The New Imperialism?

Contrary to popular notions, the world does not run on rainbows, unicorns, and skittles. Modern industrial economies need in particular, oil and gas and coal. With the earthquake in Japan turning Western nations against nuclear power (because of perceived risk), something will have to be done to garner critical resources. Which are not equally distributed among the planet, but concentrated (oil in particular) in the Middle East. Since 1945, the Western powers have been ebbing away from that area, preferring to buy oil at a distance from whoever would sell it, no matter how messy. That is likely to change. Recently on CNBC, Niall Ferguson observed that the likely outcome of the current Middle East turmoil is first, civil war, then Islamist take-over, and finally cross-border wars. All of which are going to make oil shipment nearly impossible, no matter how many eager buyers there will be, there just won't be anyone able to sell.




Ferguson of course is bullish on China, while ignoring China's very real problems. A financial sector that is a house of cards (China's State Owned Enterprises are propped up by constant new loans, to keep employment going -- these organizations don't actually make money, they exist to keep people working). China faces massive resource constraints, a largely illiterate interior population, about 30-40 million young men who will never find wives (gender imbalance due to selective sex abortion and the one child policy), a rapidly aging society before it gets rich, and massive ethnic/racial/religious separatist movements in Tibet, XianXiang (Muslim Uighurs) and in the East (Hui Muslims, ethnically Han but devout Muslims). China is the world's largest manufacturer, but its population mostly does not benefit, suffers from massive corruption and pollution, and is mostly quite poor.

Internally, China depends on an annual growth rate of 8-9%, something almost impossible to keep up much longer. There is only so much growth a nation can do by electrifying, building new roads, and so on. This is what the Soviets encountered in 1970 or so. China is quite likely to spark the new imperialism.

It has a certain logic. China needs ever greater raw materials, particularly oil which it must import from the Middle East. China must be tempted to intervene, militarily, to secure its own oil. And perhaps India will be tempted as well, it also depends on growth which means ready access to imported oil, and cheap oil at that, to fuel economic expansion and prevent its own civil war. Both India and China historically have been plagued by civil wars fueled by resource constraints and falling incomes after periods of growth, and their leadership is acutely aware of this tendency.

Europe too, faces challenges. Italy must at some point intervene in Libya, or it will be overrun by Libyans and Africans, becoming a third world hell-hole no different from Tripoli or Benghazi. Italians certainly don't want to fight and die, but neither do they want to be ruled by the Colonel, or people like him. The same holds true for France, and indeed Northern European nations like Germany, the Netherlands, and the UK. If fifteen million Africans and North Africans wash up on Italy's shores, be assured that at least half of them will simply start walking north.

And most of these nations are weak. Libya is a set of tribes with flags, Algeria and Morocco little better, the same is true in the Gulf. Weak nations, with resources China, India, and the West need to run their economies above poverty-civil war levels, unable or unwilling to sell oil and gas because they are gripped by civil wars and cross-border wars? That is a recipe for "blood for oil," with the enthusiastic support of everyone who does not want live like a Santa Cruz hippie in the dirt and mud for the rest of their life. China and India seem already edging into confrontation over who will control the Indian Ocean and perhaps the Persian Gulf oil supplies. China has made massive investments in Africa, most of which have not panned out because … the continent is full of Africans. Which means the usual African level of stupid corruption, fighting, and such to garner ten dollars for a tribal chief who could have made ten million had he agreed to let the mining/resource investment proceed.

All the industrialized nations, from the West to China, are hideously vulnerable to Middle East oil being unavailable at any price, or only massively expensive prices. At which their economies seize up and civil wars of one sort or another break out. Internal peace depends in large part on cheap imported oil. Thus each nation is likely to set out, alone or in concert with others, to intervene, first diplomatically, then economically, and finally militarily, to secure the one resource (oil) that allows their economies to function at strife-avoiding levels.

This is particularly true since the idea is not a permanent colony, in unappetizing lands, but mere resource extraction in good old imperialist fashion. Something that goes back to the neolithic, no doubt. The West, and China too, likes to talk about self-determination, about anti-imperialism, human rights, and all that. If it is a question of permanent oil prices at $200 a barrel because Saudi Arabia is involved in a civil War, Iran has invaded the weaker Gulf states, and Libya is collapsing into constant attrition warfare between the Colonel and his enemies, yes both the West and China will intervene. India might as well.

The desire to avoid internal collapse will simply be too strong. China has no real oil reserves of its own. Like Japan it imports nearly all of its needs. China cannot keep its hundreds of millions of factory workers employed with oil at $200 a barrel. Since its rulers like very much, ruling, they will do anything and everything to get oil down appreciably lower, socialist and anti-capitalist, anti-imperialist rhetoric notwithstanding. The same is true for Europe, and ultimately America.

Indeed, the absence of America in the Med while Libya implodes and the Colonel promises to push most of his eastern population (into Italy, essentially) has been a wake-up call for Europeans on the need for their own navy, air forces, and army. Expect to see some rearmament being pushed by conservative parties arguing that becoming "Camp of the Saints" is not a wise policy. And that keeping hundreds of millions of North African and African refugees out of Europe requires armed forces of real size and capability. Even constrained, an industrialized Europe could build five-ten aircraft carriers and support ships, plus planes and people to run them. They don't have to be world-beating, just better than what Khadaffi will have, or the mass refugees. And from there, well it’s a short jump to wondering just why all that oil is not pumped for their benefit?

Western guilt is likely to end along with post-war prosperity. No one likes to sit in the cold and dark. Even Europeans expect results. Like the power to go on when you flip the switch.