Have we been here before?
Economics is going to set the rules of interstate relations in the world and the current economic crises would drive the world into the emergence of a new competition of alliance structure, dividing the world into two parts ie pro-west and anti-west blocs. Today once again, the rise of antagonism over control of economic resources such oil and natural gas is going to erupt into an imperialist war around the Eurasian region that gradually advances towards the risk of a world war.
Since the economy is central to state affairs, countries keenly pursue economic surpluses, which enables them to produce more than they need, which ultimately results in sustainability of the established standards of living. The economic objectives and economic interests have bigger meaning for prosperous and developed states than developing or under developed ones. For that reason, by the year 1941, an open trading regime had become a major foreign policy goal of President Roosevelt’s administration. This was especially emphasised in Article IV of the Atlantic Charter’s transcript highlighting the right of every state to have equal access to indiscriminate terms of trade and to the raw materials of the world.
Today the Russian Federation is being pushed to bankruptcy through imposition of severe economic sanctions by the US, as it was already under sanctions by the European Union over its support to the armed separatist movement in Eastern Ukraine
The origin of setting up US foreign policy goals, focusing on economic hegemony through capitalism, was initiated in 1944 during the Second World War, when the United States, Britain, and 42 other countries met at Bretton Woods for drawing-up a framework for economic recovery of Europe and the expansion of trade in the world. This framework continues to be influential even today. At that time the Bretton Woods meeting resulted in the creation of three recognised institutions, the World Bank, the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT), which later on became the World Trade Organisation. IMF got a significant role to play by valuing all the currencies of the world in terms of US dollar once the Gold Standard was abandoned. Today, western dominated economic regulators have significant influence over internal and external affairs of most countries. The fragile economies are easily manipulated and therefore compelled to submit before the wishes of global powers, otherwise they face severe economic sanctions, which stifle the economy to the point of bankruptcy.
Likewise, today the Russian Federation is being pushed to bankruptcy through imposition of severe economic sanctions by the US, as it was already under sanctions by the European Union over its support to the armed separatist movement in Eastern Ukraine. The EU’s fears can be anticipated by the comments of EU Summit Chairman Donald Tusk that for them Russia is a strategic problem and the biggest challenge is Russia’s approach not only to the Ukraine but also to Europe.
Russian President Putin has also termed US led NATO as Russia’s biggest enemy. However, economic survival is the top priority for Russia and in that case, there are two major multilateral options available to overcome its economic depression ie the Shanghai Cooperation Organisation (SCO) and the BRICS. Through BRICS, Russia is striving for stronger integration predominantly through crafting a common financial system and a single currency to shun the chances of stagnation and ensure its access to crucial technical developments. In May 2014, China and Russia signed an energy agreement worth $400 billion under the BRICS umbrella. Under the agreement Russian energy giant Gazprom will supply a daily 3.75 billion cubic feet of liquefied natural gas to China for 30 years. The most important point here was their commitment to deal either in China’s Yuan or Russia’s rubble, which scrapes the US because mostly such business has been done in US dollar, which brings a requirement for countries to stock US dollar reserves. This demonstrates the world that Russia and China are committed to the agenda of undermining the US dollar.
Russian President Putin has also termed US led NATO as Russia’s biggest enemy. However, economic survival is the top priority for Russia and in that case, there are two major multilateral options available to overcome its economic depression ie the Shanghai Cooperation Organisation (SCO) and the BRICS
In persuasion of these objectives, the Shanghai Cooperation Organisation (SCO) also holds significant importance in terms of its counterweight against western blocs ie EU and NATO. Both Russia and China have a distinct stake in trying to reduce the influence of America’s military power in Central Asia. Russia has hoped to use SCO as an antidote to strengthen its monopoly in oil and gas transit in Asia. While on the other hand China would like to use SCO to facilitate in presenting Beijing as a dominant player of regional trade and investment. Although SCO is much larger in terms of population, land and natural resources in comparison to North Atlantic Treaty Organisation (NATO) and the European Union, yet it cannot offset the economic power of the United States. To further boost economic cooperation, China’s proposal for building an interstate pipeline network is essential for SCO’s organisational effectiveness. Presentation of this proposal clearly highlights the extent of Beijing’s interests in gaining access to energy resources in the region. Such an investment made by China could result in significant improvement of the commercial potential and infrastructure of the region. Generous economic assistance provided by Beijing brings forth a question as to why China is trying to build a traditional vassal relationship between itself and Central Asian states through investment, trade and military cooperation. There is a growing need of further economic and military cooperation between the SCO powers Russia and China to equally stand against the NATO, EU and other western dominated institutions, to counter-balance it beyond the region. Fortunately, SCO members have an edge regarding economic factor over NATO states that enable them to exercise a huge amount of power in the international arena. The rise of China as a global economic power along with the other oil rich SCO member states would yield a tremendous on global financial institutions.
China seems to throw a financial lifeline to Russia and risk a showdown with the western side. With its huge foreign currency reserves China can easily settle Russia’s debts. But after calculating the current rubble crisis and analysing the political and economic dynamics, there is concern whether the tension is gradually progressing towards another Cold or World War, because the current conflict resembles the time of the Great Depression and the rise of fascism, which were in part a consequence of countries pursuing discriminatory trade policies during the interwar years.
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