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The global power shift: defending Australia's Independence.

Article Excerpt
The world is witnessing a new form of strategic dominance. Countries that excessively depend on foreign borrowing risk losing their sovereignty, being "colonised by purchase rather than conquest".

--Warren E. Buffett, Fortune, 26 October 2003.

For 200 years Australia has depended on first the British and then the US strategic umbrellas for military protection. Over this period Australia welcomed foreign investment, first from Britain and later from the US and nations of the Western Alliance. This investment was vital to the development of Australia's resources, infrastructure and industries.

Today the economic and strategic climates are changing dramatically. Continued reliance on foreign investment and foreign borrowing put this nation at risk of losing its sovereignty, not by military takeover, but to economic colonisation by China which is ruled by a one-party dictatorship and has global strategic ambitions.

This emerging threat derives from the greatest shift in geo-political power since the beginning of the industrial revolution. The world's centre of economic power is shifting from the US and Europe to China, India and Russia.

China -- with a rapidly expanding, resource-hungry economy, boasting massive domestic savings and huge government-controlled sovereign wealth funds--may find itself in a position to buy out Australia's biggest strategic industries. Such an economic buy-out would pose a serious threat to Australia's sovereignty.

This threat is made more immediate because the international financial markets are currently under threat of collapse from the worst financial meltdown since the Great Depression.

Geo-political shift of power

The distinguished Foreign Affairs journal is published by the US Council on Foreign Relations. Its editor, James F. Hoge, Jr, has noted: "Global power shifts happen rarely and are even less often peaceful." Only a century ago, the failure of the imperial order to adjust to the aspiring ambitions of Germany and Japan resulted in conflicts that devastated the globe. (1)

Today's major players in this power shift--China, India and Russia--make up about half the world's population and are growing in economic power at the expense of Australia's traditional allies, the UK and the US. These emerging economies are now the main drivers of world economic growth. According to Albert Keidel, of the Carnegie Endowment for International Peace, in 20 years, the economy of China will be larger than the US economy; in 50 years, India's economy could well be larger than China's. (2)

Accompanying the shift in economic gravity will be a major shift in political and military power and influence. The 20th century belonged to the Americans. In the 21st century, China and India will be contending world powers with economies eventually much bigger than those of the US and EU. These new powers will seek access to the world's resources and their place at the table on key world decision-making bodies. They will inevitably wield their new-found international military and political power in their own national interests. Competition between them and the West will be inevitable.

For example, the scramble for access to energy resources gives an indication of the potential for economic and possibly military conflict. Amy Myers Jaffe, an energy expert at Rice University, told a US Congressional hearing this year that in 1973 the United States imported 35 per cent of its oil. Today it imports over 60 per cent. (3) The Gulf states account for 23 per cent of US imports. (4) Currently, it is unclear whether in the future the US will maintain its dependence on Middle East oil, or increasingly rely on new fields opening up in South America and elsewhere.

A 2005 European Union Green Paper on energy stated that: (5)

* By 2030, the EU will be 90 per cent dependent on imported oil, compared to 45 per cent in 2000.

* Gas imports will have jumped from 40 per cent to 80 per cent over the same period.

Regarding China, Mikkal E. Herberg, of the National Bureau of Asian Research, in his submission to a US Committee on Foreign Relations hearing in 2005, (6) said that China will be:

* 80 per cent dependent on Persian Gulf oil by 2030;

* a net importer of coal by 2015; and

* importing 40 per cent of its natural gas by 2025.

India imports 70 per cent of its oil requirements today, and that is likely to increase to 91 per cent by 2020, with 45 per cent coming from the Middle East. (7) Australia will have shifted from importing only 20 per cent net of its oil in 2000, to importing 80 per cent by 2015. (8)

Competition or conflict?

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