So now we go to war for China?

Fallout from the debt ceiling agreement continued as a mainstream consensus emerges that President Barack Obama got rolled by the rabid right wing,[1] the Dow Jones Industrial Averages fell by 512.76 points Thursday,[2] and Standard and Poors lowered the U.S. government’s credit rating from AAA to AA+, on Friday, saying “The downgrade reflects our opinion that the … plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”[3] Jane Hamsher responded to the S&P downgrade by pointing to the agency’s shifting rationale for threatening a downgrade, suggesting the move is an attempt to manipulate U.S. politics.[4] For all the hue and cry, Dylan Matthews posted that the impact of the downgrade was as yet unclear: it might matter—and it might not.[5]

Perhaps more ominously, China’s official Xinhua news agency published an article asserting that China had every right to demand the U.S. get its house in order and pointed both at defense and “bloated social welfare” costs.[6] This leads me to recall the “confessions of an economic hit man.” John Perkins has been on the Democracy Now! program on numerous occasions discussing his previous employment pressuring governments to accept ruinous loans and this is evidently the topic of a book he has written which I have not yet even acquired, let alone read. Basically, the idea seems to be that once heavily indebted, governments can be coerced into making concessions to U.S. corporations that they otherwise might not make, enabling unfair labor and trade practices and facilitating environmental destruction.

In essence, as a general rule, when governments cannot pay one way, they’ll pay another. And it appears that China, in particular, is—or at least believes it is—gaining that kind of leverage over the United States that enables it to make demands that intrude upon the internal politics of another country at the same time it is quick to reject “interference” from abroad over its own human rights record. But the resources the U.S. has to offer are not so much in labor and trade concessions as in military prowess.

I’m not making any predictions as to how or when this manifests. But there are obvious conflicts where China and the U.S. are on opposite sides, for instance over Taiwan and territorial disputes in the South China Sea, but also in the U.S. tilt away from Pakistan and towards India, the latter country apparently under the domination of groups who dream of regaining control over what I call a Greater Hindustan, encompassing just about everything from Afghanistan and Tibet south, west as far as Pakistan, east as far as Burma (figure 1).[7]

Greater Hindustan

Fig. 1: Greater Hindustan, based on Angana Chatterji's description in Violent Gods.

A shift in U.S. policy in favor of China in any of these disputes might reflect the influence of our foremost foreign creditor. More telling will be if we actually go to war in support of Chinese aims. Another sign might even be in a rapprochement with North Korea. And of course, some of these things are things that might happen anyway, but after all, debts must be paid.

  1. [1]Elizabeth Drew, “What Were They Thinking?” New York Review of Books, http://www.nybooks.com/articles/archives/2011/aug/18/what-were-they-thinking/?pagination=false
  2. [2]Graham Bowley, “Stocks Plunge on Fears of Global Turmoil,” New York Times, August 4, 2011, http://www.nytimes.com/2011/08/05/business/markets.html
  3. [3]Charles Riley, “S&P downgrades U.S. credit rating,” CNN, August 5, 2011, http://money.cnn.com/2011/08/05/news/economy/downgrade_rumors/index.htm
  4. [4]Jane Hamsher, “The PMS of S&P,” Firedoglake, August 5, 2011, http://firedoglake.com/2011/08/05/the-pms-of-sp/
  5. [5]Dylan Matthews, “The U.S. is downgraded. Now what?” Washington Post, August 5, 2011, http://www.washingtonpost.com/blogs/ezra-klein/post/2011/08/05/gIQAx4NKxI_blog.html
  6. [6]Agence France-Presse, “China has right to demand US address debt problem: Xinhua,” Dawn, August 6, 2011, http://www.dawn.com/2011/08/06/china-has-right-to-demand-us-address-debt-problem-xinhua.html
  7. [7]Angana P. Chatterji, Violent Gods: Hindu Nationalism in India’s Present (Gurgaon, India: Three Essays, 2009).

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