The Biggest Game Changer

Eurasia at night

The real threat to the protection racket of the naval hegemon is the plumbing of Eurasian energy and commerce becoming land-based. This is technologically and economically feasible: rail powered by cheap natural gas can compete with sea borne transport, and pipelines are the cheapest way to transport energy. Despite the now sharply lower transport costs of overseas shipping due to the container revolution, both rail and pipe still have lower marginal costs than shipping. The reason is straight-forward but requires elaboration.

The vanishing of costs due to the inter-modal transport revolution – down to three per cent since the sixties – come from the automation of seamlessly transporting containers from warehouses to rail yards on trucks, then to ports on rail, then in supermassive container ships to distant ports, where the process is repeated in reverse.1 Note that the cost of transport on rail is cheaper than on road. Why else would they be loaded onto trains from trucks? Average fixed cost accounts for the lion’s share of average cost of transporting a container by rail, especially compared to shipping, where fuel dominates average cost. In other words, the marginal costs are lower for rail than ships, and they fall faster. This boils down to the fact that rail consumes less energy to transport a container than shipping.

In January 2008, China and Germany inaugurated a long-distance freight train service between Beijing and Hamburg. Travelling 10,000 km, the train uses the Trans-Mongolian line to Ulan Bator were it connects to the Trans-Siberian to Moscow, linking to Germany via rail links in Belarus and Poland. Total transit time is 15 days, as compared the 4 weeks it takes to ship a container from Shanghai to Frankfurt. Note that none of this is automated. A land-based inter-modal transportation system, preferably on a single train line would take two to three days.2

The great nineteenth century American railroad revolution reoriented the axis of the American economy from north-south to east-west, forging the biggest national economy in history. It undermined southern plantation interests and strengthened the bargaining power of northern industrialists, thereby precipitating the Civil War. The comparison is eerie. The nineteenth century transportation revolution involved a collapse of transit time from New York to Chicago from 4 weeks to 4 days. The reorientation of Eurasia from the sea to land would be equally revolutionary.

To say that rail and pipe can compete with ships and tankers is an understatement. The EU, Russia, and China have an enormous economic surplus to gain from forming a ‘security community’ whereby they do not threaten each other.3 This requires the EU to gain some degree of autonomy from the United States, and for Russia to remain weak enough to band-wagon with China and not threaten the EU, as well as continued growth in Chinese power. All of these are likely developments. The international liberal order underwritten by US primacy is advantageous to Chinese growth, a point not lost on American hawks. Meanwhile, the United States has quietly prodded the Franco-German condominium to shoulder the fiscal burden of EU security by promoting European armament, under US supervision of course.

Even without Britain, the EU, led by a Franco-German condominium, can protect the rail lines in Europe, until the border of the Russian sphere of influence, say Belarus. Further east, the protection of the rail lines through the heartland will have to be under the auspices of the Shanghai Cooperation Council, led by a Russo-Chinese condominium. The passage through Russia will endow it with a veto over Eurasian communication, and thereby provide leverage against China and the EU, both of which would otherwise soon be too strong to deal with – the EU and China each have much more power potential than Russia.

This won’t happen at the current stage. Russia is too strong for both China and the EU, so that the EU depends on the United States for protection, and China does not threaten Russia. Once China grows strong enough, the optimal strategy for Russia is to band-wagon, that is, become a geopolitical ally of China. China would not only be in a position to cut off Russian access to East Asian markets, it will also threaten Russia in Siberia, and dominate Central Asia. Mongolia used to be a buffer state between Russia and China. Now, it is more or less strictly in the Chinese sphere of influence. No state will not be in a position to protect Russia from China in this region, not even the United States. This is simply because, in a contest over Siberia or Central Asia, both China and Russia will be operating mostly on interior lines of supply, out of the reach of American power.

Note that the EU could even stay under American protection – not an unlikely scenario given that other European states, especially France, fear German hegemony – and still become autonomous enough to negotiate over-land trade links with Russia and China. Indeed, US protection allows the EU to cooperate with the Russians without fear, and thereby de-securitizes EU-Russian relations. US protection of the EU security community is a necessary condition for its existence, allowing a geo-economic strategy by a Franco-German condominium that provides the EU with a lot of autonomy from the United States. US primacy is in this sense self-undermining. The United States thus faces the dilemma of either abandoning Europe, allowing Germany to become a potential hegemon yet again, or staying put, and underwriting the erosion of its own power position.

The concert of the Eurasian powers will exclude India for both cartographic and stability reasons. The former are clear from a cursory glance at a map of Eurasia. The latter from the fact that rail lines from Europe or Russia, and pipelines from the Middle East and Central Asia, will have to pass through Iran and Pakistan. The United States can, and surely will, prevent the construction of pipelines from the Persian Gulf to Europe and East Asia. However, it is unclear that the US has the leverage to prevent the EU–Russia–China triumvirate from establishing Eurasian land-bridges. It will certainly not have such leverage if Russia is weak, China is strong, and the EU autonomous.

An overland integration of the Eurasian landmass would unleash a potent economic dynamism, just like previous transportation revolutions. The shape of the world economy will perhaps change in unforeseen ways. It would certainly make enhance the dominance of Eurasia in the world, and vis-à-vis the United States. It would greatly undermine US’ power position, bringing an end to the long-standing  – five hundred years and counting – protection racket of the naval hegemons, whereby capitalism congregates to the dominant maritime power to exploit the natural monopoly of the blue-water security market.4

Once the stranglehold of the maritime hegemon over the three Eurasian major powers is broken, the world will become unambiguously tripolar.5 There would be three superpowers: the United States, China, and the EU, and three major powers: Russia, India, and Japan. This does not mean that the United States won’t be the strongest power in the system. It may well be. But the other major powers would no longer be under its boot once US’ command of the commons is defanged.

This has major implications for Chinese grand-strategy. China will have to concentrate on building a formidable land-based military power that allows it to protect the heartland against American power. Overland access to Middle East and Central Asian energy, and European markets would finally break all the locks in the maritime realm: Malacca, Suez, Hormuz, Bab-el-Mandeb, and Gibraltar. This would un-bottle East Asian power from the east for the first time in six hundred years, and finally undermine the protection racket at the heart of global capitalism since Venice gained the upper hand against Genoa by capturing Corfu (1401) and turned the Adriatic into her lake.

The most interesting question is not whither US primacy at all. It is wither the center of gravity of the world economy? What will capitalism do? Will it migrate to a new site of accumulation like it always has?6 This would be a massive historical shift of forces. The precariousness of the previous equilibrium will become obvious, as will be the strengths of the one replacing it. What will happen to the anti-market? With no single power that can guarantee the plumbing of even half the world economy, how could it survive? Once the world economy becomes decentered, will the world become ripe for the next hegemonic war?

The term inter-modal refers to the integration of different modes transport – rail, trucks, ships – to make them compatible with each other. The whole process is automated and seamless, and delivers huge economies of scale. See Levinson, Marc. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton, NJ: Princeton UP, 2006. Print.

The top speed of ICE high-speed trains that knit Germany together is 300kmph. This comes to precisely 33⅓ hours.

3 A ‘security community’ is a technical term in the regional security complex framework that denotes “a pattern of security interdependence in which the units do not expect or prepare for the use of force in their political relations with each other”. See Buzan, Barry, and Ole Wæver. Regions and Powers: The Structure of International Security. Cambridge: Cambridge UP, 2003. Print.

The maritime realm is a natural monopoly in the sense that it is always the case that one power enjoys ‘naval mastery’, by which Paul M. Kennedy meant the ability to secure ‘command of the seas’ at will, even if sea-lanes may be under the protection of other powers locally.

Or multipolar if Russia remains strong enough, and India rises. The former makes this scenario unlikely. India’s rise matters if the maritime realm dominates, for then, it would be able to contain China in the Indian Ocean. If this scenario does obtain, India, as the frontline US ally in the cold war against China, would be in the unenviable position of both being shut out of the Eurasian plumbing and facing the brunt of Chinese power with its superpower patron decreasingly able to provide security. 

For instance, Genoese banker-financiers set up shop in Seville once Spain essentially took over the Portuguese navy and became the dominant maritime power. Or when Dutch capital migrated en masse to London in the mid-eighteenth century when Great Britain replaced Holland as the dominant naval power.

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