The United States of America, an isolated state

The United States of America, an isolated state

The United States – Rise to a Global Power

Since the end of World War II, the world has known two powers. The United States and the Soviet Union. Since the 1990’s only the United States was left. People started to argue and philosophize how long this monopoly on power would hold. The US has been policing the world for decades, they have truly been a global power.

Geographically, the US is positioned perfectly for isolationism. Unsurprisingly, this is exactly what the USA did initially. With reluctance it joined the first World War, only to attempt to withdraw after the war finished – they never joined the League of Nations. Their global role only took hold when they opposed the Soviet Union for dominance after the second World War.

A desire for oil, that most important industrial commodity, has kept them interested in the rest of the world. But that might change.

Innovation brings us Shale Oil

For decades the United States has relied on oil imports from the Middle East and other oil-rich regions. Now, the United States has been increasing their shale oil production. Shale oil is found all over the world, also on US soil. Thanks to innovation the costs of extracting shale oil have gone down. It has become a profitable enterprise. Production has been expanding in the United States for some years now, reaching new highs.

Having said that, consumption is still far higher than production. Yet, the trend seems to move towards similar levels. The USA could reach energy self-sufficiency – no longer would it rely on imports from the Middle East. Already the USA only relies for a small part on the Middle-East, with most of its imports coming from Canada.

A Big Closed Economy

The United States is what would be called a big closed economy. Since it has the biggest GDP in the world, we can clearly call it big. Yet, we can also call it closed as imports and exports are a relatively small part of the economy. The USA relies on internal production and consumption, not on export. This gives it a huge advantage over small export-oriented economies. And, this is the reason the USA will always win a trade war. Frankly, the USA could blossom even without any trade with China. China on the other hand, would be in deep trouble if it cannot export to the USA.

It is this economic aspect, combined with its geographic location that make the USA perfect for isolation. Surrounded by oceans, a self-sustaining economy, a nuclear power. What incentive do they have to patrol the oceans once they don’t need the oil? Sure, there is the petrodollar that boosts the value of the dollar on global currency markets, but is it enough? How critical is it to keep that going after they have ceased to purchase oil? There could well be a time where the USA changes course and allows a multi-currency trade world.

What would it mean for Europe?

For decades Europe has been cutting down its military spending, but in the last couple of years this appears to be turning around. Europe has relied for 70 years on US protection and dominance, and it will need to be able to step up once that disappears.

The Russian bear lies in the east of the North European Plain, provoking in Georgia and the Ukraine. Although Russia knows its too weak to win against the USA, how afraid would it be of a bunch of weak European armies? It could be a great opportunity to expand into the areas belonging to the old lands of the Czar.

Turkey to the south-east is the unstable barrier between Europe and the Middle-East. However, with Erdogan as its ruler it may well aspire to the lands of the old Ottoman Empire. Despite being a NATO-member Erdogan seems to hold very different views for his reborn Islamic Turkey. Beyond Turkey lies the mess that is the Middle-East, violence has been overflowing into Europe in the form of terrorist attacks for years.

Europe cannot ignore these threats, as Europe still relies on energy from these regions. The USA might reach self-sufficiency, Europe is nowhere close to it. In order to maintain its standard of living, Europe will need to take over the role from the USA. Alternatively, Europe will return to being the irrelevant backwater it was prior to 1500 (or even 1800) and stand idly by while Asia reclaims its dominance.