India got its nuclear deal from America as America was writing its new New Deal. This was a coincidence but a powerfully symbolic one. The substance behind this symbol is this: it’s in India’s interest that America emerges from the financial crisis without significant damage to its geopolitical influence. Wishing this is of course not the same as assuming it. It is necessary to ask what are the chances the crisis will undermine American power. The answers may not be as gloomy as some people around the world would hope them to be. But first let’s take a look at those people. That will explain why staking our future on a world with a weakened America is a worse bet than anything seen on Wall Street.
So we may see a rough repeat of what happened after the oil shock led the West into stagflation in the 1970s: America is affected by the crisis, but other major players are affected probably even more, and their capacity for remedial action seems less than America’s. In relative terms, America emerged stronger geopolitically after the oil shock. The same may happen this time. Certainly, shifting confidence from the dollar to the euro when euro-nations are bickering in the midst of a crisis seems an odd choice.
So chances are that post-crisis America will emerge with its geopolitical pole position intact.
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