Daily Times

In order to understand the hype surrounding the phenomena of Islamic radicalism and terrorism, we need to understand the prevailing global economic order and its prognosis. What the pragmatic economists have forecasted about free market capitalism has turned out to be true; whether we like it or not. A kind of global economic entropy has been set into motion; money is flowing from areas of high monetary density to areas of low monetary density.

The rise of the BRICS nations in the 21st century is proof of this phenomenon. BRICS are growing economically because the labour in developing economies is cheap, labour laws and rights are virtually nonexistent, expenses on creating a safe and healthy work environment are minimal, regulatory framework is lax, expenses on environmental protection are negligible and taxes are low. In a nutshell, windfalls for multinational corporations are huge.

Thus, BRICS are threatening the global economic monopoly of North America and Western Europe. Here, we need to understand the difference between the manufacturing sector and services sector. The manufacturing sector is the backbone of the economy; one cannot create a manufacturing base overnight. It is based on hard assets. We need raw materials, production equipment, transport and power infrastructure. Last but not the least; a technically educated labour force is required. It takes decades to build and sustain a manufacturing base. But the services sector, like Western financial institutions, can be built and dismantled in a relatively short period of time.

If we take a cursory look at the economy of the Western capitalist bloc, it has still retained some of its high-tech manufacturing base but it is losing fast to the cheaper and equally robust manufacturing base of the developing BRICS nations. Everything is made in China these days, except for high-tech microprocessors, software, a few internet giants, some pharmaceutical products, Big Oil and the all-important military hardware and defence production industry.

Apart from that, the entire economy of the Western capitalist bloc is based on financial institutions. The behemoth investment banks that dominate and control the global economy, like JP Morgan chase, Citigroup, Bank of America, Wells Fargo and Goldman Sachs in the US, BNP Paribas and Axa Group in France, Deutsche Bank and Allianz Group in Germany; and Barclays and HSBC in the UK.

We must give credit to the Western hawks because they have done what nobody else in the world has had the courage to do: they have privatised their defence production industry. And as we know, privately owned enterprises are more innovative, efficient and in this particular case, lethal

After establishing the fact that the Western economy is mostly based on its financial services sector, we need to understand its implications. Like I have contended earlier that it takes time to build a manufacturing base, it is relatively easy to build and dismantle an economy based on financial services.

What if Tamim bin Hammad Al Thani (the ruler of Qatar) decides tomorrow to withdraw his shares from Barclays and put them in an Organisation of Islamic Conference (OIC)-sponsored bank in accordance with Sharia? What if all the sheikhs of the Gulf States withdraw their petro-dollars from the Western financial institutions? Can the fragile financial services-based Western economies sustain such a loss of investments? In April last year, the Saudi foreign minister threatened that the Saudi kingdom would sell up to $750 billion in treasury securities and other assets if the US Congress passed a bill that would allow the Saudi government to be held responsible for any role in the September 11, 2001 terror attacks.

Bear in mind, moreover, that $750 billion is only the Saudi investment in the US, if we add its investment in Western Europe and the investments of the oil-rich UAE, Kuwait and Qatar in the Western economies, the sum total would amount to trillions of dollars of Gulf’s investment in North America and Western Europe. Similarly, according to a July 2014 New York Post report, the Chinese entrepreneurs had deposited $1.4 trillion in the Western banks between 2002 and 2014, and the Russian oligarchs were the runner-ups with $800 billion of deposits.

Moreover, in order to bring home the significance of the Persian Gulf’s oil in the energy-starved industrialised world, here are a few rough stats from the OPEC data: Saudi Arabia has the world’s largest proven crude oil reserves of 265 billion barrels and its daily oil production exceeds 10 million barrels; Iran and Iraq, each have 150 billion barrels reserves and have the capacity to produce 5 million barrels per day, each; while UAE and Kuwait each have 100 billion barrels reserves and produce 3 million barrels per day each; thus, all the littoral states of the Persian Gulf together, hold more than half of world’s 1500 billion barrels of proven crude oil reserves.

Additionally, regarding the Western defence production industry’s sales of arms to the Gulf Arab States, a report authored by William Hartung of the US-based Centre for International Policy found that the Obama administration had offered Saudi Arabia more than $115 billion in weapons, military equipment and training during its eight years tenure. Similarly, during its first international visit to Saudi Arabia in May, the Trump Administration signed arms deals worth $110 billion, and over 10 years, total sales would reach $350 billion.

Notwithstanding, we need to look for comparative advantages and disadvantages here. If the vulnerable economy is their biggest weakness, what are the biggest strengths of the Western powers? The biggest strength of the Western capitalist bloc is its military might. We must give credit to the Western hawks because they have done what nobody else in the world has the courage to do: they have privatised their defence production industry. And as we know, privately owned enterprises are more innovative, efficient and in this particular case, lethal. But having power is one thing and using that power to achieve certain desirable goals is another.

The Western liberal democracies are not autocracies; they are answerable to their electorates for their deeds and misdeeds. And much to the dismay of pragmatic, Machiavellian rulers — ordinary citizens just can’t get over their antediluvian moral prejudices. In order to overcome this ethical dilemma, the Western political establishments need a moral pretext to do what they want to do on pragmatic, economic grounds. That is why 9/11 was a blessing in disguise for the Western political establishments, because the pretext of the war on terror gave them a free pass to invade and occupy any oil-rich country in the Middle East and North Africa.

No wonder then that 36,000 United States troops have currently been deployed in their numerous military bases and aircraft carriers in the oil-rich Middle East in accordance with the Carter Doctrine of 1980, which states: “Let our position be absolutely clear: an attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”

The writer is an Islamabad-based attorney, columnist and geopolitical analyst focused on the politics of Af-Pak and Middle East regions, neocolonialism and petro-imperialism

Published in Daily Times, December 13^th 2017.