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Nouriel Roubini: the Global epicenter in Asia
Material posted: Publication date: 19-06-2014

The conflict between Iran and Israel regarding nuclear weapons proliferation is not the biggest geopolitical risk of our time. And it's also not the risk of chronic disorder in the way the arc of instability that now runs from the Maghreb up to the Hindu Kush. It's not even the risk of a second cold war over Ukraine between Russia and the West.

Without doubt it is all serious risks, but none of them compare with the serious task of ensuring the peaceful nature of the rise of China. Therefore, when Japanese and Chinese officials and analysts compare their bilateral relations with ties between England and Germany before the First world war, this is of particular concern.

Disagreements between China and several of its neighbours over disputed Islands and Maritime claims (starting with the conflict with Japan) are just the tip of the iceberg. As China is becoming a stronger economic power, it will be increasingly dependent on shipping routes to import energy and other resources and goods. This implies the need to develop expeditionary fleet with the right to ensure that China's economy has not suffered serious deterioration from a naval blockade.

But what China considers a defensive important, may be perceived by neighbors and the U.S. as aggression and expansionism. And that assumes a defensive imperative to the US and its Asian allies – for example, building further military capacity in the region to manage the rise of China - may be perceived by China as an aggressive attempt to contain it.

Historically, whenever a new great power came to power and faced an existing power, military conflict was immediate. The inability to limit the rise of Germany led to two world wars in the twentieth century; Japan's confrontation with another Pacific power - the US - suffered a second world war in Asia.

Of course, no iron laws of history: China and its interlocutors are not destined to repeat the past. Trade, investment and diplomacy to defuse rising tensions. But if they would do it?

The great powers of Europe finally tired to crush each other. Faced with a common threat from the Soviet block and the US prodding, European countries created institutions to promote peace and cooperation, leading to economic and monetary Union, and now the banking Union, and possibly in the future, financial and political Union.

But such institutions do not exist in Asia, where long-standing historical grievances among China, Japan, Korea, India and other countries remain open wounds. Even two of the most important allies of America, Japan and South Korea – are in a heated dispute about the Korean "comfort women" forced to work in Japanese military brothels before and during world war II, despite an official apology from Japan 20 years ago.

Why such tensions among the great powers in Asia is becoming more serious, and why now?

For starters, Asia's powers have recently elected or are ready to elect leaders who are more nationalistic than their predecessors. Prime Minister Shinzo Abe, China's President XI Jinping, South Korean President Park Geun-Hye, and Narendra modi, who is likely to be the next Prime Minister of India, all fall into this category.

Secondly, all of these leaders now face a lot of problems pop-up on the need for structural reforms to sustain satisfactory growth rates in conditions to counter the global economic forces that violate old models. Various types of structural reforms are crucial in China, Japan, India, Korea and Indonesia. If leaders in one or more of these countries would have failed on the economic front, they may feel politically compelled to shift the blame onto foreign "enemies".

Third, many U.S. allies in Asia (and elsewhere) interested in the question of how reliable strategic shift America toward its fulcrum in Asia. Given the weak U.S. response to crises in Syria, Ukraine and other geopolitical hot spots, the U.S. security in Asia looks increasingly broken. China is currently testing the reliability of American guarantees, as a result raising the prospect that America's friends and allies - starting with Japan – may have to take the needs of security in their own hands.

Finally, unlike Europe, where Germany accepted the blame for the horrors of the Second world war and helped maintain a multi-year effort in the construction of today's European Union, no such historical agreement exists among Asian countries. As a result, chauvinistic sentiments already exist in generations that are far from the horrors of past wars, while institutions capable of promoting economic and political cooperation remain in their infancy.

This deadly combination of factors which ultimately may lead to the beginning of the military conflict in a key region of the global economy. How should the US significantly with the conversion towards Asia, thus, so as not to fuel Chinese perceptions of attempted containment, or generate the perception of these actions by American allies as the pacification of China? How can China build a legitimate defensive military power, in which needs and deserves a large state, and it does not bother their neighbors and the U.S. podrazumevanim that it aims to seize disputed territory and aspires to strategic hegemony in Asia? And as other powers in Asia believe that the US will support their legitimate security concerns instead of leaving them alone when effective Finlandization under Chinese domination?

The leaders of the region and the USA, will need great wisdom in order to find a diplomatic solution to the multitude of geopolitical and geo-economic tensions Asia. With the absence of supporting regional institutions, there is little else to ensure the predominance of the desire for peace and prosperity on the conditions and incentives that induce a tendency to conflict and war.

Source: Stratfor

Tags: assessment , crisis

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