Monday, September 28, 2020

Crossing the Rubicon on World Order

Jun 07. 2020
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By Andrew Sheng for Asia News Network

In January 49 BC, Julius Caesar crossed the Rubicon river with his 13th Legion and marched into Rome, effectively ending its Republican period and opening the way to Imperial Rome. “Crossing the Rubicon” was so pivotal that today it means a decision which marks a point of no return.


We are certainly in an epoch where facts are stranger than fiction. What is unfolding before our eyes today defies imagination. Order has become disorder. The world has become a reality show in which anything is possible. Every day, we get tweets and action from the White House in language and comments that defies credibility.


Since Trump’s election in 2016, we have experienced the most severe pandemic since the 1918 Spanish flu, the warmest years in recorded history, the sharpest recession and unemployment levels since the 1930s, the longest US stock market bull run (2013-2020), the largest central bank monetary expansion in living history, the lowest interest rates ever recorded and the largest protest levels in the US since 1968. Trump may not be responsible for everything, but it happened under his watch.


The august US Council of Foreign Relations is so concerned that it has published a report on “The End of World Order and American Foreign Policy”. Since the Second World War, the United States of America has led a multilateral world order underwritten by unchallenged American military might and economic/financial power.


However, the rise of China since the normalization of US-China relations in 1979 has shifted the global balance of power. That year, the US economy was 26.3% of world GDP and was 14.7 times larger than China’s (in US$ current market value terms). But 40 years of reforms and opening up, particularly after joining the World Trade Organization, had propelled China to become the second largest economy, overtaking the US on a purchasing power parity basis (roughly $19 trillion each) by 2017. In market exchange rate terms, however, the US is roughly one-third larger than China ($21 trillion versus $14 trillion in 2019 GDP).


Few would deny that America maintains a leading edge in science, technology, education, management skills and military power. America accounts for 40 percent of the world’s stock and bond markets in terms of market capitalization. The US dollar remains unrivaled in terms of usage as the premier reserve currency and store of value. As the most powerful player, America can shape the balance of power in her favour. Leadership is hers to lose.


But what few could imagine was how mismanagement of the pandemic has opened up all the ills and weaknesses of the US economy and society.


So far, the official GDP growth numbers are -6.8% for first quarter for China, -5% for US, but in the second quarter, when the lockdown truly became effective, the quarterly growth estimates range from -15 to -25%, with the Atlanta Fed estimating the decline as much as -

52.8%. The real risk is that with the on-going protests in 73 cities and growing risks of infection, there could be a second pandemic wave in the second half of the year, damaging further growth and job recovery.


Who could have predicted that in a matter of months, the US would suffer over 40 million unemployed and over 100,000 deaths. Recall that the United States went on a 19-year war against terrorism when 9/11 caused a mere 2,996 deaths. So the emotional trauma caused by over 100,000 deaths and loss of jobs and income will not heal easily. The unconscionable killing of African-American George Floyd by the police has sparked a raging fire of protests that has also led to violence and rioting, with more than 9,300 arrested so far. “I can’t breathe” has become the watchword of protest.


But this week, in a speech in which Trump called protestors "professional anarchists, violent mobs, or, arsonists, looters, criminals and Antifa and others", he threatened that “if the city or state refuses to take the actions that are necessary to defend the life and property of their residence, then I will deploy the United States military and quickly solve the problem for them.” In effect, he might invoke a centuries-old law known as the Insurrection Act of 1807, where in the event of an insurrection, the President may, upon the request of the state legislature or governor, send in Federal military troops.


Since the American civil war (1861-65), American troops have been used more in fighting abroad than at home. In 1871, the President Ulysses Grant applied the Act to fight the Ku Klux Klan and in 1957, President Eisenhower invoked it to enforce desegregation of schools. Notice that both Presidents were former soldiers who understood fully the dire implications of using the military on its own citizens.


Senior US military leaders have warned immediately of this threat. An angry and appalled former US Secretary of Defense General Jim Mattis rebuked his former boss, that “troops taking that same oath [to defend the Constitution] would be ordered under any circumstance to violate the Constitutional rights of their fellow citizens—much less to provide a bizarre photo op for the elected commander-in-chief, with military leadership standing alongside.” He even evoked the Nazi slogan “Divide and Conquer”, saying that “Trump is the first president in my lifetime who does not try to unite the American people..he tries to divide us.”


If Trump decides to invoke Federal troops to quell his own citizens by force, he would clearly have crossed the Rubicon from which there may be no return. Instead of his vow in his inaugural speech to end what he called “American carnage”, his words and actions are piling on the collateral damage.


Viewing this carnage from this side of the Pacific, we should reflect that America’s tragedy is also a disaster for world order. We need peace and stability to recover from the pandemic. Sound advice by the US Council on Foreign Relations to restore world order or for that matter by anyone else would have no effect prior to the November 2020 Presidential elections.


Until then, anything is possible. Fasten safety belts, everyone.





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