Preface
The world has reached a critical point analogous to 1913, when the German and British Empires were locked into a race for naval supremacy. The difference between then and now is that at that time neither one had weapons with which to destroy the world. In view of the alacrity with which they eventually slaughtered each other in two consecutive wars, there is no reason to doubt that had they had access to such weapons, they would have used them. Therefore, it is reasonable to assume that an all-out conventional war between the U.S. and China and/or Russia would quickly escalate to a nuclear exchange.
Today nine countries have nuclear arsenals, four of which (Israel, North Korea, Pakistan and India) were not independent in 1945. In addition, the ongoing rise of India, Russia and China increasingly challenges the U.S. dollar’s hegemony as reserve currency of the world. This process, of course, has happened before. What is new is that for the first time in history China is a global contender, and no one can predict how the saga will evolve. Ultimately a few powerful men will determine its outcome. As for the rest of us, who are powerless to do anything about it, we can choose either to remain disposable spectators or to share with others our fact-based opinions and suggestions.
Bubbling Volcanoes
The rift between NATO and Russia stretches from Finland and the Baltics to Ukraine and the Black Sea, and on through the Persian Gulf on account of the outright enmity between Iran and Israel and the latter’s ally, the U.S. The Far East, possibly the most dangerous area, features China against the U.S. and its allies, South Korea, Japan, the Philippines, and Australia. There the primary bone of contention is the South China Sea and Taiwan. These, then, are the critical fault lines where their tectonic interests collide.
On September 3, 2025, China held a grand military parade in Beijing commemorating the 80th anniversary of Japan’s World War II surrender and showcased some of its most advanced weaponry. Of course, the U.S. and Russia are believed to already have, or will soon acquire, equivalent systems. In any event, the Northern Hemisphere is a powder keg ready to go off at any time, deliberately or due to error, miscalculation, or accident. If it does, it will be a global terminal event.
Seemingly Irreconcilable Perspectives
The confrontation between the U.S. and China includes irreconcilable philosophical creeds. The former’s is based on the Euro-American model, legacy of the unconditional surrender of Germany and Japan at the end of World War II, America’s formerly lopsided share of global manufacturing, hegemonic dollar, and de facto control of the world’s major oil reserves. In contrast, modern China’s premise is apparently based on President Xi’s four initiatives: Global Security, Global Development, Global Civilization, and Global Governance.
The Situation
The United States, currently saddled with the largest debt in history, relentless deficit spending, and a persistent trade deficit that in the aggregate risk pushing the nation into insolvency, has embraced a strategy aimed at forestalling a financial catastrophe. Some key elements include:
• Extend, for as long as possible, conditions whereby the dollar will continue to be used to settle oil transactions.
• Impose tariffs and sanctions to compel recalcitrant allies, neutrals or antagonists to submit to America’s terms.
• Control, directly or indirectly, the world’s largest oil reserves.
The fundamental problem with this approach is that a backup Plan B either does not exist, or if it does, it hasn’t been disclosed. This is critical because two catastrophic events are on the horizon: the world will at some point cease using fossil fuels to generate electricity, and interest on the accumulated debt will increase to the point where the government will have little or no room to meet its other obligations. Either one could collapse the dollar’s value and ignite runaway domestic inflation. While at first glance it would seem that China stands to gain from America’s collapse, that is in fact not the case. The U.S. is China’s biggest single-country customer, accounting for approximately 15% of China’s total exports. Though China is trying to diversify away from the U.S., it is still in its best interest to do everything possible, without compromising its core interests, to cooperate with the U.S. to prevent the complete loss of its biggest client.
Current Prognosis
It’s irrelevant who’s right or wrong. What matters is that China and the U.S. are on a collision course, and like in a game of chicken, neither one appears to be backing down. In fact, they’re both deploying more and deadlier weapons.
President Trump’s apparent strategy to impose defensive tariffs purportedly meant to rough start the manufacturing sector and create jobs that pay living wages to American human workers, not robots, is justifiable and necessary. If that is indeed his intent, he deserves the highest praise. Unfortunately, unless and until the twin deficits are radically curtailed or -better yet- eliminated, his efforts will not prevent the dollar’s fall. Furthermore, arbitrary punitive tariffs and sanctions solely for non-economic reasons, reminiscent of Emperor Caligula’s adopted personal motto of “Oderint dum metuant”, Latin for “Let them hate, provided that they fear” will only galvanize affected friends and foes into an overt or covert opposition block. In simple terms, the U.S. risks self-isolation and loss of however much is left of the goodwill it painstakingly amassed between the end of World War II and the end of the Cold War. Not only is that a self-inflicted wound, but it’s also not conducive to global cooperation, an essential prerequisite for a stable and enduring peace.
Breaking the Impasse
As it happens, Europe (collectively), China and India are not self-sufficient in oil and gas. In addition, with glaciers melting at an accelerating rate almost everywhere (including the Himalayas), and many of the world’s aquifers already stressed beyond the tipping point, agricultural yields are poised to decline. That could potentially lead, among other things, to famines, wars, and mass-migrations. We’ve previously outlined a viable scheme to address these impending disasters and even suggested one way to finance it without additional taxes or confiscations; no use going over that again. What counts is that this time around President Xi has put forth in writing his vision for the future, purportedly for humanity’s benefit. But he left out one towering possibility: a long-term plan to use white and/or green hydrogen to generate most of the world’s electricity. A public letter of intent committing China to import as much as possible of it over time might prompt India to follow suit. That would almost certainly generate the required demand to encourage many nations not endowed with fossil fuel reserves to eventually become energy (hydrogen) exporters and earn revenue with which to service existing and future debts, invest in their economies, and pay for imported goods. Incidentally, nations such as the Philippines and the U.S., which run significant trade deficits with both China and India and are potentially capable of producing a vast amount of green hydrogen, would have an unprecedented opportunity to significantly reduce or even eliminate their deficits. China and India would also benefit enormously. Not only would they switch to a clean, sanctions-free fuel from a multitude of non-aligned sources, but they could also harvest its byproduct – pure water – to counteract current and future droughts and shortages. But perhaps the biggest and most treasured benefit for everyone would be a much-needed transition from confrontation to cooperation.