Tipping into a New Era

Let’s think about the world as if it had tipped into a new era.

Imagine that the peak oil worriers are right and that oil would go to $130 a barrel and imagine that the Malthusian types were right and corn would go to $6.60 a bushel and, finally, imagine that those skyrocketing resource prices were here to stay. What would that world be like?

First, Operation Iraqi Freedom would become irrelevant. The American people would recognize this and the Iraq war would disappear from your television screen and page 1 of your newspaper. The people would put this war behind them.

The Iraqis, too, would want to end this war. Until they could, the insurgents would declare a cease-fire or even cooperate with us. And the Iraqi people would vigorously oppose any alliance with permanent American bases. Our demand to use our military to “protect” their oil would be correctly viewed as the relic of a past when military power determined everything.

With the prospect of all that money, Saudi Arabia and OPEC would call for a world conference to try to stabilize world oil markets..

Saudi Arabia would want to avoid the dangerous nonsense where surrogates are fighting mini-wars with Israel. Iran would suspend its nuclear weapons program rather than have any confrontation with the U. S. that might end with the mining of the Straits of Hormuz. Venezuelan President Hugo Chávez would, in the name of stability, stop supporting the FARC in Colombia. Mexico would for the same reason get serious and start a war against the drug lords who control their cities.

Grain exporting countries like Russia, China, Argentina and the Ukraine would put export controls on shipments of grains. Starvation would stalk East Asia when world rice prices increased by as much as 75% in two months. The poorest grain importing countries such as Haiti, Egypt and Bangladesh would be the first to have food riots.

The countries that would benefit most would be Russia and the United States.

Russia, as a major grain and oil exporter, would build up huge reserves of cash in dollars, euros and gold. Russia would again become a major and perhaps even the number two player in world affairs. The whole world would feel the threat of this Russian wealth.

China's economic miracle would be in jeopardy. China has built a goods-producing, energy-thirsty economy. Energy prices could quickly offset low labor costs.

China would still be able to export grain for a short period of time, but is so lacking in land and oil that it could quickly burn and eat up its trillions of dollars of financial reserves.

The Japanese economy is a worst-case scenario; it remains a manufacturing economy that imports most of its food. Japan simply does not have the food or fuel to maintain the economy that they have.

The US economy would be well-positioned to meet runaway energy and food prices. Our economy has shifted from a goods producing to a service economy. All of that off-shoring could turn out to be a blessing because it is manufacturing jobs that have high fuel costs. In addition, United States agriculture still accounts for half the world's grain exports. That grain could buy us a lot of energy.

Most interesting, Al Qaeda would face a revolt from within. Sayyid Imam al-Sharif, a founder of Al Qaeda and the great theoretician of Islamic violence, would defect and write a book that condemns violence, not just against fellow Muslims, women and children but even against “Crusaders”. Al Jihad and The Islamic Group would renounce violence and Al Qaeda would have no theological basis to recruit martyrs. Ayman al-Zawahiri, bin Laden’s chief lieutenant, would go apoplectic.

All of the above is, of course, true. It has already happened. What does it tell us?

It says we have entered an era of scarce resources where the great game is not military but economic and political.

It says that the “global war on terror” and the war in Iraq are over and we should get our military out of Islam's face. Those wars are just making a theocratic, sharia-governed Middle East more likely and any kind of Islamic democracy less likely.

China diminishes as a threat despite its moves toward Latin American and African resources. Russia reappears as a dangerous criminal enterprise.

America's benign neglect of Latin America over the past seven years left those democracies to develop more independence and economic self-sufficiency than they might have otherwise. In this new era, they are able to oppose corporate colonialism and the IMF.

Despite a perfect storm of multiple crises, despite horrors that violate everything human and despite blunders beyond comprehension, prospects for this new era are far better than the financial and political analysts might tell you.

The hardest task for our next President will be to get our military out of the way and concentrate on an economic response to an era dominated by scarce resources.