The American Pacific Century

Shortly after Obama was elected President, he announced that the United States is a Pacific nation. We thought he was just playing to his home island crowd. Three years later, Secretary of State Hillary Clinton articulated at the APEC conference our entry into the American Pacific Century. The new element is the American flavor to a process that we already knew was occurring three decades ago when we moved body and soul to the Pacific.

The dawn of the Pacific Century began with the miracle of Japan, Inc. in the ’80s, buoyed by its zaibatsu’s proximity to the Korea and Vietnam conflicts; followed by the industrializing tigers of Korea, Taiwan, and Singapore, then China, Inc. WTO globalization in 2000s. Dramatic events occurred in that period, a stark example being Japan’s begging the Bank of California in 1960 for loans, and by 1985, saving the bank from bankruptcy.

Reagan’s surreptitious “devaluation” of the dollar through currency adjustment abetted Japan’s global market ascendancy. Suddenly, the ¥en dramatically increased its value that could not be absorbed domestically so places like Hawaii and the Pacific, among real estate operators, were derisively known as the new prefectures of Japan. The ¥en also began funding the industrialization of the Far East and Southeast Asia. There was a time when nine of the top 10 world banks by size were Japanese before we conglomerated into “too big to fail” financial houses.

It was the sudden wealth from real estate that would leave a lasting after tremor around the world as the financial markets went into high investments in construction and housing development. We have since learned that wealth derived from financial processes often are simply speculative paper wealth, and here lies the allure and illusion of what has since been known as phantom wealth.

The American dollar is in decline as the global currency of exchange, in commerce and industry, but the trade in oil denominated in this currency remains to our advantage. Let’s follow two strains that proceed from this reality.

First, in the recent U.S. budget cutting debate, the question of government subsidies on American oil concerns came to the fore. To ensure constant oil supply, federal and state governments extend direct and indirect subsidies to oil firms. Records reveal that the U.S. is a now a net exporter of gasoline, this being so because the value of the commodity is determined by market demand, and oil products command higher price elsewhere than the U.S. domestic market.

The subsidized oil companies earn also from Myanmar that just skyrocketed its petrol pump prices on New Year’s; the high cost of gasoline in the Marianas is determined by short supply because the oil company is selling their reserves at higher profit to developing nations that wants and needs them. Our colleague Ed Stephens could explain this better than I can, but having declared that his money is still with oil company stocks, he may not want to! Corporate welfare is alive and well in the US of A, and oil companies also reap extra quarters from the Chamorros and the needy Myanmarese.

Second, when President Obama echoes Defense Secretary Leon Panetta’s saber rattling routine of U.S. military presence in the Pacific, this is not all pride, pomp, and face powder puffs. There’$ dollar$ in them Pacific water$. There is a huge oil deposit under the South China Sea that our oil companies want without having to calligraphy their names in Zhongguo contracts. Three claimants recently got U.S. military assistance, at their cost, to strengthen their claim rights. Taiwan got her F-16s refurbished and the Philippines’ PNoy2 got a Coast Guard cutter; it also has Hillary Clinton calling the waters around Spratlys (aka Nansha) the West Philippine Sea.

But the third claimant, Negara Brunei Darusallam, already an oil company enclave in Malaysia, not unlike Kuwait to Iraq, had the Sandhurst-educated Sultan Bolkiah ink a jet purchase worth $325 million at the Democracy Forum in Bali with Obama. Given the Sultan’s refined taste and preference for Rolls Royce, (keeping them faithfully and caring for them better than his wives, a wit adds) this should not come as a surprise. Having almost trained to fly the F-4s, a sleek jet line impresses many a stiletto wearing Malayu Islam Mata Hari. The Sultanate population numbers 400 thousand heads, so the jet purchase alone is going to cost Brunei $812,500 per citizen. What is self-appointed Prime Minister and President Hassanal Bolkiah thinking? Can Occupy be activated in Bendar Seri Begawan? Not likely. The Sultan owns everything, and he is loved by everyone!?!

Yes, there is oil on the continental shelf from the East Sea/Sea of Japan down to the South China Sea, but we’ll let our trading partners in Beijing burn their coal rather than oil because we can get the rest of the world to complain about their dirty air and carbon emissions, throw a wrench into their industrialization, never mind that this Axis of Evil holds trillions of Treasury bills.

There is nothing in this narration that is confidential or privilege. It’s right out on the front page of newspapers, and when our government announces that we are going to pursue an American Pacific Century, do we bother to ask what that means? I did.

Talk to me.