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Ukraine’s War and the New World Order

ukraine-war-new-world-order-marketexpress-inAs is often the case, crises are trend gas pedals. This is the case with the covid-19 pandemic, which is a catalyst for the 4th industrial revolution in the face of the unsustainability of the previous development model. It is still the case with the war in Ukraine, but this time on a geopolitical and geo-economic level. While the cause could have been quickly heard around an unanimous isolation of Russia or a scenario of a new Cold War between two blocks, the developing world has instead experienced a great effervescence around what a drawing published on the front page of the Times of India the very day the war broke out sums up well: New World Order. But what new world order?

First of all, a situation that the former Lebanese Minister of Finance Ghassam Salamé summed up in a lapidary formula in a remarkable tweet: “The recovered unity of the West goes hand in hand with its relative solitude. Everywhere else, there is an astonishing mix of reluctance, non-alignment, incomprehension, indifference, a touch of schadenfreude and, at times, outright hostility.”

Despite the vote by 141 countries of the UN resolution dated March 2 deploring Russia’s invasion of Ukraine and demanding a complete withdrawal of Russian troops, the map of effective support for Western sanctions drawn up by the Geopolitical Studies Group shows a striking north-south divide with nearly 80% of the world’s population agreeing with Professor Salamé’s observation. Three factors seem to combine behind this gradation of the developing world’s positions between benevolent and hostile neutrality, a sort of ni-ni, neither Nato nor Putin.

Between the utopias of Peace and Justice

First of all, there is a kind of utopia of peace, a feeling found in all popular cultures marked by the suffering of war, such as the Chinese Taïping or Celestial Peace, or the Concord of the gatherers-hunters of the Manden Charter in Mali (1236). From this point of view, Russian aggression is not at all popular in the developing world, including in China and India, which are presented as faithful allies of Russia.

But this condemnation is counterbalanced by another utopia, that of Justice, which this time works against the West. The wars of the post-Cold War unipolar world have left their mark on developing countries. The images of the terrible NATO bombings in Kosovo in 1999, Afghanistan in 2001, Iraq in 2003, but also Sudan, Somalia and of course Libya in 2011 are still playing in a loop, not to mention the unresolved Israeli-Palestinian conflict, and finally the war in Yemen, although led by Saudi Arabia but with the support of most NATO countries. The impression is that the defense of Western values ends where its interests begin.

There is finally a double wisdom of the well understood interests of the States and of the opportunistic behavior of the people in front of what is perceived as an umpteenth quarrel between two wolves of which they are in fine the victims. The terrible consequences in terms of the explosion in the price of basic foodstuffs and energy are there to prove them right. Almost 80% of the burden of the sanctions and the consequences of the Russian-Ukrainian war are falling on the poorest countries and populations, or breaking the post-covid economic recovery in many parts of the emerging world. The reported fall of Pakistan’s reformist Prime Minister Imran Khan, in the wake of soaring inflation, could be the first of many.

Opportunistic Wisdom

The map is more complex when it comes to the wisdom of the well-understood interests of states. However, the management of this crisis clearly shows the shift in the balance of power in the world for more than a decade. In particular, a posture prepared for a long time by Russia when it joined the BRICS group created in 2009 and expanded to include South Africa in 2011. Putin clearly opted for a South-oriented strategy and even accelerated it after his exclusion from the G8 following the annexation of Crimea in 2014. Since then, its role as a supplier of food, oil, and arms and security groups has accelerated significantly in Africa and Latin America. It has added to the strategic partnership signed with India in 1971 following the interruption of vital arms deliveries by Nixon’s United States in the midst of the Pakistan War. The Sino-Soviet reconciliation dates from 1989, twenty years after the border conflict between the two communist giants. Since then, it has grown considerably, with China thirsting for raw materials and advanced technologies, particularly in the arms and space industries.

Accelerated shift towards a new international order

Three major trends seem to accelerate with this war:
1- First, the return of a certain non-alignment 67 years after the Bandung conference in Indonesia. This conference saw 29 leaders of what was to become known as the Third World gather around the Egyptian Nasser, the Indian Nehru, the Chinese Zhou Enlaï and the Indonesian Soekarno, and refuse to take sides between the United States and the USSR, between a capitalism deemed too liberal and a communism deemed too illiberal. Africa and the Middle East, then largely colonized de jure or de facto, will gradually join the movement, which will count more than 120 countries at its peak in 2012.

The economic principles of its Charter deserve to be re-read. Beyond the political principle of non-interference in the affairs of others, they insist on the refusal of geopolitical blocs and for more equity in international economic relations. This will include environmental issues where the participation of developing countries in the fight against climate change has always been conditional, for example, on respect for the principle of equity in the reduction of CO2 emissions and compensation for the damage done by rich countries.

2- Secondly, the much greater than expected resistance of the BRICS group, which represents almost half of the world’s population and which was said to be undermined by internal contradictions such as the triangular rivalry between India, China and Russia, or the opposition between the three democracies and the two authoritarian regimes. China in particular is making important concessions to India, which is being courted by the United States, which wanted to make it Beijing’s Asian counterweight in the famous Indo-Pacific alliance of QUAD with Japan and Australia. The strategic weight of Russia for each of the other four partners has also proved to be a stronger glue than expected despite the high cost of this war for all. This is the case for China, which has invested massively in the Silk Roads via Moscow to supply the world’s largest consumer market (Europe), and which has no need of an early confrontation with the United States or of ruining its patient strategy of reconquering Taiwan.

3- The dollar system, which still largely governs the world, is suddenly experiencing a widening of the cracks that appeared at the time of the Iraq war or in the face of the sanctions imposed on Iran, two traditional suppliers of oil to India and China, for example. The former is negotiating a ruble/rupee account system to finance its military and hydrocarbon purchases and urgently settle its export earnings. The Central Bank of Russia, which is relatively independent of political power, has responded quickly to the sanctions by increasing opportunities to use the ruble to denominate and pay for hydrocarbon exports and to repay foreign loans in order to avoid default, even though the ruble is less likely to become an international currency than the renminbi. In recent years, China has indeed multiplied initiatives to make its currency a unit of account, settlement and even reserve after a long phase of experimentation initiated in 2008 with the Asean countries. To date, more than 50 countries have signed agreements with Beijing, notably in the context of financing associated with the Silk Roads. A report by Morgan Stanley estimated in 2020 that China’s currency could account for between 5 and 10% of global foreign exchange reserves by 2030. The war and Western sanctions should accelerate the shift.

The war in Ukraine is not over, but the economic order of the world seems to be shifting towards a more multipolar world, as shown by Turkey’s pivotal role in the negotiations between Moscow and Kiev.

The opinions expressed in this article are the author’s own and do not reflect the view of MarketExpress – India’s first Global Analysis & Sharing Platform or the organization(s) that the author represents in his personal capacity.