Will COVID Crisis Prolong US Hegemony, or End It?

Kevin Barrett

Shawwal 09, 1441 2020-06-01

News & Analysis

by Kevin Barrett (News & Analysis, Crescent International Vol. 49, No. 4, Shawwal, 1441)

The coronavirus pandemic and resulting global lockdown has badly damaged the US economy, while the Trump regime’s blundering response has tarnished America’s reputation. Headlines have sprung up suggesting that the era of US global hegemony may be nearing its end. Examples include: “The End of American Leadership: The coronavirus pandemic may mark the final shift of global power away from the United States.” (Slate) “COVID-19 Knocks on American Hegemony.” (Carnegie Endowment for International Peace); “Coronavirus and the threat to US supremacy.” (Financial Times)

Economists predict that the COVID crisis will inflict between $10 trillion and $20 trillion in losses to the US economy over the coming decade. Ashley J. Tellis of the Carnegie Endowment comments: “Under such conditions, it is unlikely that U.S. defense expenditures at the 2019 level of $676 billion could be sustained over the next decade… If Washington cannot complete the transformations necessary to successfully project power into the Asian rimland in the face of Beijing’s significant and growing denial capabilities, the threat to American primacy will be serious indeed.”

Even more significant than the economic damage, many analysts say, is the reputational loss the US has suffered due to Trump’s botched response to the pandemic (among his many other failings). Thanks to the incompetence of US leadership, by the end of May the self-styled “indispensable nation” had achieved the dubious distinction of 100,000 coronavirus deaths, almost three times as many as the next leading country, the UK—which happens to be run by Trump’s ally and epigone Boris Johnson. US allies Italy, Spain, and France were next, followed by Brazil, led by another Trump epigone, Bolsonaro.

But despite all this economic and reputational devastation, the effect of COVID-19 on the longer-term trajectory of US empire remains to be seen. The two main forces conspiring against continued US global dominance are: 1) Rise of the Russia-China-Iran bloc, and 2) Decline of America’s and the West’s relative economic and technological power compared to the rest of the world in general, and China in particular. It is still too early to judge whether the COVID crisis has significantly affected these trends, and if so, in which direction. But the early signs do not augur well for the Global Domination Project.

Before the COVID crisis, America’s relative power was in slow and seemingly irreversible decline. The single biggest factor was Chinese economic growth. Absent some catastrophic “global reset,” China would clearly overtake the US as the leading global power within a few decades at most. The novel coronavirus may or may not have affected that trajectory. The damage from the “Chinese virus” has been weaponized by the Western bankster empire to intensify conflict with China, and some, including this writer, have speculated that the virus was engineered for precisely that effect. (See my other article in this issue, “Coronavirus Launches 4G/5G War on China,” and Ron Unz’s “American Pravda: Our Coronavirus Catastrophe as Biowarfare Blowback?”)

Had the world remained orderly, productive, peaceful, and ever-more dependent on ever-increasing global trade, the rise of China, the world’s most powerful economic engine, to number one power status seemed inevitable. Now that the world has been thrown into chaos, all bets are off. Let us examine two possibilities: First, the scenario of successful US containment of China in service to continued US hegemony (which, in my view, represents the intentions of those who manufactured and unleashed the virus); and second, the countervailing scenario in which COVID chaos blowback collapses the US empire. This second possibility might be termed the “they plot and Allah plots” scenario.

The first task of the masters of US empire is to maintain the strength of the dollar and the weapons and military bases it can buy. By dictating that only dollars can be used to buy energy (the petrodollar system) the US has created an artificial demand for dollars that allows it to print almost limitless quantities of currency which can be redeemed for real goods and services, including military power.

In recent years, various challenges to dollar hegemony have been mounted. Russia has been gradually and successfully de-dollarizing since 2013. In 2017, Europe began building the alternative currency system INSTEX to evade Trump’s sanctions on Iran, and this March it became operational. Venezuela and Iran have worked outside the dollar and floated alternative trade mechanisms including national blockchain-based currencies. Perhaps most significantly, China is developing a Central Bank Digital Currency (CBDC) that could bring down the dollar.

According to currency expert Glen Goodman, China’s digital yuan will be rolled out later this year to great fanfare: “China will pull out all the stops to convince international trading partners to switch from the dollar to their new currency. If they manage to lure enough users, the U.S. dollar could be in deep trouble.”

Shortly before the digital yuan’s debut, the coronavirus crisis has panicked the world into racing back to the perceived safety of the dollar, the “traditional” reserve currency. In the “US maintains its empire thanks to coronavirus” scenario, global economic chaos will continue into the indefinite future, maintaining the dollar’s aura as a supposedly stable “safe haven.” Coupled with the economic chaos will be military chaos, with the US clashing with China, decoupling the two economies, and forcing other nations to do so as well (as has already happened with US protectorate Japan). Meanwhile the US will use COVID as an excuse to further regiment and militarize its own society in hopes of maintaining social discipline and credible “big war” threats, while investing heavily in next-generation military technologies. In a badly damaged and grossly unstable world, panicked investors will continue to stick by the “secure” dollar, and fearful world leaders will endlessly kowtow to the continued US military menace.

The opposite scenario—COVID-induced US imperial collapse—could happen any number of ways. The coronavirus could intensify already-existing trends toward extreme political polarization, possibly leading to a red-vs-blue Civil War 2. Specifically, the 2020 presidential election, pitting blue state Biden-voting mask wearers vs red state “open up America” protestors, could devolve into chaos if Trump tries to cancel or delegitimize it. If plague-stricken America implodes into further chaos just at the moment a healthy, productive, disciplined China unveils the digital yuan, the world might suddenly “vote” to ditch America and the dollar, and the empire could unravel almost overnight. The immediate results of a dollar collapse, especially in the US, might not be pretty, but the long-term effects could be salutary for the world as a whole.

Another scenario for a dollar collapse followed by quick imperial retreat involves Trump following through on his threats to steal China’s investments in the US, including more than a trillion-dollar worth of Chinese-owned US treasuries, as “reparations for the Chinese virus.” That would take coronavirus chaos to a whole new level, destroying confidence in the US government and the dollar and forcing the world to get out of dollars and look for something more secure. The likely result would be a collapse of the dollar followed by the implosion of the US economy.

Though the catastrophic death of the dollar as global reserve currency is more likely than it was before the coronavirus crisis, a more plausible scenario involves continued slow decline. This could come about if and when it becomes clear that China has permanently emerged from the corona crisis with its society and economy (and near double-digit economic growth) more or less intact, while the US suffers a crippling long-term blow, exacerbating trends that were already evident. If the “growth gap” between the US and China widens rather than narrows in the wake of COVID’s disruptions, it could gradually convince the world, including American decision-makers, that acquiescing to the emergence of a new post-American world order is the least-worst alternative.