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 forecasted about the free market capitalism has turned out to be true; whether we like it or not. A kind of global economic entropy has set into motion. The money is flowing from the area of high monetary density to the area of low monetary density.
The rise of the BRICS countries in the 21st century is the proof of this trend. BRICS are growing economically because the labor in developing economies is cheap; labor laws and rights are virtually nonexistent; expenses on creating a safe and healthy work environment are minimal; regulatory framework is lax; taxes are low; and in the nutshell, windfalls for the multinational corporations are huge.
Thus, BRICS are threatening the global economic monopoly of the Western capitalist bloc: that is, North America and Western Europe. Here we need to understand the difference between the manufacturing sector and the services sector. The manufacturing sector is the backbone of the economy; one cannot create a manufacturing base overnight. It is founded on hard assets: we need raw materials; production equipment; transport and power infrastructure; and last but not the least, a technically-educated labor force. It takes decades to build and sustain a manufacturing base. But the services sector, like the 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 hi-tech microprocessors, software, a few internet giants, some pharmaceutical products, the Big Oil and the all-important military hardware and the defense production industry.
Apart from that, the entire economy of the Western capitalist bloc is based on financial institutions: the behemoth investment banks, like JP Morgan chase, total assets $2359 billion (market capitalization: 187 billion); Citigroup, total assets $1865 billion (Market Capitalization: 141 billion); Bank of America, total assets $2210 billion (Market Capitalization: 133 billion); Wells Fargo and Goldman Sachs; BNP Paribas and Axa Group (France), Deutsche Bank and Allianz Group (Germany), Barclays and HSBC (UK).
After establishing the fact that the Western economy is dependent mostly on its financial services sector, we need to understand its implications. Like I have said earlier, that it takes time to build a manufacturing base, but 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 some Organization of Islamic Conference-sponsored bank in accordance with Sharia?
What if all the Arab sheikhs of Gulf countries 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 this year the Saudi finance minister threatened that the Saudi kingdom would sell up to $750 billion in Treasury securities and other assets if 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, however, that $750 billion is only the Saudi investment in the US, if we add its investment in Western Europe, and the investments of 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 have deposited $1.4 trillion in the Western banks between 2002 to 2014; and the Russian oligarchs are the runner-ups with $800 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 have to give credit to the Western hawks they did which nobody else in the world had the courage to do: that is, they privatized their defense production industry. And as we know, that privately-owned enterprises are more innovative, efficient and in this particular case, lethal. Regardless, having power is one thing and using that power to achieve certain economically 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 ruling elites, the ordinary citizens find it hard to get over their antediluvian moral prejudices. In order to overcome this ethical dilemma, the Western political establishments wanted a moral pretext to do what they wanted to do on pragmatic economic grounds. That’s when 9/11 took place: a blessing in disguise for the Western political establishments, because the pretext of “war on terror” gave them a carte blanche to invade and occupy any oil-rich country in the Middle East and North Africa region.
It is unsurprising then that the first casualty of the so-called “war on terror,” after Afghanistan, has been Iraq which holds 150 billion barrels of proven crude oil reserves and has the capacity to reach 5 million barrels of daily oil production, second only to Saudi Arabia with its more than 10 million barrels of daily oil production and 265 billion barrels of proven crude oil reserves.
In order to bring home the significance of Persian Gulf’s oil in the energy-starved industrialized world, here are a few rough stats from the OPEC data: after Saudi Arabia, Iran and Iraq each holds 150 billion barrels and has the capacity to produce 5 million barrels per day; while UAE and Kuwait each holds 100 billion barrels and produces 3 million barrels per day; 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.
No wonder then 35,000 United States’ Marines have currently been deployed in their numerous military bases and air-craft carriers in the Persian Gulf 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.”