India, China may overwhelm US economy: US senator

FULL CIRCLE: US economy risks being overwhelmed by immense rapidly industrialising societies like India and China.

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Washington: The US economy and foreign policy are at risk of being overwhelmed by cosmic economic shifts driven by immense rapidly industrialising societies like India and China, an American senator has warned.

"Neoclassical economics analysed economic growth in terms of capital, labour, and technical progress. But, I now think, it is more enlightening to view the fundamental drivers as energy and ideas," Republican senator Dick Lugar said Wednesday, citing Financial Times columnist Martin Wolf.

"If Wolf is correct, and I believe he is, our economy and our foreign policy are at risk of being overwhelmed by forces that are receiving far too little attention within our government," said Lugar at a Senate Foreign relatioens committee hearing on the State Department budget.

Principal among these forces is the burgeoning demand for energy from China, India and elsewhere, and the cosmic economic shifts that are being driven by these immense, rapidly industrialising societies, he said.

"The immediate effect is rising energy prices, but longer term effects include accelerating climate change and shortages of hydrocarbon supplies, both of which could become sources of conflict," the senator said.

Lugar cited US agreement with India on civilian nuclear power and with Brazil on biofuels "as examples of how our strategic alliances can bring together our foreign policy, energy security and climate change interests".

Congratulating Secretary of State Condoleezza Rice for moving toward a much-needed reinvigoration of US international energy diplomacy, he hoped she would soon appoint an International Energy Coordinator.

Energy "is a really important part of diplomacy", agreed Rice.

"In fact, I think I would go so far as to say that some of the politics of energy is warping diplomacy in certain parts of the world," she said, announcing her intention to appoint a special energy coordinator for the Central Asian and Caspian region.

Later, at a hearing of the House Foreign Affairs committee, Rice said the US had increased significantly the resources for public diplomacy. Changing the way the State Department operates, she planned to re-deploy people, "many of them out of Europe and into growing places like India and Brazil and to China."

Noting that the US had almost as many Foreign Service officers in Germany as it had in India, Rice said: "It seemed important to have that redeployment. But even with those redeployments, it is absolutely the case that the Foreign Service is too small."

Over four years 2,000 Foreign Service officers had been added, she said. This year's budget asked for about 1,100 more Foreign Service officers as well as 300 people for USAID, Rice said. "And I think it is very important that we rebuild this civilian strength."