There's been quite a bit of discussion about the rise of China and the EEA in world politics and many simply assume China will be the dominant superpower in the 21st century, though I've seen claims that India will take that role. The general assumption seems to be that the 20th century belonged to the US but that its power is waning. Is it? While this could be cyclical in nature, there are several signs that the US is finally losing her ability to dominate the world. This isn't a hypothetical "we'll lose influence later". US influence appears to be eroding now, but is it coming to an end?
Petrodollars
For almost 40 years, oil has traded almost exclusively in dollars. This creates a high demand for the dollar and many foreign investors own huge amounts of US assets. This has helped the US weather many financial crises as governments work furiously to shore up our currency to protect their own economies. Just a quick glance at some of the largest foreign investors in the US shows how deeply the US economy is intertwined with the world economy. Even those nations who bear the US little good will don't want to see the US economy collapse as it will take down much of the world economy.
However, while this situation satisfies the US, it disatisfies just about everyone who may be concerned about the world economy being so heavily reliant on a single product: the US dollar. About a year ago there was a lot of discussion about the US credit rating being downgraded. The current European financial struggles, however, have overshadowed the fact that S&P and Moody's are still warning about the US credit rating. The US is not out of the woods and being caught between a "tax and spend" party and a "tax cut and spend" party simply isn't helping.
Meanwhile, Iran is still expanding its oil bourse and Iran wants to trade in currencies other than dollars. This could be a strong threat to the petrodollar and more than one pundit has pointed out the odd coincidence of internet access to Iran being destroyed right before the initial launch of the bourse. The continued US demand for sanctions against Iran also has the side effect of limiting the effectiveness of Iran's Oil Bourse.
Meanwhile, Putin keeps pushing the idea of the petroruble and has tried to start trading their oil reserves in rubles, but the relatively weak ruble makes this a gamble.
We can expect to see other attempts to break the dollar's grip on oil in the future as more countries get nervous about the US economy, but that's only one of the US's problems.
South America
With Ecuador's expulsion of the US ambassador, three out of the thirteen sovereign nations in South America no longer have a US ambassador and half of them have ignored US and Israeli pressure and have recognized Palestinian statehood. US influence in South America is waning and while Americans might forget the Monroe Doctrine and the Roosevelt Corollary, you can be certain that the South Americans do not. And regardless of our opinion of Chavez and Venezuela, Venezuela's huge oil and natural gas reserves guarantees that they will be one of the dominant forces to the South regardless of US opinion. And as the previously linked Gaurdian document pointed out, one of the USs closest allies in South America, Colombia, finally turned her back on the US Venezuelan strategy and did something the US very much did not want to see:
Although Colombia's previous president, Álvaro Uribe, was – in recent years – very much allied with the United States' strategy toward Venezuela, Santos immediately rejected it and decided to make peace with Chávez. This turned out to be quite easy to do, despite their past fights when Santos was Uribe's defence minister. As anyone who follows Venezuela knows, Chávez is friendly to any head of state or government that is friendly to Venezuela.
Combine this with the fact that
Venezuela is starting to trade oil in Euros and you can understand how the South American situation is becoming very problematic for the US.
Europe
In Europe is where the US has long maintained a huge amount of influence, largely because of strong economic and cultural ties. US influence has largely been via the UK and Germany, though I doubt few would dispute that the UK has been the strongest regional ally of the US, given the long-standing special relationship decreed by Churchill and supported by both sides ever since.
Except that even Tory (Conservative and pro-US) Ministers of Parliament admit that the special relationship is over. From living in the UK for years, I feel this is largely a influenced by British anger over Former Prime Minister Tony Blair being viewed as George Bush's "poodle". No matter one's political view in the UK, at the end of Blair's reign, there was widespread derision of him and his faithful obedience to US foreign policy.
That being said, from a business perspective the Tories are still very much pro-US and do speak with admiration of US business policy and their desire to emulate it. However, with the upcoming AV vote in the UK, it's possible the Tories may get locked out of power and many smaller parties in the UK are not necessarily friendly to the US, thus seeing our influence diminish even more (though The Economist argues that for structural reasons, the AV vote may not matter). Of course, with the UK's fury over Obama's gaffe (was it?) in calling France the US's strongest ally, the relationship between the US and the UK, while not strained, is certainly not what it once was.
But is France the US's strongest ally in Europe? No, the French president, Nicholas Sarkozy, may be the US's strongest ally in Europe, but the French people are far more ambivalent (emphasis mine):
European views of the US are considerably cooler than Americans views of the EU. Asked to rate US influence overall 48% of Europeans give a negative rating and just 42% give a positive rating. Those with the largest number giving a positive rating are Poland (58%), France (53%) and Britain (49%). Those with the largest number giving a negative rating are Germany (64%), Turkey (55%), and Spain (52%). Canadians are also predominantly negative (55%).
Of course,
there's a good chance that Sarkozy will not be the French president after 2012, so that could be another drop in US influence.
Africa and Asia
It seems unfair to lump these two together, but honestly, China is the dominant player here. Obama's popularity in Africa isn't enough to overcome China's huge investment on the continent. Though many are concerned about that development, few African countries can afford to turn down Chinese money. Meanwhile, China and India are both becoming major influences in Asia and this will further squeeze out US control in this area; there are only so many pieces to these pies.
What does this mean?
Everywhere you turn, US influence is diminishing or being held in check. If the dollar continues its decline, we could very well be watching the end of US dominance. Many countries are worried about the US economy and the attempts to break the US dollar's grip on oil trading may start to look more attractive as time goes on. However, it has to be done gradually to avoid a panic. The world economy is still far too dependent on the US economy for this to be a quick transition, but if the US economy collapses, US influence will, too.
However, I strongly feel that US dominance will continue for quite some time. Much of a country's influence is based on the strength of its currency and the US dollar is still the most widely accepted currency. Behind this are the British Pound Stirling, the Euro, and the Japanese Yen. All of these have various weaknesses. The Euro is the currency which I feel could give the US dollar the most competition, but the structure of the Eurozone seems to limit the stability of the Euro as the current bailout of Portugal shows. Both the British Pound and the Japanese Yen have the same failing: they're from countries with few natural resources and merely rely on strong banking (the pound) or manufacturing (the yen) industries to support them. Both the UK and Japan have struggling economies right now and neither can blame the US economic collapse on their woes.
So the US position seems safe for the time being. If a proper and popular oil market ever develops, allowing full trading in non-dollar currencies, or if the US economy collapses further, it could very well be the end of the US era.