*Editor’s note: On March 4, 2022, Russia enacted a law that criminalizes public opposition to, or independent news reporting about, the war in Ukraine. The law makes it a crime to call the war a “war” rather than a “special military operation” on social media or in a news article or broadcast. The law is understood to penalize any language that “discredits” Russia’s use of its military in Ukraine, calls for sanctions or protests Russia’s invasion of Ukraine. It punishes anyone found to spread “false information” about the invasion with up to 15 years in prison.
Australia has canceled the Quadrilateral Security Dialogue summit because U.S. President Joe Biden canceled his visit to Australia. He literally doesn’t have enough time and money for all the projects that his administration has started within the framework of U.S. opposition to China and Russia: The U.S. is threatened by a default.
The QUAD, or Quadrilateral Security Dialogue between Australia, India, the U.S. and Japan, is not a military bloc but some sort of club, assembled according to anti-Chinese interests. The very fact of its existence is primarily credited to two people: former Japanese Prime Minister Shinzo Abe and former U.S. President Donald Trump. It’s customary to write with a degree of respect about both of them in Russia.
Trump is very biased against China; for Abe, as a Japanese man and a patriot, it was biologically natural to be cautious around China; in any possible conflict situation in the region, the Chinese and the Japanese are doomed to stand against each other.
India is also interested in the redistribution of the spheres of influence in the Pacific, but less than in its territorial quarrels with China and Beijing’s close connections to Islamabad — New Delhi’s nemesis. In other words, the appearance of Indians on any anti-Chinese platform is also quite understandable and explainable, even despite the fact that on other platforms (like BRICS**, which leans into economics and not security) the countries cooperate with each other.
But what Australia is doing in this anti-Chinese crowd is unclear even to Australia itself. It was one of the founders of QUAD — the last accord of Washington’s neocons, but after just a year it left QUAD — until Trump (an enemy of neocons, by the way, but that doesn’t matter) lured it back in, for Chinese deterrence. Now the prime minister of Australia is canceling the summit with some relief, it seems, since without the ringleaders — the Americans — not much binds Canberra, Tokyo and New Delhi in terms of security, and even their complaints about China are quite different.
Biden’s visit to Papua New Guinea has also been put on the chopping block, and that’s another point for Beijing. This country has a significant strategic location; for many years, the decisive influence there came from the British. But in 2019, Papua New Guinea signed something like an economic union with China, after which the possibility of Chinese military bases appearing on the island emerged. This is a nightmare, not so much for the British as for the Americans; the Japanese and the Australians also share their concerns.
The reason the U.S. president canceled such important events in the fight against China is financial: America is teetering on the brink of a technical default, which, Biden believes, threatens catastrophic consequences.
He says that now. But until recently he didn’t treat his disagreements with the U.S. House of Representatives about raising the debt ceiling as anything serious. It seems that his administration believed the Republican Party wouldn’t dare subject the financial system of the country to such a challenge, but the government has underestimated the resolve of its opponents.
Geopolitics is a separate field, but when it comes to financial management, in the U.S. it’s incredibly strict. The House of Representatives controls spending, and currently, the Republicans control the House, and they are not thrilled about increasing the colossal national debt for Biden’s questionable projects.
However, if the national debt ceiling isn’t raised, the Treasury Department will be left without funds, there will be no money with which to pay off the accrued debts, the shares of stock in American companies will dip, the U.S. economy will shrink by several percentage points, and the country will lose 1.5 million jobs. And that’s only the beginning of the bad consequences which Treasury Secretary Janet Yellen has been warning about.
The Republicans don’t want to take responsibility for all these horrors either, and, in principle, they are ready to approve raising the debt ceiling, but only in exchange for spending cuts in Biden’s national programs, including social programs. But there is also an opinion, prevalent among Democrats, that this is not a way out either, since without additional injections of funds, the economy will deteriorate again, just in different areas. No matter what, according to Yellen, funds are available until the beginning of June. The latest round of negotiations between Biden and Speaker of the U.S. House of Representatives Kevin McCarthy was fruitless. The president tried to demonstrate confidence that everything will somehow settle down, but the leader of the Republicans stated that there’s no convergence of views between him and Biden. That being said, the head of the U.S. was supposed to be in Japan on May 17, where the Group of Seven summit will take place and which Ukrainian President Volodymyr Zelenskyy plans to attend via video link.
He, by the way, is a very interested party in this conflict between the spenders and cutters, since it’s not just Yellen who’s running out of funds. There’s only $6 billion left from the stash the American authorities saved “for Ukraine”; that’s a little more than 10% of the sum the U.S. Congress has allocated (with a margin). According to Politico, it’ll only last until June.
Biden planned to go from Japan to Australia for the QUAD summit, as well as to Papua New Guinea. His voyage was supposed to stretch out for a week, but now he has to come back early to try and find common ground with McCarthy and Company.
The canceled summit is not really a big loss for Biden; after all, QUAD is Trump’s toy, while the current administration has its own anti-China project with Australia, the AUKUS*** security pact. The consequences of a potential default could be much more serious — also within the context of the struggle against China.
The problem is not just in the temporary financial shock, in the aftermath of which nothing would fundamentally change. Despite a colossal national debt to the entire world, America will continue to get loans, since no one doubts that the largest (for now) economy in the world is capable of paying them back.
But the global financial system, based on the U.S. dollar as its reserve currency, will show more cracks. When the U.S. tried to disconnect Russia from the global economy, these cracks appeared especially numerous. Developing countries are now rejecting the dollar so as not to become victims of the same club with which the U.S. has tried to bash the Russians.
In the long run, this threatens America with losses which no one would like to risk — neither the Democrats nor the Republicans, not even the local communists. Almost all experts agree that the parties to this budget conflict will, after all, come to an agreement, so as not to put the “dollar alliance” through more risks. The sunset of his “Green Majesty the Dollar” is a much more weighty argument among Washington’s officials than American jobs or even the financing of the armed forces of Ukraine (to which McCarthy is also trying to object).
If everything goes along with a bad scenario for the dollar (meaning the one being implemented already), there will definitely be no money left for conflict with China. There will not be enough funds in any case, most likely, while the cancellation of the QUAD summit and of the Papua New Guinea persuasion session are, however specific, only the first examples in history of how the program for confrontation with China had to be cut because of insufficient funds in the American budget.
**Editor’s Note: BRICS is an acronym for the five regional economies of Brazil, Russia, India, China and South Africa.
***Editor’s Note: AUKUS stands for the trilateral security partnership between Australia, the United Kingdom and the United States.
