The world is coming toward a bipolar world with China, Russia, Pakistan and a number of other authoritarian countries of Central Asia on one side, and the U.S., EU, Japan and their Asian allies on the other side.
And that’s not a peaceful nor a promising future, it’s a rather chaotic future where undecided countries such as India, Brazil, Egypt and others will be squeezed between the two sides.
ValueWalk's Raul Panganiban interviews John Quealy, CIO and PM of the ESG Global Equity Strategy at Trillium Asset Management, and discuss his approach to investing, ESG, and where he finds opportunities. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Investment Interview with Trillium's Read More
If you take interest in today’s geopolitics, you probably know that the relations between Russia and Pakistan have recently seen a significant warning. It is reasonable to say that the two countries – who were Cold War rivals – are getting closer.
Meanwhile, China, who is a traditional ally of Pakistan and has always supported the country against its historical rival India with its military equipment and in the fields of diplomacy, is showing clear signs of forming this new China-Russia-Pakistan triangle, which is likely to lead to the above-described bipolar world.
After the Russian economy had been hit by Western sanctions in the summer of 2014, the Kremlin started to look in the direction of Asia, particularly – Pakistan.
Formidable China-Russia-Pakistan triangle
First, Moscow lifted its self-imposed weapons embargo on Islamabad, and then the Cold War rivals signed a historical military cooperation agreement, which was based on exchange of politico-military information, beefing up the countries’ defense and counter-terrorism sectors as well as combining their efforts on developments in Afghanistan.
Russia and Pakistan have already started collaborating in the areas of defense and energy resources. It was earlier reported that Islamabad may purchase Mi-35 combat helicopters in addition to importing of the Klimov RD-93 engines from Russia for its JF-17 multi-role fighters. It must be noted that China and Pakistan are involved in co-production and co-development of JF-17 fighter jets.
Russian state-owned company Rostekh Corporation also announced its plans to build a 680-mile gas pipeline to Pakistan by 2017 costing about $2.5 billion.
The formidable triangle between Moscow, Beijing and Islamabad has been shaped from scratch as a result of recent geopolitical shifts. Russian annexation of Crimea as well as the presence of Russian troops in eastern Ukraine have significantly worsened the relations between the West and Moscow, which prompted Russian President Vladimir Putin to look for new allies.
China and Russia: enemy of my enemy is my friend
Meanwhile, China’s claims and repeated disruptive actions in the South China Sea have rekindled tensions with U.S.-led countries in the region. The above-mentioned circumstances forced both Russia and China to look for new allies, which is why they found one another. Both Moscow and Beijing are distrusted by the West for opposing U.S. global dominance. Both countries do not support the values of democracy distributed by the U.S. and Japan, just as much as they oppose transparent governing.
Both Beijing and Moscow raise their people on nationalism that is based on historical and cultural nature of each nation, which is Confucianism and Russian Orthodoxy respectively. Both countries support the model of authoritarian capitalism as a counter measure to the global dominance of the U.S. Both countries also oppose the freedom of speech and Internet freedom – and the list can go on and on.
However, the two countries were not always fond of one another, but the “enemy of my enemy is my friend” factor plays a crucial role in the developing relations between China and Russia. China’s goal is to change the world order – for better or worse – and this change begins with Russia and Asia.
Having been investing into Pakistan for years, Beijing has also participated in building nuclear reactors for Islamabad. It must be noted that Pakistan is the largest importer of Chinese manufactured defense equipment. Furthermore, Islamabad expressed its eagerness to buy eight Chinese’s S20 or Yuan-class diesel-electric submarines.
For both China and Russia, Washington presents a challenge and U.S. global dominance must be stopped for the sake of their own security, while Pakistan would not mind to ensure its own safety under the wing of the Chinese and Russians.
Challenge for the next president of U.S. in 2016
What makes China, Russia and Pakistan a perfect fit for one another is the fact that Russia can replace Western military technology enough for both China and Pakistan. In addition, Moscow is known to be a reliable energy supplier for its allies.
China, for its part, is much more powerful in terms of its economy compared to the two other countries of the triangle. Besides, a great amount of foreign exchange reserves are looking to invest and require energy supplies.
Pakistan, it its turn, has a developing economy and requires both military equipment and energy supplies from Russia and protection from China. In that case, Russia will open a new market for its military equipment, while possibly continuing to supply weapons to India.
Is the world coming towards the above-mentioned new bipolar order or are we approaching the age of international order with present globalization tendencies? To a large extent, it will all depend on the U.S. and its role in tough conditions when the center of power is being scattered and no country in the world is capable of influencing international relations alone.
It must be noted that all presidential campaigns in the U.S. share the same rhetoric that is directed against Russia and China, while not paying any attention to the fact that the U.S. will have to adapt to the changing world order and the balance of power, especially in the coming years when the new president is elected in 2016.
But that’s how political campaigns work: they are focused on tiny issues that mask massive strategic changes in the world.