As Russia and the West clash over the Ukraine, it is important to understand the geopolitical context of what is occurring. The easiest way to do this is to obey one of the oldest and most valuable principles in the world…follow the money.
Russia, the United States and all of their collective allies present the current unrest, conflict and general sabre-rattling as a values-driven issue. It would be nice to believe that this is the way that the world works, that there are such things as ‘conviction politicians’ who are motivated by conscience and morality. Unfortunately, this is not the way the world works.
The old world order
The United States has been the leader of the old world for quite some time. It has been a powerhouse in every sense of the word, and by far the most important nation economically. It very much remains in this position today. Only the Soviet Union has seriously challenged its pre-eminence, and this threat to its hegemony expired pretty rapidly after the disastrous Afghanistan conflict of the late 1970s and 1980s. Obviously US readers will be familiar with this concept!
During the 20th century, which is often quite reasonably referred to as ‘the American century’, the United States has forged strong, and very profitable, links with what could be described as the old world order. Effectively, the United States has led this world order, which has centred around axes involving the Anglo-American alliance, and strong links with the EU-NATO power structure. Major global meetings, organisations and institutions are focused around senior political, business and economic figures from these nations, while it is notable that representatives from another growing power bloc are rather thin on the ground.
The power bloc in question is the BRIC nations, of which Russia is a prominent part. Arguably the leader of these nations is China, the world’s second largest economy after the United States. The time will come when this nation of over one-billion people will exceed the US economy, and although it is far too simplistic to suggest that when this happens it will become the world’s most powerful nation, it is obvious that China will post a threat to US hegemony which has not been experienced in decades.
Given the animosity between the Russia and the United States, it is not hugely surprising that Russia has sought allegiance with China. There are numerous benefits for China as well, not least energy-related gains.
The Bretton Woods agreement
However, the key aspect of this partnership is that Russia and China feel that they are stronger together, and can forge a significant alliance which can challenge the existing economic order. For decades, this has been based on the system which came out of the Bretton Woods Conference in 1944 (although this system is no longer operable). This conference established major economic institutions, such as the International Monetary Fund, which continue to wield massive influence in the world today (and some say a nefarious influence at that).
Despite being the two most powerful nations outside of the ‘old world order’, China and Russia have experience a rather diminished status within such institutions, and are not particularly enamoured with this. Thus, ahead of the first BRIC conference, leaders of Brazil, Russia, India and China called for a “multipolar world order”; diplomatic code for a rejection of America’s position as the sole global superpower.
The BRIC nations emerge
The Russian supremo, President Medvedev, further suggested that the BRIC countries wanted to “create the conditions for a fairer world order”, and considered the first BRIC conference to be “an historic event”. Ahead of the conference, the BRIC nations released a statement, which was effectively a modus operandi for the group. Among its explicitly stated aims was a commitment “to advance the reform of international financial institutions, so as to reflect changes in the global economy. The emerging and developing economies must have greater voice and representation in international financial institutions.”
At this point in time, the United State is not particularly keen on this notion. There are several reasons for this, but the most prosaic is that it would obviously dilute US power and influence. Additionally, the nation has not enjoyed the best relationship with Russia in particular diplomatically, and there is probably a fundamental cultural distrust and distaste for one another which is built into both the Russian and American psyches.
So who will come out on top in this game of geopolitical chess?
Russia: Oil and gas slump
Russia has been staking its claim to a more prominent role in the world on its energy supremacy. And this may turn out to be a very valid long-term strategy. But in the short-term, the oil price tumble has seriously weakened its hand. While this has ostensibly occurred due to fracking, there are many that believe that this controversial technology has been encouraged not solely to extract more oil, nor even to make big money for big business, but specifically to hammer the oil market and weaken Russia’s geopolitical influence.
Thus, this very much counts against Russia. But one thing that counts in favor of the Eastern European nation is the economic state of many Western countries. The economic travails of the United States are well documented, as are problems in Europe. Although economic growth has been achieved in the short-term, most Western nations, including the US, remain in debt up to the eyeballs.
Many economists do not consider this to be a huge issue. They believe that the contentious policy of quantitative easing has had a positive effect on the economy of the United States, and that the country is now very much in a state of recovery. Equally, it is often asserted that the United States is such a vast economy that the markets will simply let it continue to print money, buy bonds and slip further into debt indefinitely. And it’s quite possible that this is correct.
Dealing in debt
However , the economies of Brazil, Russia, India and China have a relatively paltry amount of debt. Thus, the United States external debt is three times greater than Russia in percentage terms relative to their GDPs, over five times greater than Brazil, and nearly twenty times greater than China. The United States is, as billionaire investor Jim Rogers pointed out repeatedly in an interview with BBC’s News 24 channel, “the greatest debtor nation in history”.
And the United States’ great ally Britain can only dream of such figures. The UK is eleven times more indebted than Russia, approximately twenty times more indebted than India and Brazil, and over seventy-five times more indebted than China! There are many people who believe this is unsustainable and will ultimately threaten the position of the Anglo-American dyad.
The Grand Chessboard
Ultimately, it is likely that neither the West or Russia will win this economic war, and instead something will occur which was predicted by the infamous foreign policy figure Zbigniew Brzezinski. To return to the notion of chess, Brzezinksi ’s most famous work is entitled “The Grand Chessboard”, and within it the Polish-born political scientist envisages a very different world order to the current situation:
“In time…the emergence of a Trans-Eurasian Security System would span the entire continent…such a broad transcontinental security framework could also contain a standing security committee. America, Europe, China, Japan, a confederated Russia, and India, as well as perhaps some other countries, might serve together as the core of such a more structured transcontinental system.”
In Joseph Heller’s classic novel Catch-22, an elderly character famously opines to an American airman that “Rome was destroyed, Greece was destroyed, Persia was destroyed, Spain was destroyed. All great countries are destroyed, why not yours?” It is rather fanciful to suggest that the United States is about to be destroyed; it is of course still the world’s largest economy by a significant distance and the most powerful nation on the planet. But a world in which US predominance is diluted and neutralized, and where Russia and China play a more prominent role, now seems entirely possible.