Update time!
Chapter XXIV: The Multipolar World, 2003-2008.
Meanwhile, the new global depression had begun in the United States. While China had become the largest economy in total GDP, New York was still the world’s leading financial capital. The 1990s Republican era had seen a laissez-faire economic policy consisting of across the board income tax cuts, cuts in the VAT, cuts in the fuel and alcohol excise taxes, massive privatizations, enormous deregulation and the abolition of tariffs, subsidies and privileges. This had greatly boosted the budding economic growth that had begun in 1988 after the 1985-’87 recession and continued into Reagan’s third term. The kind of economic growth of Nixon’s Second Presidency was spectacular and hadn’t been seen in a long time. The 1988-2002 period was an unusually long phase of growing wealth, but in the summer of ’02 that ended abruptly.
The piper had to be paid. The unregulated 90s had seen banks extend loans and mortgages without checking the quality of the borrowers, resulting in a growing loan and mortgage bubble. The bubble burst and the Dow Jones dropped dramatically on Wednesday June 19th 2002 (Black Wednesday), leading to an even deeper crash the following days as panicked shareholders began to dump their shares before they lost all their value, producing a downward spiral. Meanwhile, panicking bank CEOs and boards of directors called in all the loans they could call in, resulting in the bankruptcies of countless people and businesses. It looked like major banks and other financial institutions would be toppled and there was fear of a run on the banks. Bailouts were the only real way to prevent this. This reality forced the otherwise non-interventionist Republican administration to give enormous capital injections to major banks so they wouldn’t go bankrupt, as countless families would lose their life savings otherwise in what would then become a repeat of 1929.
These measures were rapidly passed before the 2002 US House of Representative Elections, as the Democrats had already announced to block such bailouts if these weren’t accompanied by tax increases for the rich and major companies if they won the House. The Democratic campaign was based on blaming the Republicans for causing the loan and mortgage bubble by reducing oversight over banks and financial institutions so drastically and putting so much stock into the “invisible hand” of the free market. The Republicans had responded by calling the Democrats “socialists” and accused their proposals to reinstate Reagan’s high tax rates for the rich, super rich and major corporations of being inspired by “jealousy toward successful, hard-working Americans.” That didn’t go down well among working class Americans but also the owners of small and medium sized businesses who suffered from the crisis and in plenty of cases didn’t weather the storm.
On November 5th 2002, the Democrats won 50.8% of the popular vote and the Republicans got 45%, which meant the former got 230 seats in the House of Representatives and the latter 205. In addition to that the Democrats won two Senate seats and thusly increased their number of Senators to fifty (exactly half). This had a number of ramifications. Firstly, President Bush would have to negotiate with the Democrats to get legislation through the House. Secondly, any legislation passed by the House could meet a tie in votes in the Senate, which the Vice President could override by casting his vote (only permitted in the event of a deadlock). Thirdly, President Bush and Vice President Gingrich had never seen eye to eye because the latter was a relic from the past with his across the board conservative views. The Republicans had abandoned part of those views in the early 80s when Reagan, the Democratic titan, effectively combined his left-wing economic agenda with his socially conservative Christian convictions. The divide between Bush and Gingrich had the potential to produce paralysis as a US President has never possessed the power to remove his Vice President from office. In the event of a tie in the Senate, Gingrich could vote against what President Bush and the Republicans actually wanted without Bush being able to do much about it, except for trying to make Gingrich’s life miserable and hope he’d resign.
Bush had to manoeuvre through a labyrinth to get things down and his time in office from 2003 onward was effectively a lame duck presidency. At one point this situation indeed produced a crisis in the autumn of ’03: the Democrats wouldn’t go along with further stimulation of the lagging economy unless the rich were taxed more and threatened to block the raising of the debt ceiling, which limits how much money the US government can borrow. If the government failed to raise it, the result would be a legal inability to borrow more money. That would lead to a shutdown of the federal government and possibly also defaulting on loans. A last minute compromise prevented it from getting that far, an agreement reached because Republicans and Democrats both understood the disastrous consequences for the global economy if the government of the second largest economy went bankrupt.
Things did not look good for the 2004 US Presidential elections. At the Republican National Convention that took place from August 30th to September 2nd 2004, Bush was nominated. Gingrich, on the other hand, got little support and Bush didn’t select him as his running mate, which indicates how much their personal relationship had deteriorated. Instead he selected the runner-up at the convention instead: popular California Governor Vladimir Putin, a Russian-American born in Sacramento in 1952 to refugee Russians who had fled the USSR to escape Nazi madness and continued Stalinist terror.
Putin obtained a PhD in criminal law in 1984 and minored in political science as well as Slavic studies, but also dabbled in acting as an outlet. He was offered tenure at Berkeley, but he declined as by then he’d surprisingly been offered the leading role in a low budget TV series called “Rugged Justice” after auditioning for it. He was reportedly selected because the director thought his stoic demeanour would convey toughness. The pilot was about a disgraced former cop turned private investigator/vigilante fighting crime, sometimes skirting the grey areas of the law or even transgressing them to get the job done. The story was subsequently modified to account for Putin’s Russian background by saying the character’s father had been murdered by the Nazis, explaining the main character’s hatred of injustice and occasional violence against criminals, gang members and mobsters in particular as they reminded the main character of the Nazis. The show, which was never expected to last for more than two to three seasons, actually ran for ten seasons from 1985 to 1995 for a total of 220 episodes and won four Emmy Awards. The show was concluded with an action-thriller movie, which received mixed reviews but was a box office success in the summer of ’96 (it put him right up there with Sylvester “Rocky/Rambo” Stallone and Dolph “The Terminator” Lundgren). Thusly acquiring fame, his fame was boosted by two Oscar winning movies. The first was “Moscow”, a 1992 three hour epic war movie about a Soviet lieutenant heroically fighting to defend Moscow and later trying to evade Stalinist persecution while fighting and bribing his way past people to get his family to America. Putin got an Oscar for best actor. The second was the 1995 movie “Schindler”, in which he played the titular character (winning Putin a second Oscar for best actor while the movie got another for the make-up used to “age up” Putin a few decades in a three hour movie). During his acting years he had always expressed an interest in politics and had involved himself in campaigns. In 1998, he was elected Governor of California and was re-elected in 2002, before resigning to run for Vice President in 2004. He identified as a Nixonian Republican, which made him a moderate Republican and very popular in Nixon’s home state of California.
Meanwhile, the Democrats nominated Dick Gephardt. After completing a law study and passing the Missouri Bar, serving in the Missouri Air National Guard and a local political career in St. Louis, he became a member of the US House of Representatives from Missouri’s 3rd district in 1977. After that he was Chair of the House Democratic Caucus from 1981 to 1985, and became House Majority Leader after his predecessor Tom Foley became Speaker of the House after Jim Wright’s fatal plane crash. After the Democratic defeat in the 1990 mid-term elections, Gephardt became House Minority Leader in 1991 and developed positive ties with Nixon who, as a moderate Republican, couldn’t always count on the vote of the right wing of the Republican party and had to rely on moderate Democrats in these instances. After the victory in the 2002 mid-term elections, he became House Majority Leader again and was subsequently nominated for the Presidency as a conciliatory figure who, as a Congressional veteran, could navigate Congress and unite moderates on both sides of the aisle. He chose Harold Ford Jr. as his running mate: as the son of former Congressman Harold Ford Sr., he was elected in Tennessee’s 9th district in November 1996 at age 26 as one of the youngest members of the House of Representatives ever. Being youthful and African American would help the Democrats win outside the South, but not alienate said South as Ford was in fact quite conservative. Former President Robert F. Kennedy, former First Lady Nancy Reagan and John F. Kennedy Jr. all campaigned for the Gephardt/Ford ticket. New York District Attorney John F. Kennedy Jr. – son of the late Senator from Massachusetts John F. Kennedy and nephew of RFK – subsequently became Attorney General under President Gephardt.
The Democratic ticket won 34 states, 280 electoral votes and 50.8% of the vote while the Bush/Putin ticket won 48.2% of the vote, sixteen states plus DC and 258 electoral votes. Gephardt was subsequently inaugurated in January 2005. While still in control of Congress, the Democratic Gephardt Administration reversed many of the deregulations and reinstated the Reaganite “millionaire taxes”, the “multimillionaire taxes”, property taxes on all property worth over $1 million, taxes on major companies and higher excise taxes on alcohol and car fuel. The additional tax income was spent on the public sector (military, police, infrastructure, public transit, public education, healthcare) as well as an unprecedented 1 trillion dollar stimulus package that was primarily spent on aide to the suffering small and medium sized businesses. The Republicans denounced what they called “the Jealousy Taxes” and the complete renewal of Reaganite “socialism” as well as criticizing renewed deficit spending after Nixon and Bush had spent years trying to push back government debt. The American people, however, wanted successes and they witnessed how the country’s economy finally crawled out of the hole in early 2006 under a Democratic leadership utilizing Keynesian policies. These policies helped, but economic cycles meant some kind of recovery would’ve happened anyway, regardless of who was in the White House and in control of Congress.
In the meantime, the world wasn’t getting any safer in the eyes of many. In the early and mid-2000s there were ten nuclear weapons states, some more powerful than others, and there was about to be an eleventh. Though capped at 10.000 warheads by SALT II, the US and the Reich still had the biggest stockpiles as well as enormous strategic rocket forces with ICBMs, strategic bombers, fleets of SSBNs and nuclear guided missile battleships and carrier fleets. China had larger conventional land forces and the world’s third navy behind the US Navy and the Kriegsmarine, but after reaching the number of about 1.000 warheads they stopped there and numbers of ICBMs and SLBMs are correspondingly smaller. At the height of the Cold War, the British had 500 warheads, a number of ICBMs and a fleet of SSBNs and Avro Vulcan bombers, but they shrank their stockpile to 300. For Italy it was much the same, except that they still maintain 650 warheads. In the early 2000s, India was projected to expand its arsenal to 350 weapons by 2015, with Pakistan following on foot, a prediction that has since proven to be correct. Iran and Spain have stayed between 100-150 warheads according to estimates and the Afrikaner Republic still only has twenty. Vietnam was the one to become the eleventh nuclear power.
After the Sino-Vietnamese War of 1997, Emperor Bao Long decided to embark on a nuclear weapons program so the country would have a trump card against future Chinese aggression. That Vietnam would become a nuclear power was not a given since the country was a developing country, and still is today with a GDP per capita of $8.000 (and a population of 94.6 million). Of course India had not been withheld from becoming a nuclear power despite its third world status, but there were obvious differences between India and Vietnam: firstly, India’s population was over ten times larger; secondly, India had much more resources to draw upon; and thirdly, India had had help, first from the Americans and later the Germans when the former didn’t give them what they wanted. Vietnam enlisted the aid of India and later also the Reich to build nuclear power plants capable of producing plutonium (later, the country built more nuclear power plants under its own power to reach targets in greenhouse gas emission reductions, as more nuclear power would reduce reliance on its indigenous sources of coal and oil for electricity production).
In August 2007 the nuclear program achieved success under the rule of Bao Thang, the new Emperor since July that year: Vietnam carried out a 15 kiloton underground nuclear test. By the end of 2009, Vietnam was estimated to possess five atomic bombs and in the first few subsequent years they produced five warheads annually while working to increase the production of fissile material to cast plutonium cores with. As of 2018, Vietnam has an estimated 60-80 nuclear weapons with some short-range missiles (with ranges of up to 1.000 kilometres) and fighter-bombers as delivery methods. Victory over China was still impossible, but if the Chinese went way too far then much of southern China would be toast and that wasn’t worth the hassle. Besides that, China had already gotten what it wanted from Vietnam in the South China Sea.
Many world leaders were concerned about the increased risk of nuclear war given the tensions between the two leading nuclear powers, the US and the Reich. Even after SALT II, an exchange between them would involve hundreds of nuclear weapons at the minimum, many of them in the multi-megaton range, and result in the annihilation of much of the northern hemisphere. Besides that, Asia had one major nuclear power (China) that had an understanding at best and a hostile relationship at worst with two other neighbouring nuclear powers (India and Vietnam). Moreover, there was an intense public debate going on in Japan about acquiring nuclear weapons to deter China. Japanese nationalists ran into resistance from an influential anti-nuclear weapons lobby representing rather fanatical anti-nuclear weapons committees in the so-called “Six Cities” (Hiroshima, Nagasaki, Kokura, Niigata, Yokohama and Osaka). They argued for global nuclear disarmament and that Japan should take the lead in that. As to the argument of national security, the anti-nuclear weapons lobby pointed out that rivalling China had a declared “no first use policy” and would therefore not use nuclear weapons against Japan, unless Japan did so first. Nonetheless, Japan had a “breakout capability” as its civil nuclear infrastructure had produced a stockpile of plutonium in the past that could be fabricated into weapons rather quickly. After Japan’s resurgence in the early 00s, the Korean government stated that it would develop nuclear weapons if Japan did.
The Middle East looked like a nuclear powder keg too: several Arab states asked the Reich for help against Iran’s Middle Eastern nuclear monopoly, though even the Reich remained wary of introducing nuclear weapons into that particular hornet’s nest. To everybody’s surprise, Saudi Arabia carried out an 80 kiloton nuclear test in 2008 and became the twelfth nuclear power. Though the Germans had given some support – such as building a research reactor and later a power plant with light water reactors unsuitable for weapons production – it would probably have taken the Saudis another decade at least to develop weapons under their own power. So instead they decided to pay Pakistan to build some warheads for them instead. The deal, about which little is known, is rumoured to have involved the purchase of 10-15 warheads for a multibillion dollar amount of money (other Arab states could have used their oil wealth similarly, but none did, presumably because Pakistan would no longer sell after a very stern talking to by the Germans). Saudi Arabia, in the meantime, could proceed with their own nuclear weapons program now that they had a warhead design they knew would work and now they only had to produce fissile material. The matter was pressing as rivalling Iran perhaps had up to 150 weapons and had tested its first thermonuclear device years ago.
Central and South America were the only regions that remained free of nuclear weapons because they’re under the American nuclear umbrella, though rumours of Argentine and Brazilian nuclear weapons programs persist. This was because most of Latin America was part of the Atlantic Union, with Argentina being a major exception. Given how much the Argentine economy was integrated into the wider South American economy, Argentina decided against nuclear weapons and an openly pro-Axis course. An economic embargo from the US and many South American countries would be the result, with devastating effects. Instead, the government in Buenos Aires decided on a strictly neutral course as a “South American Switzerland.”
Meanwhile, the acquisition of nuclear weapons by Vietnam and Saudi Arabia further reinforced the trend, which had begun in the 1980s with the rise of China, called “multipolarism” by experts in international politics: the bipolar dynamic of the US and the Reich forcing their will on the world unchallenged, except by each other, was altered by the emergence of new great powers with nuclear weapons and serious regional influence. By 2010, the United States, the Greater German Reich and the Republic of China now formed the leading trio of a wider club of countries in possession of nuclear weapons and/or large conventional militaries.
The so-called “Big Three” had to consider the interests of these countries. Previously, bigger countries only had to consider the interests of smaller countries if they were allies or states they were negotiating with, but now the possibility of a regional nuclear war existed that could also involve a multitude of smaller countries. Scientists estimated that a conflict with “only” one hundred nuclear weapons being used (with an average yield of 15 kilotons) would disrupt the global climate for over a decade. Such a conflict would result in the release of five million tonnes of soot into the atmosphere according to estimates. This would result in a cooling over large areas of North America and Eurasia, including most of the grain growing regions. In short, even a regional nuclear war would have dramatic global ramifications.
It had been argued that the proliferation would lead to greater international stability. Certain experts in international politics argue that the logic of “Mutually Assured Destruction” or MAD should work in all security environments, regardless of historical tensions or recent hostility. The Cold War was clear proof as the only example in which enmity between great powers didn’t lead to military conflict. This was, they argued, because nuclear weapons promote caution in decision-makers. Neither Washington nor Germania would risk a nuclear apocalypse to advance territorial or power goals, hence a relatively peaceful stalemate ensued marked by proxy conflicts and diplomacy. It also prevented the Reich from punitively attacking Spain and Italy for switching sides in the Cold War and a wider war from erupting over the Senkaku Islands Crisis involving China, Japan and the United States. Some foreign policy pundits and armchair generals believe there to be no reason why this effect would not occur in all circumstances for reasons of national self-preservation. Future events would tell if they were right.
