LEAP/E2020, GEAB N°43: "The Five Steps of the Global Geopolitical Dislocation Phase"

LEAP/E2020, GEAB N°43
"The Five Steps of the Global Geopolitical Dislocation Phase"

"At the end of this first quarter of 2010, with increasing signs of confrontation at international level on monetary, financial, commercial and strategic fronts, and as the severity of the social impact of the crisis is evident at the heart of major countries and regions, LEAP/E2020 is able to provide a first anticipation of the ensuing roll-out of this phase of global geopolitical dislocation.

A reminder that this phase can only be a precursor to a sustained reorganisation of the international system if, between now and the middle of this decade, the consequences of the collapse of the world order inherited from the second world war and the fall of the Iron Curtain fully come home to roost. In particular, this development requires a complete recasting of the international monetary system based on an international currency, replacing the current system founded on the US Dollar, the value of which would be based on a basket of the major world currencies weighted according to the respective size of their economies.

At the same time last year we took a full page in the Financial Times on the eve of the G20 summit in London, pointing out that the ideal window of opportunity to effect such a radical change would be between spring and summer 2009, failing which the world would be involved in the phase of global geopolitical dislocation at the end of 2009.

The "Ring of Fire" of sovereign debt - Graphic presentation of the ratio of states’ debt and public deficits (% of GDP) Source: Reuters Ecowin, 02/2010

The failure of the 2009 Copenhagen summit, which brought almost two decades of international cooperation and influence on the subject matter, due to increasing US and Chinese conflict and western lack of agreement on the actual topics is, therefore, a relevant sign confirming our researchers’ anticipations. Due to increasing tensions (zones and subject matters) international relationships become worse, whilst the ability of the United States to play their role as manager, or just only as "boss" of those under their umbrella, fades away a little more with each passing month. At the end of 2010’s first quarter we can highlight:

• constant worsening of Sino-US relations (Taiwan, Tibet, Iran, Dollar-Yuan parity, declining purchases of US Treasury Bonds, numerous commercial disputes)
• increasing transatlantic dissent (Afghanistan, NATO, contracts for US Air Force in-flight refueling tankers, climate control, the Greek crisis)
• Washington’s decision-making paralysis.

• Middle Eastern instability without respite and the intensification of potential Israeli-Palestinian and Israeli-Iranian crises.
• increasingly good reasons for having regional blocs (Asia, Latin America, and Europe in particular)
• increased monetary and financial volatility in the world.
• increasing sovereign risk worries.
• the growing criticism of the role of US banks linked to regulation targeting a regionalisation of financial markets.

At the same time, without any economic recovery in sight, social conflict is increasing in Europe, whilst in the United States the social fabric is, purely and simply, coming apart at the seams. If the first event is more visible than the second it is, however, the second which is the more important. Control of the tools of the international media by the United States enables the social consequences of this destruction of US public and social services on the back of the increasing poverty of the country’s middle classes to be covered up. This concealment is made even easier compared to Europe, that the US social fabric has been vaporised: weak trade unions, unions very limited by sector, and without general social claims being historically identified as an "anti-American" attitude.

Still, on both sides of the Atlantic (and in Japan) public (public transport, police, the fire service) and social (health, education, retirement) services are in the process of being dismantled, when they are not purely and simply closed; demonstrations, sometimes violent, are increasing in Europe, whilst acts of domestic terrorism or political extremism are on the increase in the United States. In China, growing control over the Internet and the media is, above all, a reliable indicator of increased nervousness of Chinese leaders over the state of their popularity. Demonstrations over unemployment and poverty are on the increase, contradicting the optimistic speeches of the Chinese leaders on the state of the economy. In Africa, the frequency of coups d’état has increased since last year. In Latin America, notwithstanding somewhat positive macro-economic numbers, social discontent feeds the risks of radical political change, just as Chile saw.

All these trends are in the course of rapidly creating an explosive socio-political cocktail which leads directly to strife between component parts of the same geopolitical entity (conflict between federal states/the United States itself, tensions between European Union and member states, Russian republics and the Federation, Chinese provinces and central government), between ethnic groups (an almost universal increase in anti-immigrant sentiment) and a falling back on nationalism, both national and regional, to channel these destructive tensions. All this takes place on the back of middle class poverty in the United States, Japan and in Europe (in the United Kingdom, and in European and Asiatic countries in particular, where households and local authorities are the most heavily in debt).

In this context, LEAP/E2020 believes that the phase of world geopolitical dislocation will take place in five successive steps, laid out in this GEAB issue. That is to say:

1. Step 1: Monetary disputes and financial shocks.
2. Step 2: Trade disputes.
3. Step 3: State crises.
4. Step 4: Socio-political crises.
5. Step 5: Strategic crises."

- http://www.edelmetaalplaza.nl/web_redactie.asp?onderwerp=edelmetaalplaza
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LEAP/E2020: http://www.leap2020.eu/GEAB-N-43-is-available!-The-five-steps-of-the-global-geopolitical
-dislocation-phase_a4420.html