Will Territorial Claims Dispute Lead to World War III?

All the bellicose posturing over territorial claims are posing as a risk the real thing: World War III.

Historian Eric Margolis points out why

On 30 January, a Chinese Jiangwei II-class frigate entered the disputed waters around the Senkaku Islands, a cluster of uninhabited rocks in the East China Sea claimed by China as the Diaoyu Islands. A Japanese destroyer was waiting.

When the two warships were only 3 km apart, the Chinese frigate turned on its fire control radar that aims its 100mm gun and C-802 anti-ship missiles and "painted" the Japanese vessel. The Japanese destroyer went to battle stations and targeted its weapons on the Chinese intruder.

Fortunately, both sides backed down. But this was the most dangerous confrontation to date over the disputed Senkakus. Japan and China were a button push from war.

Soon after, a Japanese naval helicopter was again "painted’ by Chinese fire control radar. Earlier, Chinese aircraft made a clear intrusion over waters claimed by Japan.

China’s Peoples Liberation Army HQ ordered the armed forces onto high alert and reportedly moved large numbers of warplanes and missile batteries to the East China Sea coast.

A US AWACS radar aircraft went on station to monitor the Senkaku/Diaoyus – a reminder that under the 1951 US-Japan mutual defense treaty, Washington recognized the Senkaku Islands as part of Japan and pledged to defend them if attacked. Japan seized the Senkakus as a prize of its 1894-95 war with Imperial China.

China’s state-run media claimed the US was pushing Japan into a confrontation with Beijing to keep China on the strategic defensive.

Japan’s newly elected government led by conservative PM Shinzo Abe vowed to face down with China. Spasms of angry nationalism erupted in both feuding nations. The Philippines, Taiwan and Vietnam, who also claim the Senkakus, chimed in with their territorial demands.

A special Chinese crisis group led by new President Xi Jinping has been set up to deal with the Senkakus – meaning any clash there may be more likely to become a major crisis.

Shades of August, 1914, when swaggering, breast-beating, and a bloody incident triggered World War I, a conflict few wanted but none could avoid.

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Oh, you may add to such mounting tensions the recent allegations of Russia’s violation of Japan’s airspace. Japan has ongoing territorial claim dispute with Russia over the South Kuril Islands.

Provocation over territorial claims, for me, have largely been meant to divert the public’s attention over domestic economic issues, as well as, to rally the public’s support by drumming up nationalism against foreign bogeymen.

Although any shooting skirmish that may occur could indeed spark and escalate into the real thing.

Nevertheless wars have been preceded by inflationism. Prior to World War II, I explained how Japan’s pre Keynesian Korekiyo Takahasi’s inflationist policies in the 1930 led to a quasi-coup via the assassination Mr. Takahasi which brought Japan’s military as a political force to the fore, the ramification of which, had been a war economy.

On the other hand, Nazi Germany’s war economy had likewise been mobilized via inflation.

In other words, wars are essentially financed by inflation.

As the great Professor Ludwig von Mises admonished in Nation, State and Economy, (bold mine)

Rational economy first became possible when mankind became accustomed to the use of money, for economic calculation cannot dispense with reducing all values to one common denominator. In all great wars monetary calculation was disrupted by inflation. Earlier it was the debasement of coin; today it is paper-money inflation. The economic behavior of the belligerents was thereby led astray; the true consequences of the war were removed from their view. One can say without exaggeration that inflation is an indispensable intellectual means of militarism. Without it, the repercussions of war on welfare would become obvious much more quickly and penetratingly; war-weariness would set in much earlier.

With almost every major economy wantonly engaging in inflationism, the risks of world at war seems to have dramatically increased. Possible flashpoints are manifold; in the Middle East, the Kashmir region, East Asia’s territorial disputes, or even from the aftermath of a possible collapse of the EU project.