Avoiding Western networks

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Great powers rise and fall on the tide of history, but we lack the analytical tools to be able to map power transitions with any degree of confidence while they are actually occurring. The process of transition is not always peaceful and linear, but often jagged with friction. As the old and new powers cross each other on the way down and up, they create potential zones of tension that may lead to armed conflict through different pathways.

A declining power may fail to recognize or refuse to accept its fading economic dominance, military might and diplomatic clout, persist in expecting and demanding respect due to its former status, and try to make the rising power pay for the perceived lack of respect. Conversely the rising but not yet fully risen power may exaggerate the scale and pace of its declining rival’s fall or its own ascent and provoke a premature confrontation.

Russia may no longer be a great power, but it acts like one. Or perhaps it still is, but the West fails to treat it so. With either miscalculation, Europe is in trouble. Both the U.S. National Intelligence Council (2008) and the United Nations (2013) have highlighted how the transfer of global wealth and power from the North to the South is historically unprecedented in speed and scale.

How should the institutions of global economic governance reflect the changed balance of economic power? Given toxic Washington politics, can any U.S. administration recalibrate policies to the new geopolitical realities?

And what does all this mean for the liberal economic and political global orders, not to mention the many regional security orders, including in the Asia-Pacific, underwritten for many decades by the U.S.? Consider the China-U.S. equation in the contested maritime environment of Asia-Pacific. In recent years Beijing has adopted a markedly more aggressive posture vis-a-vis territorial and maritime disputes with Japan, Vietnam and the Philippines.

It’s not in the U.S. interest to provoke full-fledged confrontation over relatively minor incidents like a small boat sunk, a submerged reef captured or an uninhabited rocky island contested. But each probe tests the patience and resolve of the regional country and gradually increases skepticism about the reliability of the U.S. security guarantee.

Washington cannot challenge Beijing on every provocation, yet each provocation that goes unchallenged improves China’s leverage over its neighbors and weakens America’s standing.

Along the misperceptions and miscalculations resulting from such equations do the bloody rivers of human history flow into the ocean of oblivion for once-great powers. Short of armed conflict, the struggle for power can also occur over the capacity to write and enforce the rules, norms and laws that govern international relations, including access to markets and resources.

In a July 23 article, I noted how the major deliverable from the sixth summit of BRICS (Brazil, Russia, India, China and South Africa) in Brazil in July was economic in form and content — the creation of the New Development Bank based in Shanghai with an initial capital subscription of $50 billion that will be progressively doubled — but its primary motivation, significance and limitations are geopolitical. They also created a $100 billion Contingency Reserve Arrangement to help developing countries avoid short-term liquidity pressure, strengthen the global financial safety net, complement existing international arrangements, and foster more intra-BRICS cooperation.

On Oct. 24 in Beijing, 21 Asian countries, including India and all members of the Association of Southeast Asian Nations except Indonesia — but not Australia, Japan and South Korea — signed a memorandum of understanding for a new Asian Infrastructure Investment Bank. The AIIB will have its headquarters in Beijing and an initial capitalization of $50 billion.

The U.S. has raised concerns about the bank’s governance, environmental standards and debt sustainability. Secretary of State John Kerry was reported to have lobbied Australian leader Tony Abbott against joining the AIIB as a founding member with the opportunity to shape its evolution. Japan’s proposal for an Asian Monetary Fund after the 1997 Asian financial crisis was stillborn as the U.S. objected. Today China and BRICS can shrug off U.S. dissent.

The new banks are a direct challenge to the World Bank and the Asian Development Bank — dominated by the Euro-Atlantic and Japanese allies — in the world’s most dynamic economic region. The World Bank’s numerous critics charge that it has failed to lift countries out of poverty and instead has generally deepened poverty and created dependency, although foreign creditors have done well from its projects.

The operations and governance structures of the International Monetary Fund and World Bank are seen as rigged against the voice, vote and interests of developing countries and skewed toward the industrialized bloc.

Speaking at the Valdai Club of Russia experts in Sochi, also on Oct. 24, President Vladimir Putin delivered an extraordinarily tough diatribe against Washington, insisting that U.S. policies had torn apart the existing rules of global order and brought chaos and instability. The Ukraine crisis was the result of “a coup d’état carried out with the support” of Western powers.

They were also shortsighted in Afghanistan, Iraq, Libya and Syria, such that Americans “are constantly fighting the consequences of their own policies, throw all their effort into addressing the risks they themselves have created, and pay an ever-greater price.”

Moreover, “unilateral diktat and imposing one’s own models” leads to conflict escalation and the growing spread of chaos with the authority vacuum quickly filled by neo-fascists and Islamic radicals. The “period of unipolar domination has convincingly demonstrated that having only one power center does not make global processes more manageable.” Rejecting charges of wanting to recreate a Russian empire, Putin insisted: “While respecting the interests of others, we simply want our own interests to be taken into account and for our position to be respected.”

All five BRICS have a list of irritants in relations with Washington and a strong vested interest in protecting strategic autonomy vis-a-vis the U.S. in global affairs. According to India’s former foreign secretary Kanwal Sibal, “the West’s bullying instincts” based on “unbridled self-righteousness and arrogance” must be countered by rising countries building their own political, economic and security networks.

The West’s addiction to sanctions provides a powerful incentive for BRICS countries to develop long-term alternative financial institutions for parking money and moving it internationally.

The growth of BRICS-created and China-based and led parallel global financial architecture is evidence of intent and ability to rewire the global governance system so that it no longer runs through the West. One could interpret Putin’s Valdai Club speech as yet another post-imperial tantrum by a delusional would-be czar.

The larger geopolitical import of his remarks — reminiscent of his combative 2007 Munich speech — is that it signals the end of a search for a mutually beneficial Russia-U.S. partnership in which Moscow cedes a global leadership role to the U.S. in return for a privileged Russian role in Eurasia. Russia will look to forming coalitions with others so that collectively it can circumscribe and ring-fence the exercise of U.S. economic and geopolitical power and BRICS countries can sustain their policies against concerted Western pressure.

Ramesh Thakur is a professor at the Crawford School of Public Policy, Australian National University