China has gained large geopolitical influence due to its growing economic relations. This has helped shift alliances from the US to the East, which has led to tensions.

LewRockwell.com
anti-state * anti-war * pro-market

By: Tyler Durde of ZeroHedge 
Date: 1 September 2014

---

Marc Faber Slams US Intervention In Middle East, Warns "Whole Region Will Blow Up"

Excerpted from Global Gold interview with Marc Faber, (Emphasis removed)

Let’s talk about the ongoing power shift from the West to the East.

Well, basically, everything is connected and interrelated. We had a colonial system until the end of the Second World War, followed by the rise of individual countries. And over the last twenty-five to thirty years what we had was the rise of China with 1.3 billion people. Because of China’s rapid growth and resource dependence (iron ore, copper from Australia, Brazil and Africa, and oil principally from the Middle East), the Chinese have obviously become a very important economic force.

Take Africa twelve years ago: trade between Africa and the US was twice the size of trade between Africa and China. But today, the situation is reversed.

As a result, China has gained large geopolitical influence due to its growing economic relations. This helped shift alliances from the US to the East, which has led to tensions. China has many provinces that are larger than a European country and as an economic block, China is huge! It dwarfs everything else in Asia. But now China is surrounded by military bases in Asia, by American aircraft carriers and by the signed defense treaties between the US and Japan.

Moreover, the Chinese never forgot that Japan had attacked them numerous times over the past 200 years. Additional disputes between China and its surrounding countries, Vietnam, the Philippines, Taiwan, and especially Japan about maritime rights will cause further tension in the region.

Despite these tensions, the power shift is still underway. You have a superpower like the one Britain was until the First World War and you have a rising power like Germany whose economy in 1910 overtook that of the British. Here you have the superpower that believes in the old order and the new power that believes it should have more influence on global affairs. The resulting tensions create an environment that is favorable for confrontation.

But it doesn’t have to come to war. In my view, China’s long-term objective is to kick out the US from their military bases, particularly after Hillary Clinton and Mr. Obama announced the American Pivot to Asia two years ago; it was a kind of direct attack or confrontational behavior towards China.

Can you tell us your opinion on the recent developments and events in the world like the Middle East? Will these events in that region further escalate? Will they have a long-term impact?

Today, we find ourselves with the same anti-free market interventionists who set up the Federal Reserve, the US Treasury and the US government. These same incompetent professors and academics also run foreign policy in America and then go and intervene in the affairs of Libya, Syria, Egypt, Iraq or Afghanistan. And as can be expected, they mess up just about everything.

We have this Wolfowitz Doctrine that says they don’t want to tolerate any other major power such as the Soviet Union or China. So they want to contain these countries. When these countries become economically more and more important, the tensions, in my view, are only going to increase.

I think it’s unlikely that the West will take any action.
First of all, they don’t have the money.

Second, a survey done by the US military stated that over 71% of their youth are unqualified to join the military for a number of reasons, including educational, behavioral and health conditions. So, if 71% of American youth are not qualified, it means the US doesn’t have the labor force to actually implement its foreign policies. And so they resort to private contracting companies that create more problems than solutions.

I’m very negative about the Middle East. I think the whole region will blow up.

Eventually Iraq will be divided into three different countries: the Kurds, the Sunni in the North and the Shiites in the South. All I can say is that, in general, financial markets are not paying sufficient attention to this.

What are your thoughts on the Chinese-Russian gas deal? Is this a further step towards the decline of the Dollar or the next step towards replacing the USD as the world reserve currency?

I think it’s a symptom of the new world order I was referring to where the balance of economic power has shifted to Asia and emerging economies. This becomes very clear if you look at European companies. Where do they grow? Not in Europe.

Asia has become and will remain the growth market. The gas deal is a big deal in the sense that, it proves how incompetent US foreign policy is.

The US supported the opposition in Ukraine thinking that Russia will do nothing. But Crimea is strategically important to Russia since it gives their fleet access to the Mediterranean and the Middle East. And so, by supporting the opposition in Ukraine, the Americans essentially removed a democratically elected president. He may have been incompetent, but he was democratically elected nevertheless.
That’s democracy! In democracy you have incompetent people at the top.

The Americans also thought they can push the Russians a bit further by trying to lure Ukraine into NATO. That was a step too far and so the Russians reacted by signing a gas deal with China! The significance of this deal lies in that the payment will no longer be made in Dollars but in local currency, the Ruble or Yuan.

I think this is symptomatic of an empire, the US, in decline and a global currency in decline as well. Don’t forget, until WWI, the world currency was the British Pound and its importance diminished afterwards. And now we have a gradual lessening importance of the US Dollar.

*  *  *