FOREIGN RELATIONS: US-CHINA

After Irom Sharmila last year, Anna Hazare wins IIPM's 2011 Rabindranath Tagore Peace Prize of Rs. 1cr. To be handed over on 9th May

China persistently refuses to succumb to the US pressure and tactics.

The Obama administration's foreign policy started on a hopeful note especially vis-a-vis China. Efforts to infuse new life into military and economic cooperation, buttressed by the much hyped presidential visit to Beijing raised expectations. However, this initial exhilaration soon fizzled out, and today these two nations can't seem to agree on any issue including sanctions on Iran, arms sales to Taiwan and nuclear proliferation of North Korea! No matter how much the US wants 'strategic reassurances' from China and no matter how much the US Deputy Secretary of State, James Steinburg, emphasises on the areas of cooperation, the two countries converge in viewpoints only on cooperation in economy and in taming terrorism.

China is at odds with the US on a number of issues. The US strategy to persuade its allies in the Middle East to augment their oil exports to China in order to make it less reliant on Iran (read ' to force China to move away from Iran) will undermine this bonhomie. The UAE and Saudi Arabia have already done that at America's insistence. China is unlikely to buckle under these indirect pressures from the US, as it has its own long term interests in Iran. The Chinese investment in the energy sector of Iran is $40 billion with booming bilateral trade worth $21.2 billion.

The confrontational postures between the US and China on climate change ensured that Copenhagen summit was a failed mission last year. These two nations between them account for about 40 per cent of the total global gas emissions, making them the two biggest greenhouse gas emitters in the world. Since they could not come to terms, no constructive legislation could be passed, much to the frustration of many European nations that were serious for a breakthrough. China was infuriated by the termination of climate change aid' which the US provides to all developing countries. The citation provided for this was that China had the largest foreign exchange reserves in the world, and thus was ineligible for such aid.

The US and its allies have been quite candid with their criticism on China's close ties with North Korea, and its unwillingness to leverage the position in persuading Pyongyang to regress to talks. China on its part maintained that North Korea is not a Chinese stooge. China's worst fear is the economic collapse of North Korea and its consequent political subversion' an opportunity that the US will grasp along with South Korea to set up American military base in the Korean peninsula! Therefore a strong and stable North Korea is in China's interest who is the lone provider of foreign aid to Pyongyang.

Another bone of contention between the two countries is the arms sale to Taiwan by the US. In spite of the fact that arms deals worth $6.4 billion struck between the two allies is defensive by nature, China reacted angrily by suspending military exchanges and imposing sanctions on weapon manufacturers that traded with Taiwan. The initial euphoria that Obama brought into the Sino-American relationship has evaporated. What remains is acrimony, aggravation, opportunism and, of course, a bitter struggle for regional hegemony.

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US MILITARY SPENDING: US Defence Champs Unmatched

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Extreme superiority of the US defence over the rest of the world
United States' supremacy as the sole superpower is not without its reasons. According to Center for Arms Control and Non-Proliferation, an adherent and credible US based research organisation, an overwhelming 48 per cent of world's defence spending comes from this one country alone. What is more surprising is that 46 of the highest defence spending nations cannot match the budget of this lone superpower! The base budget of US for 2009 was a staggering $680 billion up from a $607 billion of 2008. Though Obama suggested a curtailment after winning the election, it was actually $16 billion more than what he advocated. But above all, the projection for 2010 is more astonishing. The proposed expenditure includes a $33 billion additional bill to be used in Afghanistan and Iraq war, apart from $216 billion that could also be used, and another $361 billion spending for Department of Defence (DoD), which makes the grand total in 2010 to be an astounding $1.03 trillion. This figure is a sharp escalation from the 2001 budget of $432 billion. The DoD accounted for 19 per cent of total federal budget and 28 per cent of tax revenue, and if we consider the additional amount of non DoD expenditures, the figure turns out to be 25-29 per cent of the federal budget and 38-44 per cent of the tax revenues.

Such colossus figures are way ahead of the rest of the world. The US is followed by Europe (including NATO and non-NATO countries) with 22.43 per cent of the total world military spending, Middle East with 7.03 per cent, Latin America with 3.69 per cent, and sub-Saharan Africa with a meagre 0.77 per cent. US' spending is approximately 5.8 times of China (that spends 5.31 per cent of the global budget), 10.2 times more than Russia, and 98.6 times that of Iran. More interestingly, Stockholm International Peace Research Institute raised another perspective. Even though China and Russia come right after the US in the defence budget, it is Western European nations that are leading the way in arms sales and enjoy a competitive edge in high technology available to them. British giant Aerospace Systems, a state-owned manufacturing enterprise leads the world in arms production, while Russian Ahmaz-Antei is the only non-NATO country's arms manufacturer in top 20. Centre for Arms Control and Non Proliferation's study reveals Gulf Cooperation Council Countries increased their military budget in recent years in response to Iran's nuclear programme, a reality that has threatened even Israel compelling it to step up its defence expenditure.

Despite the recession looming large over the entire world, including the US that is experiencing high level of debt and budget deficits, and despite Obama's centre-left posture along with Democrats' suggestions about reining-in military spending, the government could not do all this in reality because of various pressure groups, especially the arms contractors. Defence spending is relevant but US' gigantic budget is maddening. After all, it is the global cop with a headache for the entire world.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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