Superpowers

Enquiry question 2: What are the impacts of superpowers on the global economy, political systems and the physical environment?

7.4 Superpowers have a significant influence over the global economic system

Superpowers influence the global economy (promoting free trade and capitalism) through a variety of IGOs (World Bank, IMF, WTO, World Economic Forum (WEF)

The global economy is disproportionately influenced by superpowers. The United States, the European Union, and Japan accounted for 60% of global GDP in 2016:

• Are capitalist, in the sense that people own companies, hire employees, and profit for themselves

• Encourage cross-border commerce in products and services

• (free of import/export taxes and quotas that limit trade volume)

• Are controlled by private industry as opposed to government-owned corporations

• Encourage wealth generation and accumulation by businesses and people

The World Bank - 1944

• Loans money to developing and emerging economies in order to stimulate economic development

• This is done in accordance with the Western capitalist model

• The funds come from wealthy economies

IMF - 1945

• Contributes to global economic stability

• Assists economies in opening up to international commerce and investment

• Comes to the help of countries in financial distress

WTO - 1995

• Works to abolish trade restrictions on a global scale

• Has negotiated a series of worldwide free trade accords in which trade tariffs and barriers have been steadily abolished

7.4B TNCs - TNCs (public and state led) are dominant economic forces in the global economy and economic and cultural globalisation in terms of the technology (patents) and trade patterns

Economic power:

• They control the world economy. In 2015, the top 200 TNCs generated 25% of global production

• This is due to scale economies. They may make things at a lower cost than national enterprises, driving them out of business

• According to a 2013 UN meeting, TNCs account for 80% of global commerce

• Apple's yearly income is nearly equivalent to Finland's or Chile's whole GDP

• They may wield political influence by lobbying governments with their earnings

• Negotiations with government elites may result in trade conditions that favour the superpower

Trade routes:

• Their economic strength has an impact on trade patterns and, as a result, the placement of regions of growth through FDI

• Responsible for a portion of the worldwide shift. If they decide to go abroad, such as US automakers leaving Detroit, the economy may suffer

Technology:

• They significantly spend their considerable revenues in new technology and patents. This increases their revenue through new goods and fees paid by other firms for the use of their patents. It may result in lower prices or higher quality for their items.

• The EU, US, and Japan receive 90 percent of worldwide patent royalties.

• A patent is legal protection granted to a new innovation (new "intellectual property"); other firms may use it after paying a royalty fee to the creator (usually a company). Intellectual property rights are enforced by the WTO.

7.6 Global concerns about the physical environment are disproportionately influenced by superpower action

Global environmental governance is disproportionately influenced by superpowers. This is most obvious when it comes to global warming

Global carbon dioxide emissions in 2015:

1. 29% China

2. 14% USA

3. 10% EU

4. 7% India

5. 5% Russia

6. 35% Rest of the world

Because major emitters account for such a high amount of world emissions, any endeavour to cut greenhouse gas emissions will fail until they agree

The United States and China have been hesitant to set carbon reduction objectives, although the European Union has frequently led in this respect

Emissions in the EU and the US are flat or dropping (because to increased efficiency and certain green legislation), while emissions in China are continuously growing

A good example is energy demand. Projections until 2040 predict a 40-50 percent growth over 2010. Almost all of this will come from developing and rising markets, primarily India and China. Much of the expansion is projected to be in the form of fossil fuels such as coal, gas, and oil, implying increased carbon dioxide emissions.

• In India, as the country eliminates poverty, demand for food and water appears unsustainable by 2030, since the country battles with appropriate water availability even now

• Demand for credit cards, larger residences, and consumer items in China will suck in global energy and mineral resources, potentially leading to increased resource prices and shortages

7.6C - Middle-Class Consumption in Emerging Powers

The demand for resources in the United States and the European Union is expected to stay stable over the next 30 to 40 years. The majority of people are already rich, and their need for greater resources will be answered by more efficient use of current resources

This is not the case in emerging powers. The following factors contribute to resource scarcity:

• Population growth, particularly in India, Indonesia, and Brazil

• Growing wealth: The global middle class (those earning $10-100 a day) is predicted to grow from 2 billion in 2012 to 5 billion by 2030

These individuals will desire more'stuff,' raising the demand for:

• Rare earths - China accounts for 80-90 percent of worldwide rare earth output. This raises the prospect of shortages as a result of resource nationalism

• Food - As China and India grow, there will be a greater need for reliable grains (wheat, rice). As these countries migrate to 'Western' diets, demand for meat, dairy products, and sugar will soar

• Oil - In 2015, the United States consumed 19 million barrels of oil per day, China consumed 12 million, and India consumed 4 million. Demand from India and China might rival that of the United States

• Water - In the United States and the European Union, washing machines, dishwashers, a daily bath/shower, and swimming pools are typical. This is not true for developing nations, but if it becomes true, huge new water sources will be required.

Increased demand will almost certainly have two consequences:

• The price of critical resources rises when demand outstrips supply

• The availability of resources, particularly nonrenewable resources, decreases when some suppliers are depleted

Enquiry question 3: What spheres of influence are contested by superpowers and what are the implications of this?

7.7 Global influence is contested in a number of different economic, environmental and political spheres

Physical resources, particularly fossil fuels, minerals, and ores, are required by both superpowers and developing nations. Some of these are available locally, but in many cases they must be bought through foreign trade. This can imply:

• Acquiring resources at high prices, for example, crude oil was valued at $140 per barrel in 2008

• Business with hostile or politically unstable governments (e.g. Iranian and Iraqi oil)

• During a battle, trade channels and hence supplies are disrupted

Oil and gas resources in the Arctic - Case study:

• Massive oil and gas deposits may lurk beneath the Arctic Ocean

• This region is outside the EEZs of Canada, the United States, Russia, and Denmark

• All of these nations have claimed EEZ expansions, which others dispute, and have filed these with the UN (which ultimately rules on them)

• Since 2007, military patrols and activity in the Arctic have escalated as each government demonstrates its interest in the region and willingness to protect its rights

Crimea was annexed by Russia in 2014:

• In 2014, Russia attacked and forcibly seized Crimea (part of Ukraine)

• One important motive for doing so was to acquire complete control of the Russian military station in Crimea, Sevastopol, which houses Russia's Black Sea Fleet

• The facility was leased to Russia in 1997, although Russia did not possess it

• Russia believed that if Ukraine joined the EU and/or NATO, it would lose this key foothold

• Russia intervened in response to the loss of territory and a port, both physical resources

7.7C - Political Spheres of Influence

Political spheres of influence can be challenged, resulting in disputes over territory and physical resources (South and East China Seas) and, in certain circumstances, actual conflict (Western Russia/Eastern Europe), with consequences for people and physical surroundings

The South China Sea:

• There are several contested islands that are claimed by China as well as US allies the Philippines and Taiwan. China has vigorously pursued an island habitation and artificial island building programme, followed by the addition of military infrastructure

• The South China Sea is a highly volatile region. China's 'Nine-Dash Line' and 'First and Second Island Chain' plans require it to aim to control a huge region of water to the south and east of the country. Since the Second World War, the United States has seen this as a sphere of influence

Eastern Europe:

• The accession of Eastern European nations to the EU, as well as attempts by Georgia and Ukraine to do so, infuriated Russia, resulting to Russian invasions of sections of Georgia in 2008 and Ukraine in 2014, as well as a buildup of NATO armed troops in the Baltic States

Central Asia and the Middle East:

• Russia has been an active supporter of Syria since 2011, assisting the Syrian government in its struggle against opposition groups and ISIS. Russia backs Iran, an adversary of US allies Israel and Saudi Arabia. Russia's growing engagement in the Middle East complicates an already tough situation

7.8 Developing nations have changing relationships with superpowers with consequences for people and the physical environment

Crude oil powers the global economy. Because the Middle East holds 60% of proven oil reserves, no superpower or developing country can afford to ignore it

For a variety of reasons, the Middle East is a source of tension and conflict:

• The majority of Muslim countries are opposed to Israel, the Jewish state: Iran has pledged to destroy it, but the United States is an important friend of Israel

• Religious differences between the Sunni (Saudi Arabia, Syria, and Turkey) and Shia (Iran, Iraq, and Lebanon) branches of Islam are a cause of conflict both within and inside countries

• The development of the extremist group Islamic State in Iraq and Syria since 2011 has resulted in conflicts, terrorism, and a refugee crisis

• Kurds in Iran, Iraq, Syria, and Turkey are calling for their own state

• Yemen has been embroiled in a civil war since 2015, with Saudi Arabia actively participating and the United States indirectly

The Middle Eastern nations' complicated web of alliances and geopolitical contacts is a major continuous threat to stability. Within the area, Russia and, to a lesser extent, China tend to back Iran. The United States and the European Union favour Saudi Arabia. Both the Saudis and the Iranians regard themselves as regional leaders, but their ties are strained