Analysis: Ezone, Iran & China – Is US Hegemony About to Unravel?

The writing appears to be on the wall for the US this weekend. In a (sadly) global world where domestic and foreign policy can no longer be regarded as separate, there are glaring signs that American will is not prevailing. What happens next could well be very ugly indeed. The Slog offers a startling analysis based on recent news developments.

The downbeat (and unnamed) announcement from Beijing yesterday may well have passed most of the MSM by, but China-watchers will recognise it as a ‘no’ to the EU beggars….and a snub to the US policy pressure applied by State over the last week. Some nameless bureaucrat popped up to say vague, equivocal stuff about China’s domestic this that and the other, and of course long-term peace-loving nature. That was it…until this bit about the Brussels folk fingering Chinese steel imports:

“Launching an anti-import subsidy investigation sends bad signals about trade protectionism from the EU. This casts doubt on China-EU steel trade, but also damages the Chinese people’s willing efforts to respond to the debt crisis. European debtors in the vice of sovereign debt need to show more open, cooperative and forgiving attitude in facing the crisis.”

Fine: eurocrats getting in the way as usual – right hand, left hand and all that – but this effort from Beijing is a convenient excuse. The intemperate tone probably reflects a desire by the Chinese veterans to say “Look, we’re suffering too here”, but the message is, in the end, “no way”.

Given that Beijing will, without question, be fully aware of the danger to the US of contagion from Europe, in diplomatic terms this is a glove thrown down by the challenger….albeit a velvet one for now. Last year we had moralising about America in debt, this year we have what one might term ‘proactive inaction’: China isn’t going to boost the eurozone firewall just because the US Treasury has got the jitters. (I’m bound to add, however, that the upcoming, younger officer class in China may also be exerting its influence in this communique.)

As the Buddhists and the astro-physicists assert, all things are connected. This now gives the Iranian regime added confidence in testing American resolve….and boy, are they pushing it. Because most of us (The Slog included) have had our eyes somewhat off the geopolitical ball of late, an awful lot of escalation of the Iran/US/UN/Homuz Straits/Nuclear mess has gone unnoticed. We are much closer to a hot war about this than most people realise….and having sided with the Iranians pretty firmly of late (as has Russia) it is highly unlikely that Beijing will want to back down. Exactly fifty years on, we have Cuba 2 – times 3.

In saying ‘no’ at this stage, what the anonymous Chinese announcer also did, however, was make it even more vital for Geithner and Co to get Berlin onside with the ‘bank bailout – amputate Greece – boost ezone firewall’ deal that the Fed and the White House thought they had Europe signed up to. But like China, Germany too is entering a more aggressive period of nationalism: Berlin is in no mood to have a hyper-neurotic America demanding money to end a crisis many people see as having been exacerbated by US bank lending (and Goldman Sachs currency-swapping) in the first place.

Thus – despite massive G20 pressure, and a breakout by the German Interior Minister yesterday who called for Greece to default and leave the euro – Schauble and Merkel are continuing to give out with the same flat ‘no’ as that emerging from Beijing. Berlin has (as The Slog has predicted consistently in recent weeks) its own growing internal divisions: Frankfurt bankers and FPD/CDU rebels are all making the Chancellor’s life a misery….and the ECB under Mario Draghi is taking its orders more from Goldman Sachs than Berlin.

Stay with the universally connected causality loop now as it bends back on itself – and towards the strategic importance of Greece for the US, beyond saving Wall Street’s arse. The bottom of the Aegean sea is, I hear, a mining prospector’s wet dream. For Greece to lose a sovereignty battle in Cyprus with Erdogun-happy Turkey would complicate American access to this further. And since the Chinese bought Piraeus Harbour from cash-strapped Greece, the Pentagon has been on a hot tin roof about access to ports and bases in the Mediterranean. For one massive happy side-effect of Greece outside the ezone would be the Americans piling in (on their own and via the IMF) with the tell-tale stream of consultants, military advisers, construction deals and further-leveraged Dollars to provide ‘humanitarian aid’. Not for nothing is Wolfgang Schauble alleged by a Slog banking source to have said last Friday, “There is a lot more in this idea [the Default Plan] for the Americans than there might be for us”.

Let me summarise up to this point. Resentment towards the American Way has, over the last sixty years, been concentrated among four broad geographical groups: South Americans, Arabs, Asians and increasingly united Europeans. While it might be fair to ask “So who’s left?”, this really isn’t the point: when we ran the world from Merrie Olde England, everybody hated us too….especially the Scots. It goes with the territory: everyone in the pack resents the fact that Top Dog gets to shag who he wants, and first.

South America’s trading group – and the growth of Brics there – has loosened the US grip upon that continent. And as 2012 unfolds, America isn’t getting its way anywhere else either.

The final part of the connection now completes a circular noose that will one day tighten around America’s neck: if the European contagion can’t be contained, the economic and fiscal effects on a sham US recovery will be beyond the imagination of even Ambrose Evans-Pritchard, Tyler Durden at Zero Hedge, or Max Keiser. And these are all guys who can see the downside in every situation. If the White House has to back down over Iran, it will be a victory for rogue States and Chinese ambitions. And if (as a result of both that and a radically changed Greek bases outlook) American business and the Pentagon lose a major raw materials game, then China more than Russia has the power to fill any vacuum thus created: Turkey might be the winner in 2013, but Beijing will be – given its African position – the ultimate victor

Almost imperceptibly, the United States of America – and the World – have come to a crossroads. There are three roadblocks there, and they all have to be pushed aside….or the US fate is sealed. I think that, while the players are entirely different, the parallel with the 1962 Cuban Missiles crisis is a sound one. On that occasion, Russia blinked – and the American Century continued. Will those in the way of US aims blink this time? I have my doubts. Whatever revisionists might today think of JFK, none of the US Presidential candidates – including the chap in the Oval Office – have the vision, cojones or stature of Kennedy. And while Nikita Kruschev was a belligerent Communist peasant, he was sane. Ahmadhinnejad very clearly isn’t.

The world has never been a more dangerous place than it is this morning. The G20 – I’m pretty sure – will once again prove to be a pointless, spineless, troughing club for overblown elite members to announce and pontificate. It would be really good – no, I mean truly satisfying – to be the leader of an SAS-style operation designed to seal off their first session tomorrow. And better still, to be the guy who went round the audience, one by one, to give each onanist a really hard face-slapping….and then deliver a speech saying, “Look, you jerks may be protected, but the rest of us aren’t. Get off your butts and do something.” Then to leave them without food until they had an idea, a real plan, and – who knows? – the desire to grow some long trousers.

But that’s not going to happen. And China can’t afford (yet) to leave America impoverished. And Berlin may give in. And Mahmoud in Tehran is going broke at a rate of knots, thanks to the US banking grip on world cash transmission. So this time we may well just muddle through again. Until the next time.

But down here in Devon, it’s a beautiful Spring morning, and as it’s my birthday I’m off for a wizard slap-up lunch courtesy of the other half. Nothing, but nothing, is going to ruin my Sunday. You may now feel free to thank me for ruining yours.