9/11 shapes BRICS, and ‘boosts’ Sanya Summit
India’s Prime Minister Manmohan Singh (L-R), Russia’s President Dmitry Medvedev, China’s President Hu Jintao, Brazil’s President Dilma Rousseff, and South Africa’s President Jacob Zuma pose before a joint news conference during the BRICS summit in Sanya, on the southern Chinese island of Hainan, April 14, 2011.
As his global teleconference broke up in disarray on Sept. 11, 2001, a top economist at a U.S. investment bank began to ponder what the attacks on the United States might tell him about the future shape of the world. His conclusions had little to do with Al Qaeda.
Jim O’Neill of Goldman Sachs had been at a meeting in the World Trade Center only two days before, and flew home to London just hours before airliners slammed into New York’s twin towers. About to become head of the bank’s global economics team, he was looking for a "big idea" to put a stamp on his leadership.
Soon, he had it: the decade after September 11 would be defined not by the world’s sole superpower or the war on terror but by the rise of the four biggest emerging market economies – China, Russia, India and Brazil. O’Neill nicknamed them the "BRICs" after the first letter of their names.
"I’ll never forget that day," O’Neill told Reuters. "It was right at the core of how I dreamt up the whole thing… Something clicked in my head that the lasting consequence of 9/11 had to be the end of American dominance of globalisation… that seems to be exactly what happened."
O’Neill, who now heads Goldman’s global asset management business, launched the BRIC phrase in a pamphlet published in November 2001. The numbers from the past decade suggest the trend he identified will resonate more in world history than the strikes and their aftermath.
When O’Neill dreamed up the BRIC acronym, the four big emerging powers made up eight percent of the world economy. The top five world economies were, in order, the United States, Japan, Germany, Britain and France.
Ten years later, the BRICs have grown faster than even O’Neill expected to constitute nearly 20 percent of the global economy. China is the world’s number two economic power, while Britain – the closest ally of the U.S. in the decade-long war on terror — has dropped out of the top five, overtaken by Brazil. India and Russia are not far behind.
Within days of the attacks on New York and Washington, the U.S. had launched a costly and attention-sapping global "war on terror" and was plotting retaliation against not just Al Qaeda but also other members of what it saw as a wider "axis of evil", including Saddam Hussein’s Iraq.
At first sight, the U.S. and its allies appear to have won their war. The Al-Qaeda network is badly damaged, Osama Bin Laden and other key leaders are dead and the group has not pulled off a major terror strike in the West for years.
What is less obvious is the cost of that apparent victory, both financially and diplomatically.
"For most of the first decade of the century, as the world economy gradually shifted its centre of gravity towards Asia, the United States was preoccupied with a mistaken war of choice in the Middle East," said Joseph Nye, a former U.S. under-secretary of state and defence as well as ex-chair of the National Intelligence Council and now a Harvard professor of international relations.
U.S. actions, he says, critically undermined its "soft power" in diplomacy, values and culture, while diverting and ultimately weakening its military and economic "hard power".
The day before the attacks, the U.S. national debt stood at a sliver under $5.8 trillion. A decade on, it has skyrocketed to $14.7 trillion.
Unfunded tax cuts, post-financial crisis stimulus and other increased domestic spending account for much of that. But America’s post-9/11 conflicts added heavily to the burden.
One recent estimate, from Brown University in the U.S., put the cost of America’s wars in Iraq, Afghanistan and Pakistan at up to $4.4 trillion – nearly a third of the total.
"It was pretty immediately obvious that the Americans were going to lash out and probably going to overreact," says Nigel Inkster, a former deputy head of Britain’s Secret Intelligence Service (MI6) and now head of transnational threats and political risk at London’s International Institute for Strategic Studies (IISS).
"In the overall scheme of things, I suspect the impact of 9/11 and rise of Al Qaeda is going to be seen as not much more than a blip".
The United States was not the only Western power to take drastic measures.
Like then-U.S. president George W Bush, British Prime Minister Tony Blair saw the September 11 attacks as a defining moment.
"… I don’t think we were clear on what exactly had to be done but I do think we were clear that the calculus of risk had changed."
That belief helped send Blair and his country to war in Iraq and later Afghanistan, costly military adventures that ultimately may have made far less difference to Britain than the threats it faced from a fast-changing world economic order — as well as its own internal financial problems.
The Iraq war ended up seriously tarnishing Blair’s premiership and his reputation, after it emerged Britain went to war based on a faulty assessment of the risks posed by weapons of mass destruction.
Wolfgang Ischinger, a former German deputy foreign minister appointed ambassador to the U.S. in 2001, says September 11 "burst the bubble" of any illusion that one superpower could rule the world.
"But in terms of importance for the global power situation, for global governance, I think the rise of the BRICs will have the more enduring effect. 9/11 created such a lot of confusion that it took us the better part of a decade to figure out what conclusions we should draw from it and the wrong turns some countries took."
LESS A TURNING POINT THAN FINANCIAL CRISIS?
On a flight into Houston, Texas for a meeting between Jordan’s King Abdullah and Bush when Al Qaeda struck, Jordan’s ambassador to Washington Marwan Muasher’s initial worries were over an anti-Muslim backlash in the United States. He believes Washington did well to avoid that, but misjudged its broader reaction and should never have launched the Iraq war.
"But there have been other developments since then such as the financial crisis that in some ways, overshadow much of 9/11," says Muasher, who later became foreign minister and is now a vice president at the Carnegie Endowment for International Peace, a U.S. think-tank.
"It is not a matter just of U.S. decline, it is a matter of the emergence of other powers. The age of the unipolar power of the United States was very short in part because it was ultimately never sustainable."
Ian Bremmer, president of political risk consultancy Eurasia Group, says the world has already moved on from September 11.
"With hindsight, 2008 was the seminal moment," Bremmer told Reuters. "Not only did we have the financial crisis, we also had the Beijing Olympics. Before that, China was seen simply as an emerging market, a backwater. Suddenly we saw them coming into their own."
China paraded brash self-confidence at the 2008 Olympics opening ceremony, showing off spectacular new buildings in its capital and brushing aside Western concerns at human rights abuses.
The country’s growing financial and economic weight – it now holds $1.2 trillion of U.S. government debt, by far the biggest foreign investor in these securities – means the West can ill afford to question it.
When a government debt crisis hit Europe this year as buyers shunned the most indebted countries, leaders begged China to come to their help by buying up euro-zone securities – a scenario unimaginable in the 20th century.
August 2008 also saw fellow BRIC Russia swiftly win a war with U.S.-backed neighbour Georgia, the first time Moscow had sent troops outside its borders since the 1991 collapse of the Soviet Union. That more muscular approach from emerging powers — particularly in their own backyard – could in future be adopted by the likes of China or India.
HASTENING THE WEST’S (RELATIVE) DECLINE?
Reflecting broader changes to investment patterns, Stephen Jennings, the CEO of Moscow-based investment bank Renaissance Capital, says he sees more and more big "south-south" business deals now struck in developing nations, funded by BRIC banks on behalf of emerging market investors – and at which there is not a single face from London or New York.
"The traditional financial centres and Western economic model are losing their pre-eminence," Jennings said in a speech to investors in Moscow in June. "There is a gravitational shift of business, capital and ideas towards emerging market economies fast-growing economies, including Russia, are becoming the leaders of the new economic order".
The diplomatic order has also changed. When it came to salvaging a deal at the Copenhagen climate summit in 2009, U.S. President Barack Obama went into a room not with the other G8 developed states but with the leaders of the emerging world: China, India, Brazil and South Africa, the latter increasingly keen to position itself as part of a wider "BRICS" grouping to counterweight older powers.
The uprisings of the so-called "Arab Spring" across the Middle East and North Africa — which blindsided not only regional leaders but also Western intelligence agencies and apparently Al Qaeda — were seen by some as a wake-up call for more authoritarian BRICs like China. But critics said the uprisings also pointed to double standards on the part of the U.S. and its allies.
The West, they charged, backed authoritarian Arab rulers when they needed their business or support in the "war on terror", then abandoned them when their positions became untenable.
Now, Britain and the United States have been embarrassed by documents found in Libya suggesting that their intelligence services were cooperating closely with Col. Muammar Gaddafi’s regime.
"In many ways, it shows the whole hypocrisy of the approach that said you had to embrace the dark side to defeat terror," says Jan Egeland, Europe head of Human Rights Watch and United Nations global humanitarian chief between 2003 and 2006, a role in which he became a frequent critic of U.S. Policy.
"It was devastating for the reputation of the West — and it happened at the same time as the emerging economies were already closing the gap in other ways."
A CHANGED WORLD
In many ways, much of what has happened since September 11, 2001 was precisely the opposite of what conventional opinion expected.
Whilst the US and allies spent much of the following decade at war in the Middle East, in much of the rest of the globe the number of conflicts fell sharply.
Whilst development economists such as Jeffrey Sachs say the billions spent on Western wars represent a lost opportunity to tackle poverty and hardship in the poorest countries, BRIC economic growth in particular has lifted millions from poverty – despite a growing internal wealth gap in many states.
Now, following a long-standing historical pattern, the growing economic power of the BRICs is starting to translate into greater military strength – and the West’s financial decline is mirrored in ever more drastic cuts to its defence spending.
London’s International Institute for Strategic Studies highlighted in its annual survey of global military power this year a key theme: while Western military budgets are being pruned, those in Asia and the Middle East are growing sometimes by double digits every year.
"There is persuasive evidence that a global redistribution of military power is under way," it said.
This year, Britain replaced China as the only member of the UN Security Council without an aircraft carrier, scrapping the Royal Navy’s flagship "Ark Royal" just as China launched its first such vessel.
Goldman’s O’Neill believes the dramatic economic growth of the BRICs will dwarf the long-term impact of September 11. His bank is now touting the merits of what they term the "N-11" – the next 11 big emerging market economies after the BRICs, including such powers as Mexico, Indonesia and Turkey.
He also believes the attack and its aftermath may have played a part in shaping the BRICs’ newly assertive approach in the world.
"What it may have done at the margin was to sow the seeds of doubt about the power of America and therefore the need for them to stand more on their own two feet," he says.
With the West’s single-minded focus on the Middle East, Al Qaeda and its allies, some worry that the old powers missed their chance to help shape the new world order that is emerging. But even had they been paying more attention, perhaps it would have made little difference.
"The focus on the Islamic world meant that shift (to emerging powers) took us by surprise," says former British spy Inkster. "But it probably would have done so in any case."
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