthcoming poll will likely provide another example of the cure proving to be worse than the disease.

Iran's Nuclear Power Play

Imagine a pious Muslim faced with a ban on fabricating a certain kind of weapon. He is committed to obeying unquestioningly the fatwas of his religious leader and yet discovers that producing such a weapon, or threatening to do so, is a strong lever for gaining benefits from a powerful group living in the neighborhood. Replace "a pious Muslim" with "Iran," and "a powerful group" with the 25-member European Union (EU), and the above sentences aptly sum up the current Iranian-EU relationship.

Enriched by millions of daily encounters in bazaars, Iranians are adept at bargaining and confident in the knowledge, acquired over centuries, that skillful bargaining and brinkmanship go hand in hand. This is what just happened in Paris between the officials of Iran and the EU troika – France, Germany and the United Kingdom. The subject was Tehran's nuclear program; the occasion, the run-up to the finalization of an International Atomic Energy Agency (IAEA) report for its 35-strong board of governors on Nov. 15. The Iranians dragged out the bargaining until the last minute before initialing a deal subject to the approval of the Supreme National Security Council (SNSC) in Tehran.

It was a deal that was meant to prepare the way for further negotiations. Iran has agreed to suspend its uranium enrichment and reprocessing programs until a "grand bargain" is reached in which the EU guarantees nuclear, political, and trade concessions in return for Tehran's indefinite suspension of the same programs. Though negotiated by the troika, the agreement's ownership lies with the European Union as a whole. To the undisguised relish of the Iranians, this deal killed the Bush administration's pet plan to refer the Iranian case to the United Nations Security Council for censure or the possible imposition of sanctions for its alleged breaches of the IAEA nuclear protocol.

Both Iran and the EU have a stake in seeing that the next round of negotiations, starting on Dec. 15, succeeds. By clinching a deal with the European Union, the Iranian leadership aims to achieve two strategic objectives: improve Iranian living standards through a Trade and Cooperation Agreement with the EU, and forestall the Bush administration's "hegemonistic designs" by widening of the political gap between the United States and the European Union over Iran.

The EU threesome has stayed firmly on the Iranian diplomatic path, despite American pressures, in order to protect the interests of its companies which already have lucrative contracts in Iran's oil and gas industry and are hopeful of securing more in the future.

Countering American Hegemony

With the collapse of the Soviet Union in 1991, the Islamic Republic's opposition to the imperial ambitions of the two superpowers narrowed to the winner of the Cold War: Washington. At a joint press conference with visiting Russian Defense Minister Igor Sergeyev in February 2000, for instance, Hassan Rouhani, secretary-general of Iran's SNSC, summarized his country's foreign policy in this way: "Cooperation among Iran, Russia, India and China is very important if one hopes to confront the hegemonic policies of America."

That was one year before the arrival of George W. Bush in the White House, his unveiling of a thoroughly unilateralist foreign policy based on "preventive" force, the ominous inclusion of Iran in his "Axis of Evil," and, of course, his illegal invasion of Iraq in 2003. That, in turn, led French President Jacques Chirac to articulate a competing vision of a multi-polar world in which the United States, the European Union, China, India, and Russia all would be poles. In this context, it was no accident that Paris was chosen as the venue for the recent Iranian/EU negotiations.

In Iran, even diehard conservatives now agree that developing cordial relations with the European Union is an effective and necessary way to curb Washington's designs on their country. They are also realistic enough not to underestimate the power of the Bush administration: It successfully pressured Japan to withhold its signature on a $2 billion deal to develop the enormous Azadegan oilfield in Iran, and the EU to suspend its nine-month-old negotiations with Tehran on the Trade and Cooperation Agreement (TCA).

But then, Iranian conservatives and others are equally aware that, singularly, on the issue of Iran, even Britain has stood apart from the U.S. and with its European partners. As a consequence, the British Foreign Minister Jack Straw – as they are well aware – is derided by the hawks in Washington, the effective makers of Middle East policy, as "Ayatollah Straw." They wish to see this policy gap between Washington and London maintained, if not widened.

To Each Its Own Interests

At the same time, Iranian leaders want to extract maximum possible benefits for their country in their dealings with the European Union. The most effective way to do this, unsurprisingly, was to acquire as many bargaining chips as possible. And so they resumed the manufacture of centrifuges for enriching uranium in July – but only after the EU troika had reneged on its part of a deal it had signed with Tehran in October 2003. The three European countries delivered neither promised technological and economic benefits to Iran, nor did they address Tehran's security concerns which are closely tied up with the denuclearization of the Middle East (read: Israel and its sizeable nuclear arsenal). They even failed to get the Iran file downgraded at the subsequent IAEA governors' meeting – as stated in the agreement.

So on Oct. 31, amid chants of "Allahu Akbar" ("God is great") and "Death to America," all 247 members present in the Iranian parliament unanimously called on the government to restart the country's uranium enrichment program, using its already manufactured centrifuges, and to exercise its right to complete the nuclear fuel cycle enshrined in the nuclear Non-Proliferation Treaty (NPT) to which Iran is a signatory.

A nuclear fuel cycle consists of mining uranium ore (in which only seven out of every 1,000 uranium atoms are the lighter fissile isotopes U235, the rest being the heavier U238), processing it into uranium oxide (yellow cake), transforming it into uranium tetraflouride (UF4) gas, and then uranium hexafluoride (UF6) gas, followed by enriching UF6 to varying degrees of U235 purity: 3.5-4 percent pure for use in nuclear power reactors, 10-20 percent pure for use in research reactors, and 90 percent-plus pure and so usable in nuclear weapons.

In a nuclear power plant, the fuel consists of sealed rods containing hundreds of pellets of 3.5-4 percent pure uranium. When hit by high energy neutrons, these pellets undergo a controlled chain reaction, emitting intense heat which transforms the surrounding light (ordinary) water into steam. That then runs the plant's electricity generating turbines. Once these fuel rods have yielded their energy, they are called "spent rods." These can be reprocessed with the aim of extracting from them plutonium (Pu239 or Pu241), which could be used as fissile material for nuclear weapons. (Although as yet there are no commercial electric plants using plutonium fuel, Pu239 and Pu241 do contribute towards generating heat for uranium-fuelled plants.) Nuclear fuel thus produces both electric power and more nuclear fuel, and is therefore, in principle, a renewable source of energy.

Therein is the rejoinder to those in the United States who argue that, given Iran's enormous oil and gas resources, its government does not need nuclear power plants. Oil and natural gas deposits, being finite, will not last forever whereas a nuclear fuel cycle can be self-perpetuating. These critics ignore the fact that, despite its vast oil deposits and the largest gas reserves in the world, Russia has a thriving nuclear power industry at home. Furthermore, it exports its technology. Having already built the Iranian nuclear power station near Bushehr, it remains the favorite contractor for the eight more such plants that Iran plans to build in the near future.

Meanwhile, it is Iran's hydrocarbon resources – an estimated nearly 10 percent of global petroleum reserves and the second largest gas deposits in the world – that are at the root of the pressures that British and French oil companies are exerting (discreetly) on their respective governments to cut a diplomatic deal with Tehran on the nuclear issue, and thus torpedo the American plan to take the issue to the UN Security Council with the possibility of economic sanctions or, in the future, worse.

The list of the European oil companies with ongoing oil contracts with Iran – Royal Dutch-Shell, Elf, Total SA, Agip of Italy, as well as BG (British Gas), Enterprise, Lasmo, Monuument, and so on – is so extensive that no major European Union member can afford to ignore such interests.

The Europeans are not the only ones. Last month the visiting Chinese Foreign Minister Li Xhaoxing signed an oil-and-gas deal with Iran, and Chinese officials assured Hussein Mousavian, deputy to Rouhani,, in Beijing that China would block any move at the IAEA to refer the Tehran nuclear dispute to the UN Security Council.

Bargaining over the Shape of the World

Whatever agreement emerges out of the "grand bargain" between Iran and the European Union, its nuclear component will be verified by the International Atomic Energy Agency. In his annual report to the UN General Assembly on Nov.1, IAEA director-general Muhammad El Baradei said that Iran needed to restore the international community's confidence by suspending enrichment after previously providing the IAEA "information that was at times changing, contradictory and slow in coming."

A fortnight later, what the EU troika actually got from Iran was an agreement "to cease to develop or operate facilities to produce fissile material, including any enrichment or reprocessing capability." "Reprocessing," a term that applies to the spent fuel rods, had not been demanded by the IAEA.

The Iran-EU deal came on the heels of a direct intervention by Iranian Supreme Leader Ayatollah Ali Khamanei. In his Friday prayer sermon on Nov. 5, he declared that "developing, producing or stockpiling nuclear weapons" is forbidden under Islam and "our believing nation," and added: "They accuse us of pursuing nuclear weapons program. I am telling them as I have said before that we are not even thinking about nuclear weapons."

What apparently drove Khamanei to this public statement was his determination to frustrate the Bush administration's plan to isolate Iran. He had used a similar argument when, in October 2003, protests arose at home over Iran's agreement to sign an additional protocol allowing IAEA inspectors access to any sites they wished to visit. He insisted then that the decision to cooperate with the IAEA was taken "widely and carefully" in the interests of the Islamic Republic to "foil an American-Zionist maneuver" to isolate Iran.

Since that moment both Iran and the EU threesome have raised their horizons. Besides adding in the reprocessing of the spent nuclear fuel rods from civilian projects, the Europeans plan to introduce the issues of human rights and political reform into their upcoming negotiations with Iran for the "grand agreement."

Tehran's wish list includes the reaffirmation of its right to a nuclear energy program for peaceful purposes; access to imported nuclear fuel at market prices for its reactors; support for Iran's acquisition of a light water research reactor; help with regional security concerns, including combating drug trafficking; the resumption of talks on the Trade and Cooperation Agreement; support for Iran's application for World Trade Organization membership; and the keeping of the Iraq-based Mujahedin Khalq Organization on the EU's list of terrorist organizations.

Much tough talking lies ahead between the EU and the Middle East's most strategic nation. All the more so when, as 34 IAEA governors welcomed Iran's decision on the suspension of all enrichment and reprocessing activities, Jackie Sanders, the Bush administration's representative, promptly followed up her very reluctant yes-vote with a nine-page statement asserting repeatedly that Iran has a clandestine nuclear weapons program without offering any back-up evidence.

Bush's Big Stick

With Vice President Dick Cheney describing the presidential election result as "a broad, nationwide victory," secured on the platform of an unapologetically hard-line foreign policy, the world should expect more of the same from President George W. Bush and his administration in the "war on terror" he declared on Sept. 12, 2001.

Specifically, this means Bush, Cheney, and their coterie of neoconservative ideologues will continue to visualize the ill-defined war on terrorism in purely military terms, and deploy the Pentagon as their primary instrument to win it. What this has undoubtedly translates into is: one, the already initiated assault on Falluja in Iraq to destroy a bastion of insurgents resisting the occupation of their country; and two, ratcheting up pressure on Iran under the rubric of "countering Tehran's nuclear arms ambitions."

The assault on Fallujah – and the intended confrontation with Iran – is taking place in a context in which anti-American feeling, already rife in the Muslim world, is rising yet again in the wake of a recent report from Johns Hopkins University's Bloomberg School of Public Health in Baltimore, Maryland. It concluded that some 100,000 Iraqi civilians had died between March 2003 (when the Bush administration with its British allies invaded Iraq) and September 2004; that the largest number of these deaths were caused by the unleashed air power of the invading and then occupying armies; and that women and children had suffered most.

In other words, the invaders may have managed to kill up to a third as many Iraqis in a year-and-a-half as President Saddam Hussein did in his 24-year dictatorial rule. This comparison led the Riyadh-based, pro-government Saudi Gazette to ask rhetorically, "If this is a war on terror, then who are the terrorists and who are the terrorized?"

The net result of Washington's escalating confrontation with Muslim countries and peoples under various guises will only be to widen further the gulf that already exists between the United States and Muslims in general, paving the way for a much-dreaded "clash of civilizations" that never need have happened.

Attacking the Fly on the Horse

The Bush administration is attacking Falluja despite warnings from Ghazi al Yawar, Interim President of Iraq, Kofi Annan, Secretary-General of the United Nations, Shaikh Muhammad Bashar al Faidhi of the Association of Muslim Scholars, which represents 3,000 mosques; despite the string of bombs that killed at least 34 in Samarra on Saturday, a northern city recently "retaken" from the insurgents and now plagued by fighting between the local police and the American-trained Iraqi National Guard.

"I completely disagree with people who see a need to decide [Fallujah] through military action," Interim President Yawar said. "The coalition's handling of this crisis is wrong. It is like someone firing bullets at his horse's head because a fly landed on it; the horse died and the fly went away."

In his letter to the American, British, and Iraqi governments on Oct. 31, Kofi Annan insisted that the escalation in violence that the taking of Fallujah represented would be "very disruptive for Iraq's political transition" and would also put civilian lives at risk. He added that he wanted the UN to help prepare for elections in Iraq in January, but feared that a further rise in violence could disrupt the process. "I have in mind not only the risk of increased insurgent violence, but also reports of major military offensives being planned by the multinational force in key localities such as Fallujah," he wrote.

Shaikh al Faidhi, on the other hand, was not so diplomatic. "If the U.S. invades Fallujah or any other city in Iraq, all the clerics in Iraq will call for a boycott of the election," he stated. Even if the phrase "all the clerics" were to be qualified with "Sunni Arab," that would still mean one-fifth of the Iraqi population concentrated in the country's crucial areas.

A majority of the residents of Baghdad, which accounts for one quarter of the national population of 25 million, are Sunni. So too are the inhabitants of Mosul, the second largest city in Iraq, not to mention the resistance cities of Fallujah and Ramadi.

It is worth recalling what happened last April when the Pentagon mounted an offensive against Falluja in retaliation for the murder of four Americans working for a Pentagon security contractor. A four-week long running battle with the Iraqi insurgents ensued in which the application of overwhelming force by the U.S. Marines led to nearly 600 Iraqi deaths, mostly civilian, and 65 American military fatalities. And yet during that period the Pentagon kept reducing its demands in stages until rebel demands that only Iraqis should police Falluja and that the Marines should withdraw to their bases were essentially accepted.

In the glow of his electoral victory, George Bush is unlikely to grasp the significance of this statement of Annan's in his letter: "The threat or actual use of force not only risks deepening the sense of alienation of certain communities, but would also reinforce perceptions among the Iraqi population of a continued military occupation."

Long used to blocking unwelcome reality, the President and his advisors are no more likely to take note of what is happening on the ground in Samarra, a city the U.S. military reconquered from the insurgents – for the third time – in early October, and handed over to the interim Iraqi government. Interim Prime Minister Iyad Allawi now holds Samarra up as a model for the fate of other rebellious cities still to be retaken, and yet it is an omen of what a military approach to the Iraqi situation is likely to yield.

Forced underground but not out of town, insurgents in Samarra, a predominantly Sunni settlement, are now so well organized that on Nov. 6 they were able to set off four car-bomb explosives within minutes of one another. On the government's side, fighting has already broken out between the interim government's National Guard, whose troops have been recruited from Baghdad and predominantly Shiite areas of southern Iraq, and the local police, a Sunni force, which is heavily infiltrated by the insurgents or their associates.

Since their arrival in the city, the National Guardsmen have been breaking into home without warrants, arresting people arbitrarily, and firing into the air at random. As for the local police, they extract bribes from the Samarrans and cooperate with criminal gangs. "We are now caught between an arbitrary authority [the National Guard] and a corrupt authority [the police]," was the way Hisham Nouri al Samarrai, a tribal leader on the local council, summed up the situation.

An attack on Fallujah, say most analysts, will act as a catalyst, uniting disparate resistance groups throughout Iraq. It is also expected to increase resentment among Iraqis and swell insurgent ranks. It's worth remembering that the siege of Falluja in April was the tipping point when insurgents – hitherto seen by most Sunni Arabs as imbued with Islamic fundamentalism – gained popularity. Fellow Sunnis, witnessing the carnage the Americans had caused in the besieged city, shed their fear of religious fanaticism and embraced the resistance fighters and their cause. It also gained the Sunni insurgents sympathy in a section of the Shiite community which put nationalism above sectarian affiliations. This time radical Shia cleric Hojatalislam Muqtada al Sadr has already expressed solidarity with the insurgents in Fallujah with whom he shares the aim of establishing an Islamic republic in Iraq.

Following tactics they had already developed in Samarra in late September, most Iraqi and foreign insurgents have already left Falluja for other destinations in the Sunni heartland. Those who have stayed behind will undoubtedly fight to the death, and the resulting heart-rending carnage – shown on numerous Arab satellite channels – is sure to intensify anti-American feelings not only among Iraqis but also among the inhabitants of the surrounding Sunni-majority countries of Saudi Arabia, Jordan, Syria, and Turkey.

Finally, a pacified and half-razed Fallujah, handed over to the Allawi's interim government, will most likely only replicate the recent history of Samarra.

No Carrots, All Stick

In speeches last week in Europe, Iyad Allawi singled out Iran among Iraq's neighbors for being uncooperative. This was not accidental. He was echoing his master's voice, that of the man who installed him as the Interim Executive Prime Minister – George W. Bush. Nor is it accidental that the Bush administration has refused point blank to endorse the package that the European Union trio – France, Germany, and the United Kingdom – has offered Iran as a way to begin to settle the nuclear issue, even though the offer was backed by the European Union summit in Brussels on Friday.

"A full and sustained suspension of all [uranium] enrichment and reprocessing activities, on a voluntary basis, would open the door for talks on long-term cooperation offering mutual benefits," said the EU communiqué. It further pledged resumption of suspended negotiations on a Trade and Cooperation Agreement between Iran and the EU.

Earlier, when shown the EU trio package, John Bolton, the neoconservative American undersecretary for arms control and international security at the State Department, said, "I don't do carrots."

In contrast, Iran's Supreme Leader Ali Khamanei, delivering his weekly sermon on Friday in Tehran, repeated his opposition to "the production, stockpiling and use of nuclear weapons," which, he asserted, are forbidden under Islam. "They [the Americans and Israelis] accuse us of pursuing [a] nuclear weapons program," he added. "I am telling them as I have said before that we are not even thinking about nuclear weapons."

Yet Washington is pressing its allies to start drafting a UN Security Council resolution of condemnation as a preamble to imposing sanctions against Iran. There can be little doubt that, even before its second term begins, a re-energized Bush administration is thinking once more of assembling "a coalition of the willing" – this time to wield against Iran, which is still firmly ensconced in its "Axis of Evil" along with North Korea. "They [the Americans] wanted an international coalition against Iraq," mused Jaswant Singh, former foreign minister of India, whose country refused to join the Iraqi version of the coalition. "But they ended up getting virtually an international alliance against America."

Unfortunately for the world at large, there is no sign yet that the Bush administration's disastrously flat learning curve has risen even by a fraction of an inch. The disjunction between the perceptions of policy-makers in Washington and Muslims abroad is so total that our planet is certain to become ever less safe as the new four-year term of the Bush White House unfolds.