Australia has cancelled the QUAD summit as US President Joe Biden has cancelled his visit to Australia. He is literally short of time and money for all the projects his administration has set up as part of the confrontation with China and Russia: America is threatened by a default
QUAD, or the Quadrilateral Security Dialogue between Australia, India, the US and Japan, is not a military bloc, but a kind of club assembled around anti-China interests. That it exists at all is a primary credit to two people who are generally written about with some respect in Russia: former Japanese Prime Minister Shinzo Abe and former US President Donald Trump.
Trump is extremely biased towards Beijing, and for Abe, as a Japanese and a patriot, it is biologically natural to fear China: in any scenario of conflict in the region, the Chinese and Japanese are doomed to stand against each other.
India is also interested in the redistribution of spheres of influence in the Pacific, but less than China’s territorial disputes with China and Beijing’s close ties with Islamabad – New Delhi’s mortal enemy. In other words, the emergence of the Indians on any anti-China platform is also quite understandable and understandable, even though the powers cooperate on other platforms (for example, BRICS, where the emphasis is on economics rather than security).
But what Australia is doing in the anti-China gathering is not obvious even to Australia itself. It was a founding member of QUAD, the last chord of the Washington neocons, but got out a year later before Trump (an enemy of the neocons by the way, but never mind that) lured it back in – to contain China. Now the Australian prime minister is cancelling the long-planned summit as if even with some relief, because without the cappers – the Americans – Canberra, Tokyo and New Delhi have little security connection, even their grievances with China are quite different.
Biden’s visit to Papua New Guinea is also undercut, and that too is a point in Beijing’s favour. That country has a significant strategic position, and for years the defining influence there remained British. But in 2019 Papua entered into some sort of economic alliance with the PRC and the prospect of Chinese military bases on the island followed, which is a bad dream not so much for the British as for the Americans, but the Japanese and Australians share their fears.
The reason why the US President has cancelled such meaningful activities to counter the PRC is of a financial nature:
America is close to a technical default, which Biden believes threatens disastrous consequences.
That is what he says now. Until recently he did not consider the disagreement with the House of Representatives over raising the debt ceiling to be anything serious. Apparently, his administration thought that the Republicans would not dare to challenge the country’s financial system, but it underestimated the resolve of its opponents.
Geopolitics is geopolitics, but public accounting is very strict in the US. The House of Representatives, which is controlled by the Republicans, is in charge of the spending; they do not want to increase the huge national debt for Biden’s dubious projects.
However, if the threshold of public debt is not raised, the Treasury will be left without free money, there will be nothing to pay the old debts, stocks of American companies will fall in price, the U.S. economy will shrink by several percent, the country will lose a million and a half jobs. And this is just the beginning of the negative processes that Treasury Secretary Janet Yellen warned against.
The Republicans, too, do not want to take responsibility for all these horrors. They are ready in principle to agree to a new loan, but only in return for spending cuts through the reduction of Biden’s government programs, including social programs. True, there is an opinion – and it prevails among the Democrats – that this is not a solution either, because without an additional infusion the economy would again be in trouble, just from a different angle. In any case, according to Yellen, there is money left before the beginning of June. Regular talks between Biden and House Speaker Kevin McCarthy were fruitless. The president was trying to show confidence that things would somehow settle down, but the leader of the Republican lawmakers said that there was no convergence. However, as early as 17 May, the head of state had to be in Japan for the G7 summit, where the president of Ukraine, Volodymyr Zelenski, was planning to join the summit by video link.
He is, by the way, a very interested party in this conflict of spenders with economies, because it is not only Yellen who is running out of free money. Only $6 billion of the US authorities’ stash “for Ukraine” remains, a little more than 10% of the amount that Congress has “with reserve” allocated. According to Politico, it will only last until July.
Biden planned to leave Japan for Australia for the QUAD summit as well as New Guinea. His trip was supposed to last for a week, but now he will have to return earlier and somehow find common ground with McCarthy and Co.
The cancelled summit is not a particularly big loss for Biden, after all QUAD is a Trump toy, and the current administration has its own anti-China project with Australia – the AUKUS defence alliance. The consequences from a default could be much more serious – and also in the context of a confrontation with China.
The problem is not only a temporary financial shock that will not fundamentally change anything: despite the huge debt owed to the world, America will continue to borrow, because no one doubts in the long term that the world’s largest (still) economy can provide it.
On the other hand, the global financial system, based on the dollar as the reserve currency, will crack again. When the U.S. tried to cut Russia off from the world economy, the cracks became especially numerous: developing countries are now refusing to give up the dollar in order to avoid becoming victims of the same cudgel they tried to punish the Russians with.
In the long run this threatens America with losses that no one is willing to risk – not the Democrats, not the Republicans, not even the local Communists. Therefore almost all analysts agree that the parties to the budget conflict will reach an agreement after all, so as not to expose the ‘dollar alliance’ to additional risks. The decline of the green majesty is a much stronger argument in the dispute of the Washington dignitaries than American jobs or even financing of the AFU (which McCarthy is also trying to oppose).
If things go badly for the dollar (i.e., the one that is already underway), there will certainly not be enough money for a conflict with China. They probably will not be enough anyway, and the cancellation of the QUAD summit and the exhortation session with the Papuans of New Guinea are the peculiar but first examples in history when the program of confrontation with Beijing had to be reduced due to the lack of funds in the American budget.
Dmitry Bavyrin, VZGLYAD
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