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Adjusting the Epochal Architecture

 

 

 

 

The brand of the STRATFOR global intelligence company keeps very much in the news of the world mass media, and a bestseller of its founder and CEO George Friedman “The Next Decade” is read to tatters and smudges by high officials as well as analysts, and is in a core of disputes about new changes in the coming decade.

 

Our time is a time of magnificent flowering of the most various and often contradictory forecasts. It was so in an epoch of radical changes in trends and paradigms of the universal human development. It seems, such momentum is coming. To live successfully in the changing world, to adapt to it, it is necessary to know of these changes and ways of their future development. That is why, nowadays, a demand in forecasts is very high than heretofore. But forecasting is very complicated and thankless task because it is very difficult to predict any changes, to predict shift in factors have been served as a basic for earlier matrix and forecasts.

 

Nevertheless, even in the flow of numerous predictive schemes, the forecasts of an American political scientist G. Friedman postulated in his bestseller “The Next Decade” have arisen a special interest around the world.

 

Even a preface to his book fascinates by the statement that the main zigzags of a history are unpredictable in the coordinates of public thinking which exists on the eve of these zigzags. At the beginning of XX century, nobody could think that the World War I would break out over the years. When Germany was in ruins and paid huge contributions, nobody could think that it would be able to challenge to global hegemon of those time – to Great Britain. In a full play of two superpowers’ confrontation nobody could think that not only socialistic block but the USSR as well would break down due to moral pressure by the West.

 

This thesis about unpredictability of the most major events is fully confirmed by Arabic events at the beginning of this year which were unexpected both for analysts and politicians.

 

At the same time, the forecasts in “The Next Decade” have very shock and paradoxical character. In this regard, the Economic Review magazine has addressed to Dr. G. Friedman to find out, would the author refute his statements by own forecasts.

 

Let us start with you and your organization. STRATFOR is famous globally as a leading private intelligence company. Its estimates and forecasts, especially yours, make analysts around the world prick up their ears and fall in analysis in order to determine which way the wind blows. This probably means that you keep track and keep a record of the balance of interests both of U.S. and other countries’ governments as well as big business and informal groups. If it isn’t a secret, how do you succeed in doing this? How do you work and interact with governments, business, other analytical structures and intelligence services?

 

– Your understanding of what we try to do is correct.  We divide what we do between the collection of information and its analysis.  We collect information in a number of ways.  First, we of course monitor the global press and have a separate group that does that.  Second, we try to form relationships with news organizations and think-tanks around the world for the exchange of ideas and information.  Finally, we seek to develop relations with individuals in countries around the world who can provide us with insight as to what is going on.  We do this very carefully making certain that we don’t break the laws of any country and that countries understand that we are not trying to undermine or embarrass them but to understand them.  This information – which is massive – is then passed on to analysts who are experts on a region and work in teams for collation and analysis and then to a writers group for preparing material for publication.

 

You write that the first of two confrontations are the efforts of subordinate states to form coalitions for USA control and restraint. The second one is the US pre-emptive acts to hamper a valid coalition. We can see these efforts - to create a coalition against the USA - in such formats as the SOC, BRICS, which are, however, still not effective enough. And suddenly there is a new factor that may serve as another stimulus and criteria for coalition – Libya and other Arabic revolts. Political accent on these issues are disunited and continue to become more acute. How do you assess the recent events with a view to strengthening the USA coalition and preventing the counteracting one?

 

– We divide the events in the Middle East between North Africa and the Arabian Peninsula.  The North African events were not democratic risings against regimes, but attacks against particular leaders—Ben Ali, Mubarak, Gadhafi.  At this point they do not pose a challenge to the United States.  We see the Arabian Peninsula as more important because there what is happening aligns with Iran’s interest, which is to dominate Iraq after the United States leaves, and change the order in the Persian Gulf as a whole.  This is both internal social unrest coupled with Iranian exploitation and influence.  This poses a substantial challenge to the region and the American interests.  But this has been something the U.S. knew it would face when it committed to withdrawing from Iraq, so it is not unexpected but it still poses a major challenge to the U.S.  It should be seen as one of the consequences of war in Iraq.

 

It is impossible to dispute about your words that previous cycle of China openness has ended quite sad for this country. But it happened in other geo-economic realities. This openness was reached due to activities of European fleets and thebaic wars. Then, the openness played for benefit of more competitive economies and turned out harmfully to traditional Chinese one led to the impoverishment of hundreds of millions of its inhabitants. Now, China possesses concrete advantages compared to the same Europe and USA, and openness plays to Chinese economy’s good.

 

– We must remember some Chinese statistics in evaluating China. About 600 million Chinese live in households earning $3 a day or less.  About 440 million live in households earning $3-$6. So, 80 percent of China lives in third world poverty.  About 60 million people live in what would be called an advanced economic state.  This is a lot of people but less that 5 percent of China.  The other 15 percent are migrants to cities who live between poverty and comfort but if they lose their jobs they plunge back into poverty.  This is a very old fault line that has existed before in China and it is still one.

 

The 60 million are really not part of China. They can’t sell their products to the rest of China but must sell it to the United States and Europe, so they are hostage to their customers. If the customers reduce buying, that curtails production and creates unemployment.  Unemployment creates social instability and this is something the Chinese are afraid of, which is why you see serious repression in China now.  Last quarter, China imported more than it exported for the first time in seven years.  Events like this make the Chinese very uneasy.

 

Drawing the negative scenario for China you will suppose the external shock in case if there is slump in economy, and funds cease to flow into the country. But if the global composite demand falls, economies with less competitive goods (by price) will suffer rather than Chinese one, and, as in the last crisis, Chinese products will only increase their share in foreign markets. In addition, the crisis greatly affects the developed countries cutting their population incomes and diluting the middle class. In contrast, in China we can see reverse picture, and, it seems, incomes growth will promote stability.

 

– At this point China’s competitive advantage has declined. Its wages have risen with inflation, driven both by massive lending to maintain existing indebted businesses and by rising commodity prices. So at this point, China’s wage rates are substantially above Mexico’s, but also above Vietnam’s or Philippines’.  In the end, China is affected by declining demand for its products particularly in Europe, and also declining price competitiveness.  Other countries are challenging China in the same way China challenged Japan.

 

For your forecast to come true, may we assume that one having an optimistic vision in a bright future of China does not account some shortcomings in its competitive advantages? How do you think is it possible external - non-economic but political - shock for China?

 

– I do not believe that external, non-economic shocks will play a significant role in China.  While China has difficulty projecting military power, China is also invulnerable to military power.  Anything that would affect China’s access to oil, such as the closure of the Straits of Hormuz, would of course affect China deeply, but it would also affect the rest of the world.  In general, I don’t see war as a major external factor for China.

 

With respect to Russia, you forecast a number of events by 2020: its rehabilitation in former dominancy, which will inevitably conflict with the US interests; the Russians will move in on the West via the East-Europe plain; Russia will attempt to set its own order; etc. But reading your description of the internal situation in Russia, the question arises, from where can it gather the strength for expansion, as you outline? Rethinking the relations of Russia with the West and the USA in neutral years of this century, there is a feeling that your scenario has already had the time to be realized early, nowadays. What do you think — maybe Russia has hidden potential in this regard?

 

– It is important to remember that Russia has always differed from other countries in that its political-military significance outstripped its economy. Both under the Czar and under the Soviet system the economy was always weak and disorganized, but Russian power was much greater than what you would have expected.  So it is not appropriate to measure Russia in the same terms you measure other counties as they can achieve much greater power than others.  In terms of external dynamics, attention should be paid to the growing relationship with Germany. As Germany redefines its relationship with the EU following the 2008 crisis, and with NATO (as we can see in the Libyan campaign) it is drawing closer to the Russians.  It depends on Russia for natural gas and is a source of technology for Russia.  Also, neither Russia nor Germany like the role the United States is playing and what it demands of them.  I see this as the most critical coalition emerging, potentially tying German technology to Russia resources.  This should be watched very carefully.

 

You write that the USA will maintain an indisputable hegemony in the world in the next century as any country in XXI which has an exit to the both oceans possess the huge advantage. It is impossible to agree with this in a view of habitual for the last 500 years postulate of “the marine civilization”. You also mention the need to consider technological development due to which, however, “the marine civilization” was able to be formed and dominate over continental states. But what do you think that the same technologies can work for benefit of countries, traditionally belong to “the continental civilization”? For example, having no barriers to informational technologies and high-speed railways with China in the lead? And if the interests of China, Russia, Central Asia, Continental Europe are consolidated, how will it affect upon influence and status of the USA which is separated from the Eurasia by two ocean?

 

– High speed rails are of course an alternative to maritime power, and it is important.  But as always, land based transportation is energy intensive while maritime transport is less so. So the real question is what will be the long-term cost of energy?  Unless there is a radical breakthrough in energy cost, maritime transportation will continue to be the more efficient means of transport.

 

Would you consider a visit to Uzbekistan upon receiving, for example, an invitation from the Centre for Economic Research to deliver a lecture here? 

 

– I would be very interested in visiting Central Asia and particularly Uzbekistan.  That is the Eurasian heartland that Mackinder, the founder of modern geopolitics wrote of and the opportunity to visit your country and get to know it would be very welcome.

 

 

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