On the back of the global financial crisis, the balance of power is shifting from debtors to creditors, and foremost to China, writes Galal Nassar Every international crisis, whether economic or political, leaves a lasting mark on the world. Once the crisis is over and the difficulties it brought have been encountered, things tend to change. Old delusions disappear as history evolves and the international scene assumes a new shape. The international system, in all its various forms, has mostly been -- and still is -- a product of the volatility the world experiences every time a crisis occurs. Following World War I, a world system developed of which the League of Nations was a major achievement. Another system developed following World War II, and that one gave us a bipolar superpower situation. Following the fall of the Soviet Union and the collapse of the Socialist bloc, we had an era of unipolarity marked with excessive use of force and unprecedented international hegemony. As the US became the world's uncontested power, it used its resources to undermine international law, wreck UN principles, and wage multiple wars across the globe. As this happened, US military spending increased, consumption rose and American debts grew to astronomical figures. The recent economic crisis, which the world experienced since 2008, is only a side effect of the US economic crisis. The international economic crisis is of a scale unknown since the Great Depression of 1928, and its political and economic impact is going to be just as lasting. As the Great Depression paved the way to World War II and to a new world order, this crisis is likely to produce any number of grave repercussions and perhaps another world war. How will the world look like in the next few years? How will the balance of power change? And which powers are likely to lead the world economy? These are crucial questions, and their answers will define the way in which relations and alliances develop between our region and the rest of the world. These answers need to be based on a careful examination of reality, one that would allow us to identify the international decision-makers of the future. The first thing we need to take into account is that the US economy is not going to emerge from this crisis unscathed. The US is the largest indebted nation in the world. Over the last few decades, the Americans have been spending more than they produced and making up the difference by borrowing tens of trillions of dollars. So long as there are debtors, there will be creditors. And it is in the nature of things that power shifts from debtors to creditors. In other words, the debtor has to abdicate power to the creditor. The world's new rising power, China, has acted quite differently from the US. Throughout the spectacular economic growth it has witnessed in recent decades, China has saved nearly half its revenues, which made it more immune to economic crises. The resulting accumulation of capital has helped China in a number of ways. For starters, it kept inflation down, boosting the competitive edge of Chinese products. Thanks to its remarkable financial abilities, China was in a position to support Asian nations during the economic meltdown of 1996. Consequently, China has a lot of political and economic leverage in Asia. Let's compare the US and China. The US has borrowed too much, consumed too much, and is about to lose its position of leadership as a result. As Ibn Khaldun said, urbanisation is the start of decline. And as some Sufis say, there is nothing but decay after perfection. The rampant consumerism that has brought unprecedented prosperity to America is the reason the US economy will not be able to win this battle. The US economy will not be able to rely on the domestic market alone, because the US domestic market is much smaller than that of China or India. Therefore, the US will not be able to tackle the economic crisis without relying on foreign debt. China, which is a major creditor of the US, is now in a position to launch its economy using its own savings. China can, through a policy of saving, keep inflation down. And even if its exports fell, China has a huge domestic market on which it can keep the economy going. Once the international crisis abates, China would come back to international markets unburdened by debt and inflation. If this analysis is correct, then a new world system is in the offing. The US is about to lose its key power position to China. In the new world, the US would become a major player, but not the key one. The US would have just the same influence as other major countries such as Japan, France, Germany, Britain and India. A new world is taking shape, a world in which international law should be respected and the right of all nations to self-determination upheld.
