Courtesy Island

December 23, 2015, 9:05 pm

The much nervously anticipated US Federal Reserve interest rate rise is now upon the world and it is expected to have an unsettling impact on the economic fortunes of the emerging economies in particular. Sections in Sri Lanka are reassuring themselves that there would be no immediate adverse impact for the local economy from this rate change but time could prove the opposite. Indeed, all foreign commercial borrowings and loans will eventually prove costly and to that extent, almost all the economies of the world would be affected negatively by the US interest rate hike. And Sri Lanka is likely to feel the pinch too because foreign borrowings will remain a mainstay of its economy.

What the above proves is the continuing ‘power’ of the US dollar. That is, developments in the international economy would continue to be shaped in the main in the foreseeable future by the vibrancy or otherwise of the US economy. In fact, even as this is being written, a rebound in the US economy, following some years recession, is affecting the economic well being of all the main economies of the world, including that of China. The fact that is staring us in the face is that a resurgence of the US economy is having a ripple effect all over the world, regardless of how US power is viewed by the latter.

(L to R) British Foreign Secretary William Hague, Chinese Foreign Minister Wang Yi, US Secretary of State John Kerry, French Foreign Minister Laurent Fabius, Russian Foreign Minister Sergei Lavrov, EU foreign policy chief Catherine Ashton and Iranian Foreign Minister Mohammad Javad Zarif attend a plenary session on early November 24, 2013 in Geneva. (AFP Photo)

That said, the position cannot be challenged that US hegemonic influence worldwide is on the decline. It has waned in proportion to which the influence and power of other international players have increased over the past twenty years. The US-centred unipolarity of the distribution of international political, economic and military power, which was a strong feature of the world which emerged from the Cold War decades, is giving way to a multipolar international power structure where China, Russia, India and Iran, to name a few states, would have considerable influence.

But we are still some years away from an international order in which the US in particular and the West in general would be eclipsed by the newer predominant powers just mentioned. It is not coming any time soon although US power would be challenged almost every step of the way to a vastly changed world power distribution system. For the foreseeable future, US power will remain an important factor to contend with. If this were not so, the US dollar would not be continuing to prove its decisive weight in the international monetary sustem, for instance.

These considerations reaffirm the advisability of countries such as Sri Lanka conducting cordial relations with the US and the West. As a very small player on the world stage, Sri Lanka has no choice but to be on the best of terms with the powers that currently have a decisive say in the conduct of international relations. Accordingly, it needs to be on amicable terms with the US, China, Russia, India and all the countries that matter, in economic, political and military terms. In other words, Sri Lanka will be serving its vital interests by being truly Non-aligned.

From 2005, until the advent of the Maithripala Sirisena administration early this year, Sri Lanka seemed to conveniently ignore these home truths. The basic consideration that the bulk of our exports continues to go to the US and the West, regardless of other factors, should have convinced the former Mahinda Rajapaksa regime of the advisability of maintaining cordial ties with the West. Apparently, the Mahinda regime lacked the thinking capacity on these matters. May be, his many ‘advisors’ were tongue-tied by apprehension and nervousness over losing their positions as a result of speaking the truth. But the truth must prevail and ‘public servants’ must adhere to this principle or give up their positions.

However, it is abundantly clear that the US cannot expect to go unchallenged in the political, economic and military spheres in this changing international environment. Even with regard to international economics, its growth is second to Asia, growing at some 2.2 percent while Asia has recorded 6.25 percent. The foremost Western financial institutions, such as, the World Bank and the IMF are being challenged by the predominantly Chinese-funded Asian Infrastructure Investment Bank and the BRICS-founded New Investment Bank, to name just two institutions of this kind. Thus, is US economic hegemony being confronted by emerging economies and combines of such countries.

On the international political and military fronts, the situation is no better for the US and the West. The current Russian military involvement in Syria and its clear show of support for the Bashar Al-assad regime, underscore the fact that Russia aims to be on par with the West in the Syrian military quagmire. Whether anything of a positive nature would emerge for Russia and the embattled Al-assad regime from such military initiatives, may not be quite to the point. The fact is that Russia is not intending to play second fiddle to the West in the Middle East. Earlier, Russia flexed its muscle in the Crimea, in a show of defiance of Western opnion.

But it is all too clear that Western military power is on the wane even outside the Middle East. For example, Iraq and Afghanistan have been virtually left to their own devices. The government of Afghanistan, for instance, seems to be in an uphill and extremely bloody struggle against the Taliban to keep its power. In both theatres of conflict, the West seems to have made mere face-saving withdrawals. It would be interesting to see the UN Security Council’s future course of action with regard to Afghanistan. As matters stand, Afghanistan and Iraq seem to have been ‘left in the lurch’ by the West.

Accordingly, Western military and political predominance is fast becoming a thing of the past, although the West would continue to wield decisive weight in the affairs of the world. However, it is important to point out that world power relations are in a fluid state with anything like a clearly describable international power hierarchy not presenting itself to the political observer. What is certain is that we cannot swear by the ‘old certainties’ in international politics.