The difficult emergence of the new world order

Image: Jayant Kulkarni
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By JAIME CESAR COELHO & RITA COITINHO*

If the new multipolar order is already born, it is born to the sound of the drums of war, in a profoundly unequal and insecure world

War is an extreme event and, in the face of it, analyses, opinions, desires and media campaigns proliferate. In the midst of the turmoil that hit the international order after the outbreak of Russian military actions in Ukrainian territory, public opinion is disputed by a profusion of hasty calculations and assessments that either announce Russia as the great winner of the conflict that has just started, or as the great defeated. As in all political and social analysis, caution is also needed here.

This conflict cannot be treated in the same terms as the old Cold War, a period in which alignment with one side was symptomatic of a world defined by antagonistic social projects that fought a battle of ideas. The Manichaeism is understandable, since the main actors are the same, or almost the same: Russia and the North Atlantic Treaty Organization, NATO (read: USA). It is, however, necessary to avoid it, in order to produce an analysis of the historical course that comes as close as possible to reality.

Faced with the outbreak of the conflict on European soil, three questions can function as a starting point: (i) What are the root causes of the conflict?; (ii) What are the interests at stake?; (iii) Are we, in fact, witnessing the redesign of the world order? To do so, we will draw the lines of continuity between the decisions in the political and diplomatic field that created the environment for the conflagration and its consequences in the economic sphere. With this substrate, it will be possible to outline some of the strategic objectives of the US, the latter, in its siege of countries that threaten its hegemonic position, and Russia, in its strategy of self-defense and containment of the expansion of the Transatlantic Alliance.

 

From siege to war

Unsuspecting intellectuals (unsuspecting of being pro-Russian, mind you) with a long record of service to the US State Department, such as Henry Kissinger e John Mearsheimer, go back to the encirclement strategy adopted by the US towards Russia as the root cause of the current situation. Both point to the 2014 coup d'état, the event that deposed the elected president Viktor Ianukovytch, and the enlargement of NATO to Russia's neighboring countries as the beginning of the construction of a framework of tension that could have no other outcome than armed confrontation.

Em interview Portuguese Major General Raul Cunha indirectly quoted one of Sun Tzu's famous teachings to a television channel in his country: “when you surround the enemy, leave an exit for him; otherwise he will fight to the death.” Also for the Portuguese general, the origins of the conflict in Ukraine must be sought in the policy of encircling Russia implemented with the expansion of NATO over the last 30 years, crowned, so to speak, with the direct sponsorship of the 2014 coup d'état and the political and economic support by the European Union (EU) and the Military Alliance of an Atlanticist provisional government composed of extremist elements identified with neo-Nazism.

After the coup – in which the direct involvement of senior EU officials present on Ukrainian territory during the events was observed –, the attacks against Russian-speaking populations and unions – with the dramatic example of the burning of the House of Trade Unions in Odessa, which killed 42 people – became frequent, in a veritable scenario of civil war in Russian-majority regions.

Given the chaotic situation in the Donbass region, popular plebiscites led to the declaration of independence for Donetski and Lugansk, locations where the majority of the population has strong cultural ties (including language) with Russia. In this wake, Russia and Ukraine signed the Treaty of Minsk eight years ago, according to which there would be a process of demilitarization of neighboring areas and pacification of the autonomous region of Donbass.

Unilaterally, however, the Ukrainian Parliament modified the text of the agreement in 2014, reducing its scope and, in practice, making it impossible to withdraw heavy weapons from the region in conflict. Elected in 2019 without the participation of the eight million Russians residing in the breakaway republics (Ukraine's population is 44 million), the government of Volodymyr Zelensky has raised the tone (and the stakes) even more. Along with the claim to participate in the European Union, he resumed negotiations for Ukraine's effective accession to NATO.

Russia has sought diplomatic solutions to the issue for eight years. During this time, NATO pressure on the surroundings grew. And this is the background, without which it is not possible to understand the escalation of the conflict. Ukraine's entry into the Transatlantic Alliance would mean the installation of short-range missile launch systems on the border of Russian territory, missiles that are available, because the US abandoned the treaty on ballistic missiles in the administration of Barack Obama. As the negotiations for Ukraine's entry into NATO continued – until now with opposition from European countries, but with clear favorable US management –, the Minsk treaties became a dead letter, and Russia was left with no options. Surrounded, according to the analogy of Major General Raul Cunha, the Eurasian country counterattacked. It resorted first to diplomatic recognition of the independence of the breakaway provinces and then to military action. Its aim is clearly to neutralize the chances of further NATO expansion on its borders.

Since the beginning of military actions, an intense media campaign has been unleashed around the world aimed at disinformation and the spread of terror and Russophobic sentiments. This week, all information channels of Russian origin were blocked in Europe, unequivocally exposing what is the disposition of the “West” in relation to detente. It is interesting that, from the point of view of the so-called “West”, today's war has many differences with the wars of the bipolar world of the XNUMXth century. It is observed, however, the inconsistency of such a narrative, since what we have, at this moment, is not the confrontation of two antagonistic projects of society, but of exclusively geopolitical interests.

In this sense, the omnipresent declarations of “preservation of the democratic values ​​of the West” once again set the tone of media propaganda, opposing, however, what the hegemonic voices decided to call “autocracies” to the already discredited Western “democracy”. On the Russian side, there is also no ideological demarcation of a struggle for a new society, or for a new man, socialism. It is a sovereign capitalist country that seeks to guarantee its survival space on the world stage, facing a broad alliance of capitalist countries under the indisputable leadership of Washington. The stage of war is raw, without promises, without a future.

As much as European rulers embark on the US discourse in defense of freedom and self-determination of peoples, reality imposes itself, showing how this discourse is worn out. We are no longer in the initial years of building the Pax American, in the immediate post-war period, when paper still accepted many things. Since then, the US government has ventured into Vietnam and Korea, offered support and support to dictatorships around the world – as it still does with Saudi Arabia and as it clearly did in Latin American dictatorships in the XNUMXth century –, has enormously expanded its military presence across the globe, both through the expansion of NATO and through the construction of unequal treaties with peripheral countries, and continues to finance agitations and uprisings with the aim of overthrowing governments that, in some way, are not in line with its interests.

Armed interventions and bombings have increased significantly in frequency since 1990. Let Bosnia, Afghanistan (pictured below), Iraq, Syria, Somalia, Mali, Yemen and many other countries around the world say so. Interventions are made in such a way that the stage of war does not come close to US borders, uses war technologies that save the lives of American citizens and soldiers, and counts on means of communication in the US that converge with State strategies, very different, for example, from what happened in Vietnam.

In the West, unequal democracies, which resemble plutocracies, are being challenged internally. This goes for all of Europe and the US as well. The promise of freedom, of democracy, collides with a regressive reality in central countries, with a growing loss of participation of labor income in the amount of national income, with the dismantling of the social welfare pact, with the growing and selective police violence , in a perspective of the militarization of social life and the emptying of the meaning of political representation. Precarious work and social insecurity are no longer hallmarks of the peripheries, but also of central capitalist societies in the West. The super-exploitation of labor affects not only the old Third World, but also the big cities of the USA, and the old “developed” world.

US hypocrisy in terms of foreign policy no longer gives the great power a status of leadership but, increasingly, of domination by force. Among the two dimensions of hegemony, in Gramscian terms, the construction of consensus gives way to violence and to the position of strength, in the realistic sense of Realpolitik. O soft power remains one of the fronts of imperialism, increasingly linked to the game of cognitive manipulation through social networks and its machine for destroying the truth. It sounds hypocritical that the US government bases its speech against Russia, identifying the Putin government as the exclusive and preponderant actor of information wars and the fabrication of fake news, as the relevant information platforms, with their algorithms, are all owned by US citizens.

We talk here about bigtechs such as Meta (formerly Facebook), Instagram, Google, WhatsApp. The communications infostructure is American. The US is a powerhouse in creating information and controlling the transmission of data, something fundamental in the political economy of the digital and information age. Just look at the Swift system (English acronym for Worldwide Interbank Financial Telecommunications Society), which is responsible for most of the communication system that secures international payment flows.

 

The USA Bet

One might ask what does the United States gain from military tension in Europe and the possibility of even a continental-scale conflagration – given that leading European voices seem to prefer arming Ukraine to presenting themselves as parties in search of a diplomatic solution. It is possible for the US to gain a lot, in either scenario – excluding the extreme scenario of a nuclear conflict. Even though the course of events cannot be predicted, it can be said, without fear of being wrong, that the US is playing very high and that this could be the decisive game for its status of the world's only superpower. Let's see:

Since the 1970th century, international organizations have been created to facilitate international business, especially in the field of communications. Created in XNUMX, the Swift is one of them. For the US, the mechanisms that facilitate business and economic flows are part of a complex infrastructure of power that, under its control, can quickly be converted into war machines – something that the specialized literature calls economic statecraft. This is what we saw in these first days of the military conflict, when the USA and its NATO allies, but not only, demanded that some Russian bodies and citizens be kicked out of the payments system, and this after a series of measures already taken on February 22nd, which inhibit Russian activities in the American financial system.

These measures create chain adjustment effects, the total costs of which are difficult to calculate, affecting the stock market. commodities agricultural and mineral sectors, in addition to impacting – something that has been little commented on – confidence in international financial governance. It can be seen that monetary authorities have warned of the consequences of using Swift as an economic warfare mechanism, as was the case with the chairman of the G20 Financial Stability Forum Council and president of the Central Bank of the Netherlands, Class Knots.

The climb within financial statecraft extended to the blocking of reserves at the Central Bank of the Russian Federation, in an attempt to stifle the Russian domestic payment system and make the country's trade flows with the rest of the world unfeasible. Russia has diversified its reserve assets, increasing the share of the renminbi to 14,2% of the total and, in gold, to 23,3%, and significantly reducing assets directly allocated in dollars to 6,6%. This diversification and reduction of exposure to the US scrutiny may, however, be insufficient in the short term to face and resist the siege by the US and its allies.

It is difficult to predict the impacts that these sanctions would have on the international system. The use of sanctions in financial markets should, however, put everyone on their toes, as depending on Washington's moods is increasingly costly. This is not without implications for the “currency war” (currency war), or in the dispute that will take place between international currencies for global leadership. To the greenbacks (dollar) and red notes (remimbi) participate, in a very heterogeneous way, in international business, with a very large preponderance of the dollar, due to the infostructure dominated by the USA, the network effects that are difficult to replace and the fact that China is a closed economy in terms of capital account, with restricted access for non-residents to the domestic financial market (On the subject, see the book by Barry Eichengreen et al. How Global Currencies Work – Past, Present, and Future, Princeton University Press).

What matters to verify in this case is not how the world is, but how war can affect decision-making in the sphere of national states and how this can change the institutionality of the business world. Our hypothesis is that the effects of the war will be of long duration, because it is already the result of a long process of competitive movement between three fundamental poles: the USA, the Russian Federation and China. In the monetary and financial spheres, which are key elements in the dynamics of the global political economy, the sanctions movement pushes Russia into the Chinese sphere and reaffirms China's distrust of the need to expand its room for maneuver, reducing exposure in assets. denominated in dollars, in particular US Treasury bonds, as well as in the composition of its reserves, diversifying means of payments, reserves of value and creating payment infostructure mechanisms, as recognized by the American business analyst and associate editor of the newspaper Financial Times, Rana Forrohard.

According to Forrohard, which is based on the Capital Economic Report, since the annexation of Crimea in 2014, Western banks have reduced their exposure to business with the Russian market by 80%, while Russia and China have signed agreements, since 2019, to carry out their commercial exchanges in their respective currencies. The increase in business in remimbi can and should be slow, due to the low participation of red notes in the international payments system (2% against 54% of the dollar) and because the Chinese currency is not a store of value. The conditions for it to become a reality, however, rest on the long-term strategy of the Silk Road and the consolidation of trade flows on a global scale, with an increase in Chinese participation in the acquisition of real assets. offshore.

From the Chinese point of view, the current situation is very delicate. On the one hand, NATO expansion and frequent threats to Russia's stability, if consolidated, would create the ideal external environment for advancing the policy of containing Chinese expansion. On the other hand, war is also bad for China, as it increases transition costs. We call it "transition costs” the adjustment period from the crisis to the moment of a new unstable equilibrium. It would be much better for the Chinese than trends of globalization to run its course, as the Chinese competitive advantages were evident with its leadership in new communication technologies, as was the case with 5G.

The US reaction – with the neomercantilist escalation (in this case, the tariff war) from 2018, when significant tariff barriers were erected against China, followed by a speech of growing demonization of the Chinese government – ​​is not an isolated fact, or momentary, of government policy, but a State reaction, within a long-term strategy of defining areas of influence, of building a cultural battle in defense of the values ​​of the “West”, as well as of containing China as a power -Leader in the economic field. The alignments between Russia and China become more understandable if we place recent events within a larger perspective of geoeconomics.

From the US point of view, the war is not that bad. If the Russians are successful in neutralizing Ukraine, preventing it from joining NATO, the US will also have been successful in the task of resuming and consolidating its influence over the European Union, which had been shrinking with the growing agreements and the formation of ties. trade with Russia and China. By throwing Russia into the conflict, the US unifies the EU around NATO, as demonstrated by the German decision to abandon the agreement on the purchase of natural gas and the huge flow of European resources for the armament of Ukraine in less than a week of war. As for Ukraine, the attacked country, it will bear the human costs of a conflict, in which it is, exclusively, an instrument of the politics of the powers. By the way, Ukraine already bears these costs since 2014, when the euromaidan threw the country into a conflict between civilians.

In the State of the Union Address (SOTU, in the acronym in English) delivered by President Joe Biden, on March 1, 2022, in the US Congress, the different pieces of the chessboard of imperialism's strategy form a coherent mosaic. His speech summary is:

(I) Goodbye to globalization, fasten your seat belts, because inflation will come with force, and the United States commands the western hemisphere, that is: in its conception, Europe, Americas and Africa are an untouchable area of ​​US domain. Let us remember that this is not the first time that the inflationary adjustment appears as a major geopolitical adjustment. We already saw this happen in 1973. The great power, when moving in a structural way, produces an effect of reallocating factors, impacting trade and capital flows. The crisis has always been, as Biden said, an opportunity that only one nation has managed and is able to produce: the US. Therefore, the crisis originates in the US and is functional to US power;

(Ii) Biden stated that the US will not send troops to Ukraine, saying that they will definitely send equipment and personnel to NATO, further occupying Europe, already full of military bases of the aforementioned organization;

(Iii) the US president's reference to China confirms the trade war and launches its second stage, converging with the latest measures of the European strategy to deconstruct value chains in what is most sensitive from a technological point of view. The US focus is on breaking value chains, starting with China, in microchips and semiconductors. Biden's phrase was: “I warned Chinese President Xi that America would not accept being challenged”;

(Iv) Biden assumes the discourse that the inflationary costs will be great, but that this is the time to make the inflection, just as it was in the 1930s. Although he did not mention the Interwar period directly, he ended up doing so, referring to his personal story, telling that his father lost his job, but that later came the New Deal from Roosevelt, and things got better.

Whether Biden will be able to achieve all these goals remains to be seen. It is important to underline here that Donald Trump's neo-mercantilist stance continues with Biden, even though Democrats and Republicans have some differences in approach. What takes some analysts talking about the “next US war… against China”.

The high stakes in the conflict on the borders of Russia were already outlined in the Obama administration, having been highlighted by the then Secretary of State and later defeated presidential candidate Hillary Clinton and resumed with Biden. If Trump preferred a slightly more relaxed tactic in relation to Russia, with regard to China, the trade war was already under way in his government. It seems increasingly likely that the costs of the geopolitical transition will be high. The crisis that is announced will bring an inflationary process that tends to extend over time, which indicates that we will have strong turbulence in the “south” of the world.

The aggressive response of the United States is inserted in a context of loss of internal legitimacy, in a society that generates few quality jobs and that faces the advance of the intensification of the conflict between the bourgeois fractions in dispute. Exported to the world as a manifest destiny of the promised land, the old American dream is thus threatened by the strength of its capital in the world and by the weakness of the distribution of its profits internally. Something perhaps difficult to reconcile, in the face of intercapitalist competition on a global scale. Here, we refer to the political difficulties due to the historical monopoly bloc under US financial leadership.

For the American people, the reality of American way of life been the following, since the neoliberal ascension: expensive education, permanent indebtedness of families, health for the few, violence and epidemic drug addiction, financial casino, closed borders for the poor and massive incarceration of marginalized populations – above all, the black population, historically persecuted and marginalized. The homeland of free competition is, in fact, the paradise of monopolies.

Europe, on the other hand, lives with the specter of war, while its rulers have very little room for maneuver in the face of the US strategy in the new international order – Olaf Sholz says so. European social democracy is a pale memory of what it was in the past. Nothing promises beyond managing the neoliberal agenda, even more so now that it is returning to the US sphere of influence, abandoning the diversification initiatives that began with Russian and Chinese cooperation. This is, incidentally, at the origin of the rise of populism with a xenophobic and fascist bias throughout the Old Continent, fueled by the unresolved crisis and the dismantling of social welfare structures.

Russia, in turn, does not represent, like the former USSR, a reference of principles and the new, a dream to be pursued. Russia is a great capitalist and sovereign country, acting in defense of its autonomy, either in cooperation with Europe, as it has already sought to do, or with China, which is the new element produced substantively by the previous failure of Westernization (by Gorbashev , Yeltsin and Putin's first moment). The West moves by the raw sword of realism and the interests of self-preservation and the conquest of areas of influence, with the US seeking to consolidate, with relative success, an extended border to Russia. Under pressure, the latter looks for a way out that guarantees a greater degree of autonomy.

 

A new order?

If the new multipolar order has already been born, which would be a good sign for everyone, it is born to the sound of the drums of war, in a profoundly unequal and insecure world. The UN can no longer be more than a representation of an old Pax in decline and insists on not making room for a new order. The same UN that has been systematically attacked by US governments, whenever and wherever it presents itself as a multilateral space. The USA wants a UN of NATO, an Organization that accepts and endorses its actions. They want a colonialist UN, as indeed NATO has been. The new that is born keeps much of the old. We still have no reason to announce the eruption of the new order as certain.

War is the specter that directly affects the Old Continent and its citizens, but it affects all continents. War has different faces: economic sanctions, blockades, regime change through external interference (such as Ukraine in 2014) and war itself, with force of arms at work. It is a new world that is born without promises, without utopias, without illusions. In this sea of ​​mud and dystopia, the utopias that appear in the West are the Revival of fascism, in different versions and colors. The new order is still meaningless. For now, it's full of the old, and that's what needs to be faced.

Finally, the current movement is the result of a long eastward climb by NATO. It is also the result of a longer trajectory, of changing relations between the US and China, with geopolitical tensions that have intensified since the 2008 economic and financial crisis. trends globalist, through neomercantilism, and the perspective of a multipolarity that is not contemplated in the institutions of the international order. Everything spins, with more force, pushing national players to reposition themselves. At the moment, the war subordinates the European Union, which is already the big loser, with the US relaunching NATO and preparing a strong adjustment for the countries on the periphery. The war hinders Chinese strategy and seems to favor US interests.

The future is uncertain, as it always has been, but calculations need to be made and strategies built based on a real-world vision. We can and should aim at what we would like the world to be, however, without cultivating fantasies. The old insists on dominating, and the new is not ready to lead.

* Jaime Cesar Coelho is professor of economics and international relations at UFSC.

*Rita Coitinho holds a PhD in Geography from UFSC.

Originally published on the website of OPEU .

 

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