Size matters in world domination

UNITED STATES/SINGAPORE - Horace Greeley, Napoleon Bonaparte and Cecil Rhodes may seem strange bedfellows but they all agreed that territorial, political and economic size were critical to a country's success.

They wanted more land - in the West, in Europe or overseas.

In 1904, eminent British geographer Halford John Mackinder told an august assemblage at the Royal Geographical Society that the country that controlled the Russian "heartland", a frostbitten Central Asian steppe, would dominate "the world island" - the combined territory of Europe and North Asia - and in time come to rule the world.

A centrally located piece of territory like the Russian plain, Mackinder argued, could be expanded west and east without the need for naval power.

As it turned out, Russia was then facing both war and revolution, and could not fully control the heartland, to say nothing of ruling the entire world. But Mackinder's terms pointed to the critical role of territorial and economic size in the competition among nations.

Without quoting Mackinder, United States President Barack Obama and German Chancellor Angela Merkel have recently sought to form a huge free trade zone that would join Europe with the US in a new Transatlantic Trade and Investment Partnership, creating an economic power with nearly half of the world's gross domestic product.

Last month, alongside Dr Merkel in Berlin, Mr Obama declared that Europe and the US were the "engine of the global economy" and should "see ourselves as something bigger" in the global quest for freedom, justice and peace.

Of course, the joining of the two continents would increase trade and employment. It would facilitate Mr Obama's goal of doubling US exports and increasing investment and consumption.

Dr Merkel would smile as German cars and medical equipment pour into US markets, and Washington would return the favour with microprocessors, biotechnical devices and liquid natural gas.

If the deal is concluded next year as planned, economists estimate the creation of at least one million jobs over 10 years, and a 0.5 per cent increase in gross domestic product on both sides of the Atlantic.

The new pact would draw together 259 Fortune 500 companies. Investment flows and tourism would bubble to new heights.

Power to the East

But the underlying reason for bridging the narrowing "Atlantic Channel" is that power is shifting east and there is a need to reconsolidate the West.

Paradoxically, closer ties with Europe will be the means by which Mr Obama carries out his "pivot to Asia" as the US and Germany bring together advanced industries and a vast population of skilled workers.

In the short term, China will respond - and has already responded - to this transatlantic combination by strengthening its ties with the outside world. While dumping dollars and buying euros, China has sought to turn its US bond holdings into shares in US corporations.

It has moved into London's money markets and invested heavily throughout Africa. None of this has created an alternative political unit, however.

Countries like Sudan, Zimbabwe, Myanmar and North Korea will never be pillars of a new international economic order. There is no looming political or economic counterweight to the West's assembly of democratic nations, which recently embraced Croatia as the European Union's 28th member.

The pursuit of greater democratic size by Mr Obama and Dr Merkel is not a new objective.

Strategists have always known that countries with more people, wealth and economic space can produce more and trade over a larger region.

Worldwide tariff cuts have failed; what could be more appropriate than for Mr Obama and Dr Merkel to seek the largest alternative place in which to trade freely, thus stimulating their industries in competition with rising Eastern nations?

Overbalanced power

The strategists of the post-war era reached similar conclusions.

The US State Department's legendary policy-planning chiefs George F. Kennan and Paul H. Nitze recognised that "a combination of the physical resources of Russia and China, with the technical skills and machine tools of Germany and the Eastern European countries might spell a military reality more powerful than anything that could be mobilised against it".

Thus began the patient accumulation of allied nations into what became the North Atlantic Treaty Organisation, which was buttressed by the economically consolidating European Common Market, then the European Union.

Under former Soviet leaders Mikhail Gorbachev and particularly Boris Yeltsin, Russia wanted to join the West and the European Union. The 1996 election led some to believe Moscow could eventually become an approximation of Western democracy.

When Mr Vladimir Putin succeeded Mr Yeltsin, this dream vanished as former KGB agents came to dominate. And when oil prices rose, abundant energy supplies allowed Russia to conclude that it didn't need the West, nor did it need to be democratic.

Finally, victory in the Cold War stemmed from a Western agglomeration of decisive economic and industrial strength. It was not an equality of power that brought the Soviet Union to heel but a surplus of power, or an "overbalance" in the hands of the West.

This is not a declaration of economic war against the East. Rather, it reflects an awareness that China and others need to be brought into the West, bringing two halves of the world together.

A greater US and European combination would amass US$32 trillion (S$40 trillion) today, and more tomorrow.

A balance of power leads to conflict but an overbalance attracts others to its economic core.

China's Western dependency

And China is dependent on that core. Unlike Russia, China must import the majority of its oil - its use is currently at 9.7 million barrels a day. The money to buy this petroleum and natural gas must come from exports, mainly exports to the West.

Here the West maintains a continuing advantage because China receives only about 50 per cent of the "value added" of its exports. The rest is garnered by European and US companies, which provide the research and development, design, marketing and financing for most products exported from China.

For decades to come, China will have to sell in the West to gain money and access to technologies that it doesn't yet possess.

The consolidation of a Euro-American economic unit will require China to join too, as it becomes a more open, liberal and rule-governed polity.

Sceptics will argue this is just an incremental enhancement of an already strong relationship and that the West could draw China in without this new trade deal. But the US has tried and failed.

It tried to form the G2 bilateral bloc with China in 2009 but China's leaders refused and frustrated Mr Obama's plans to cooperate on addressing climate change. It was clear the US would need a stronger West to get China's attention.

The key advantage of a new trade partnership with Europe is that it has a strong political and security foundation.

A peaceful but powerful alliance will add elements of technology, military strength and political will to resuscitate the West in its dealings with the rest of the world. In the end, trade - not war - will attract others to the West's economic core.

The writer is a public policy adjunct professor at the Harvard Kennedy School and author of The Resurgence Of The West: How A Transatlantic Union Can Prevent War And Restore The United States And Europe.

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