The World’s newest ‘Banana Republic:’ the United States?

The United States is bankrupt. The government refuses to pay its bills. The US currency is no longer the 'be-all and end-all' of international currencies. Notwithstanding Apple, Microsoft and other entrepreneurial start-up companies, US economic clout is on the wane.

Ok, so the US is not really bankrupt – it can keep printing (and debasing?) more paper currency notes which the rest of the world happily purchases in ever growing amounts. Economic stability equals a free trade environment predicated on trust in the USD.

The rest of the world includes Singapore.

Singapore's foreign currency reserves, one of the largest pools of capital in the world are biased towards the US Dollar (USD). From Temasek Holdings to the Government of Singapore Investment Corporation (GIC), Singapore's stake in international economic stability is great. Singapore is not alone. China – the largest single owner of US government debt – has a lot riding on USD stability.

The day China stops buying US debt, the USD may collapse.

Result: China becomes much less wealthier, on paper at least. Moreover, the US will be unable to keep importing goods from China because it cannot pay for them in the 'new, debased' USD. In turn, this leads to social problems within China as Chinese factories reduce production and lay off workers. Consequently, Chinese consumers, including travellers, decrease consumption and the world suffers more ... and the vicious cycle continues.

Of course, global politics are not so simple. Despite a gradual shift away from US dependencies, the world needs the US to behave responsibly. International stability continues to rest on the US, economically and politically. Shutting down government because of domestic political squabbles is not responsible. It smacks of 'Banana Republic' politics and politicians. The US looks more and more like the Third World countries it chooses to lecture (and bomb when they don't listen) about governance on a regular basis.

The world entered a new socioeconomic era some years ago. The post World War Two Bretton Woods and Cold War orders have wasted away. However, the replacement paradigm has yet to be defined. At least for the next several decades the world will continue to watch US domestic politics as if it were their own.

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Imran is a business and management consultant. Through his work at Deodar Advisors and the Deodar Diagnostic, Imran improves profits of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com. 

Afghanistan, Iraq, Libya, Syria and Mali: still more interventions to come?

Over a decade ago, the United States reacted to the 9/11 attacks with military interventions in Afghanistan and Iraq. Afghanistan's Taliban and Iraq's Saddam Hussein may be history but Islamic extremism is anything but weakened. So, while another attack on the US mainland may not have occurred in the intervening years, US foreign policy successes have been limited at best. Particular if curbing the growth of austere, extremist Islam is defined as a key US policy objective.

A balance sheet of events in the Islamic world since the turn of the century makes poor reading. In the years since America started to proactively (aka militarily) 'defend' its overseas interests, much bad stuff has happened. At the same time and just as important, positive events within the Islamic world have been in short supply.

Afghanistan: The war is winding down and the US seems only interested in making sure Pakistan releases all the Taliban captives held in its custody. Afghanistan may not be another Vietnam but it is hard to argue for a clear-cut American victory. In fact, Islamic radicalism in Pakistan has increased partly due to the effects of the US intervention in Afghanistan.

Islamic terrorism nearly brought Pakistan to its knees a few years ago, with the Pakistani Taliban attempting to move out of its traditional havens in the tribal areas and into 'settled' areas of Pakistan like the Swat Valley and Peshawar's outlying districts. The immediate danger may be past for Pakistan but political instability and Taliban inspired violence will negatively affect the country for some years to come.

Iraq: Saddam's gone and in its place is a nation divided along ethnic and sectarian lines. The Kurds have their piece. Sunni – Shia bloodletting continues with alarming frequency. Iraq's minority Christian community, a beneficiary of Saddam's secular nationalism, is struggling to maintain its freedoms.

The real winner in Iraq is former president Bush's arch-enemy: Iran. Shia politicians have taken over Iraqi state institutions and provide Iran a potent platform through which to play the centuries old Persian – Arab rivalry. The heightened Shia – Sunni tensions in the Arab Gulf, particularly Bahrain, can be attributed partly to Iran's greater presence within the Arab world.

Egypt: It seems Egyptians wanted democracy as much as their Iraqi brothers. Egypt did not wait for American troops to bring them democratic freedoms. Instead, following Tunisia's lead, Egyptians took to the streets and brought down longstanding dictator, Mubarak. Subsequently, Mubarak's nemesis, the Muslim Brotherhood has assumed control of the Egyptian state.

The 'legitimization' of the Muslim Brotherhood through the formation of Egypt's government is significant. Arguably, the Brotherhood is the spiritual Godfather of Al-Qaeeda and other Islamic extremist offshoots. How the Brotherhood's leadership uses its new found powers, prestige and organs of the Egyptian state may be decisive in the battle for Islam's silent majority.

Syria: Another bastion of secular Arab nationalism is tottering and on the verge of collapse. In Syria, Western intervention has been crucial in allowing Islamic extremists to create another battleground and, possibly, ultimately control the reins of a recognized nation- state. Islam's historic Sunni - Shia rivalry will most certainly be exacerbated by events in the Levant as Syria's civil war deepens. As in Iraq and Egypt, Syrian Christians will be big losers as Islamist influence further pervades the country.

Africa: Africa has been an unfortunate continent in so many ways for so long. Islamic extremism can now be added to the woes of the African continent.

From Nigeria in the west to Somalia in the east, there is no denying radical Islam has found itself a new playground. Lest one wishes to give Africa the benefit of the doubt, one can throw Mali into the mix for good measure. Oh and there are also thousands of unaccounted weapons and trained jobless Tuareg fighters – formerly part of Libyan leader Gaddafi's military – looking for a piece of land to settle.

Libya itself is not handling the transition to democracy too well. Essentially the country is divided into fiefdoms controlled by different tribes and groupings, with the active participation of Sunni extremists.

Gulf Cooperation Council (GCC): The GCC is mentioned not because several Islamists have been arrested in the normally sedate United Arab Emirates (UAE). Or the troubles in Bahrain continue and threaten to spill over into Saudi Arabia. No, the GCC is important because of Saudi Arabia's influence (and cash) within the wider Islamic world.

In Saudi Arabia, the most pertinent issue is the pace of social reforms and the development of civil society. Surely, reforms are proceeding apace. Women have been nominated into the country's consultative assembly. Nonetheless, real reforms in empowering women and co-opting females into mainstream society are still missing from the agenda. Separate but equal is not only expensive but does not work.

9/11 is understood primarily as an act of war against the US and western interests – and it most certainly was such an attack. However, it is the Islamic world which has suffered the greatest repercussions since September. The show of aggression not only prompted western military interventions in a host of Muslim countries – the list appears to grow annually – but has resulted in introspective soul searching by the Islamic world. During this intellectual exercise, Muslims have killed each other in large numbers with both randomness and precision. Undoubtedly, all the blame cannot be placed at Washington's door. However, the US might better serve international security by nudging reforms in the Saudi kingdom rather than sending troops to foreign shores at the first hint of trouble. The ripple effects from a reforming Saudi society will be positively felt far and wide in the Islamic world.

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Imran is a business and management consultant. Through his work at Deodar Advisors and the Deodar Diagnostic, Imran improves profits of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com.