MONALISA VERMA/MILITARY ANALYST
The global order based on rules and precedents is fast collapsing due to conflicting interests pursued by top ranking powers like it happened just before the First World War and Second World War. The scenario may look slightly distinct from the past but the root cause is the same – the vested interest – jealously pursued by competing powers. Now, the US and the West are on one side and Russia-China are on the other side. This geopolitical competition could push the world into a nuclear quagmire the humankind may not have seen ever in its existence.
This situation is pushing acute hunger, unemployment, rising prices of essential commodities, deteriorating climate crisis, economic erosion and political uncertainty for many nations in the global south.
Now, a fast decline in global economic output arising out of Russia-Ukraine war is going to unleash a massive economic crisis very similar to pre-Second World War era. This melt down is going to be felt also in US, Europe, Russia and China, apart from dozens of developing countries.
Banks of many developing countries are facing acute crisis and there is no sign of ease of the situation. Already six countries have defaulted and nine more will default by end of this year. And by end of next year the number of economically bankrupt countries could touch 31.
This will push most countries to adopt a harsh policy and their survival instinct will bring recklessness. On the other hand, mercantile powers like US and China could compete for asserting their global strategic supremacy as they might consider the time is ripe for their chance.
The competition between China and US was inevitable and to some extent quite just as well. It is not new in the cycle of era change. But they publicly refuted it till the right time arrived. Even the Chinese once considered themselves as G-2 (only US and China), not G-7 or G-20. Now the technology blockade and economic barriers are coming more forcefully than it was previously thought.
There will be no winner if it leads to a nuclear conflict. One descending power and another ascending power will have to get into a raw fight on the streets like beasts fight in the plains of African Savannah. In fact, healthy competition is good for the world. But it has crossed ugly.
If one studies the events and cycles of history, competing powers create more disasters than even nature could produce. These cycles were driven by logical cause-effect relationships. The US had nearly defaulted in March 1933 and August 1971, later it faced a major financial crisis in 2008.
In case of China, it has faced a major financial crisis in 1989 and perhaps another is waiting for now. The Chinese debt bubble is going to burst sooner than it is anticipated.
The rise and decline of markets, economies, agriculture and power centers often lead to decimation of nation-states. Because of unsustainable debt growth, China is approaching a major tipping point that will change the financial order.
Now, in case of US, the financial crisis too is fast approaching. The deficits are rising sharply against which the US treasury will have to sell a lot of debt and it appears there will not be adequate demand for it. If that happens, it will lead to either much higher interest rates or the Federal Reserve will print a lot of money and buying bonds which will devalue money.
Once the domestic economic situation of both nations plunge into a crisis, they would like to find a way out through external means to divert their own weakness. This will lead to a global military, economic and political crisis in next 16 to 24 months.