Daily Archives: January 8, 2011

Waking up to the threat of the Second World

The Second World: Empires and Influence in the New Global Order: How Emerging Powers Are Redefining Global Competition in the Twenty-first Century

 by Parag Khanna

Publisher: Penguin
Published: 30 April 2009

I would urge everyone who wants to get a grip on exactly what the rapidly developing nations and especially the Chinese are up to read this book.

Khanna writes from a liberal internationalist viewpoint in one sense - for him the EU is the light to follow  as the world hardens into three empires, the American, the EU and the Chinese – but in another sense he is not because he is far from being a hardline laissez faire follower. 

The scope and ambition of China is truly breathtaking. Most will have probably heard of their forays into Africa and their attempts to buy strategic first world assets such as Rio Tinto Zinc and a decent lump of the major US port system, but that is just the tip of the iceberg. They have built a ring of client states around them from Burma to North Korea who are to All intents and purposes as much part of China as is  Tibet.  Their influence extends throughout all of South and central Asia and across to Latin America. Only the developed world is still largely untouched by their policy of giving massive amounts of Aid to get them into a country and then using that country for their own purposes. 

They are being immensely clever. Aid is giving without strings, unlike that doled out by the West. It is on a truly gigantic scale. They build infrastructure in Third and Second world countries for free but this infrastructure is very often to promote their own direct purposes such as transporting materials and manufactured goods. The deal is, we will give you money and material help and you will give us food and materials and allow our cheap manufactures to come into your markets. No moralising, just and exchange of goods and services. Resource wars may become a defining feature of the century. In particular, Khanna  identifies the  potential for serious warfare in the medium term between Russia and China as the Asian provinces of Russia are denuded of Russians and Chinese immigrants take their place.

Interestingly, as the extract from the book I reproduce below shows, Khanna rates the Chinese development and potential  vastly beyond that of India, despite the latter having the “correct” political system and China the “incorrect” one from the Western point of view.  I foresee a re-run of the Fascist-Liberal democracy argument in the 1920s and 1930s over which is the more efficient system and whether the First World can afford what we now call democracy (in reality elective oligarchy). 

But the book is about far more than China and India. It paints a vivid picture of of the potential of Asia and Latin America and the potential  threat this presents for the currently developed world. The time of laissez faire is almost done as governments in the developed world suddenly wake up to what is happening among the five sixths of the world which do not live in the First World.  Their  elites still instinctively think in protectionist terms. The elites of the developed world will have to begin to  do the same if the nations of the developed world are not to be overwhelmed by the sheer numbers and growing material strength of the developing world.

The Second World 
Parag  Khanna’s 

CHINA’S FIRST-WORLD SEDUCTION pp275 -277 
INDIA LOOKS EAST 
The devastating 2004 tsunami, which centered on Indonesian Sumatra and swelled over islands and coasts from India to Somalia, reinforced the 
reality of a seamless oceanic space in the world’s Eastern Hemisphere. As lunar gravity dictates the tides, however; the Indian 
Ocean increasingly serves as the western bay of a greater Pacific space centered on East Asia. Its western shores—Africa, Arabia, and 
Iran—increasingly send their natural resources eastward, even as the area provides investment and export markets for booming Asia. The 
majority of the world’s shipping now traverses this integrated Indo-Pacific realm, making all of South Asia the third-world western 
subsystem of the China-centered Asian order. Over 50 percent of India’s trade is with East Asia, while Japan, South Korea, and 
Singapore are its largest foreign investors. 
Under the British Raj, India was the most powerful territory between the Suez Canal and the Straits of Malacca, but its influence in the Arab world and Central Asia also ended with the Raj. Hemmed in by the world’s highest mountain range and a vast ocean, power projection (even with nuclear weapons) is highly circumscribed for India’s modest army and navy. The United States explicitly seeks to sponsor India’s rise as “the first large, economically powerful, culturally vibrant, multiethnic, multireligious democracy outside of the geographic West”—not to mention as a hedge against China. But India has transitioned from its Cold War nonalignment to multi-alignment. It declares itself and the United States to be the “twin towers of democracy” while announcing with China plans to “reshape world order. ‘ To lure India, America has offered high-tech investment, civilian nuclear technology, defense agreements such as joint F-18   production, and more visas for immigrants. China has emphasized their common positions in trade negotiations, joint oil exploration, commercial corridors through the Himalayas, $20 billion in annual trade, 
and a civilian nuclear deal as well. Indian IT firms must import hardware from China to produce their software; that the largest outsourcing operations in China are Indian-owned shows its growing integration with China. 
But China’s soft cooperation with India has facilitated its grand strategic goal of encircling and containing it through a naval “string of pearls” in order to reach the Arabian Sea without relying on the Straits of Malacca. Once part of colonial India, Burma is now entrenched in China’s orbit, with India’s proposed east-west gas pipelines 
dropped in favor of north-south pipelines to China. Where India has built a fence to prevent Bangladeshi migration, China has built a modern Bangladesh- China Friendship Conference Center in Dhaka. While India threatens to divert the Brahmaputra River (on which Bangladesh depends) into the Ganges, China has muscled in, since it is the source country of  the Brahmaputra. Against Indian wishes, China has become an observer in the South Asian Association for Regional Cooperation (SAARC), while Indian influence in the evolving East Asian Community is marginal. 

“Nobody in the region really cares what India   thinks,” confided a Malaysian diplomat involved with regional diplomacy. India is big but not yet important. Outsourcing has made it a  leading back office for Western firms, but except for a few segregated twenty-first-century oases of development, India is almost completely third-world, most of its billion-plus people living in poverty. In Mumbai (once known as Bombay), which accounts for over one-third of the national economy, some residents pay among the world’s highest rents while the city’s slums of over ten million inhabitants are also the world’s largest. Clogged Indian cities still have three-way streets: 
Two directions for automobiles, with pedestrians and stray cattle  meandering in between. India’s bonanza of IPOs, impressive corporate profits, and billionaires galore show the dynamic potential of its private sector, but its growth will remain spectacularly uneven until the government catches up—perhaps over the next two decades—with its promises of infrastructure development. India’s continued high   population growth ensures that even with high economic growth it will remain the poorest large country in the world for decades to come. 

Though agriculture constitutes only 30 percent of the economy, seven hundred million people depend on seasonal monsoons and harvests—yet India’s groundwater is depleting rapidly. Unable to pay their debts, many farmers have committed suicide, while indentured servitude continues in many backward areas. Most of India’s population growth is occurring in the northern states, which have the weakest infrastructure, the worst governance, the poorest education, and the highest rate of 
HIV/AIDS infection, all while also being the epicenter of a resurgence of the polio epidemic. 
China has order and may one day have democracy. India has democracy but achieves less because it is chaotic. The link between trade and development that China exemplifies is almost absent in India. Relative to its geographical and population size, India’s government is almost invisibly weak, with a federal budget the size of Norway’s. Unlike China, unified India is a British creation, and its unity often appears more geographical than psychological; it is a cramped peninsula where 
Tamils and Assamese have nowhere else to go—yet still they try. It could also be argued that China is a freer country than democratic India: Literacy is far higher, the poverty rate far lower. Also, it takes longer to start a business in India, one-third as many Indians have Internet access, and only one-fifth as many have cell phones. 
India’s democracy may never have experienced a famine, but over half of India’s children are malnourished. Because most Indians lack economic freedom, other freedoms are that much more difficult to enjoy. 

The difference between India and China is thus not just the time lag between the advents of their current economic reform eras but also a fundamental matter of national organizational ability. Even if India rises, it will be according to Chinese rules.

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