Monday, November 24, 2014

The Post-Russian World Order

BRUSSELS – Russia’s intervention in Ukraine and the ensuing Crimea crisis is wrongly seen as the start of Cold War II. But, while the fallout from Russian President Vladimir Putin’s defiance of international law and public opinion will be very different from that of the Soviet Union’s long campaign to defeat capitalism, the geopolitical ripple effects are certain to be just as far-reaching, if not more so.

Russia is set to sideline itself from the global economy, and by doing so it will usher in a new era in international relations. International sanctions will be only the first consequence. Markets and banks penalize uncertainty, so the Russian economy will progressively be cut off from international trade and investment and consigned to a future of slow or no growth.

That is Russia’s own funeral, of course. The wider consequences will be a shake-up of international politics and of governments’ attempts to address common problems, ranging from global governance to climate change. The result may even be positive, with events in Ukraine unexpectedly opening the way to a significant realignment of fast-emerging countries whose twenty-first-century roles will be decisive.

The first result of the West’s standoff with Russia is that it spells the end of the BRICS. For a decade or more, the grouping of Brazil, Russia, India, China, and recently South Africa has been a major feature of world politics, challenging the might and influence of industrialized Europe and America. But, with Russia set to become a pariah, either pushed out of or withdrawing from global markets and multilateral forums, the days of BRICS summits and institutions, such as the group’s embryonic development bank, appear to be numbered.

The BRICS may not be formally dissolved, but it is hard to imagine that the other four members would be willing to place their own positions in a globalized economy at risk by being drawn into Russia’s quarrel with the world. Bit by bit, the idea that the group represents a coherent voice in world affairs will be quietly buried.

A maverick Russia, bent on pursuing assertive foreign policies and creating a “Eurasian Union” trade bloc, poses obvious dangers. The more important outcome, though, will be how Russia’s former BRICS partners realign with other major emerging economies in the G-20.

Cue the arrival on the world stage of MIKTA – a new group made up of Mexico, Indonesia, (South) Korea, Turkey, and Australia. These countries’ foreign ministers plan to meet soon in Mexico to discuss a joint agenda on global governance issues. When they first met under the MIKTA banner on the fringes of last September’s United Nations General Assembly, the initiative seemed little more than a club for countries that for one reason or another did not qualify for BRICS membership but fell short of major-power status.

Russia’s self-inflicted difficulties will change all of that. With the BRICS alliance set to be transformed almost overnight into something of a very different character, the way is cleared for a much larger grouping of countries that share many of the same concerns.

What the MIKTA countries share are rapid economic growth and increasing influence outside of their own borders. They have development problems, but they are also models of economic dynamism and innovation with a substantial stake in the way post-WWII global institutions and rules should be reshaped. Many of their challenges and ambitions dovetail with those of the BICS (the BRICS, minus Russia).

In the alphabet soup of international politics, a nine-member jawbreaker like BICSMIKTA might eventually prove too unwieldy to be workable. The bottom line, though, is that Russia’s coming absence from the multilateral scene will be a catalyst for new thinking on global challenges. A key question is whether that will revive the G-20 or destroy it.

It seems clear that Russia’s membership in the G-8 will soon be revoked, and that the group will revert to its origins as the G-7, comprising the United States, Canada, Japan, Germany, France, the United Kingdom, and Italy, plus the European Union. But where that will leave the G-20 – including Russia’s continuing participation in it – is much less clear. The G-20 has been a somewhat disappointing mechanism for tackling global issues, and the idea of bringing emerging economic giants into the same forum as the leading industrialized ones has yet to pay off in terms of measurable achievements.

What is clear is that in today’s increasingly interdependent world, Putin’s distancing of Russia from so much of the international community looks self-defeating. A generation after the collapse of communism, Russia’s economy and its people’s living standards have started to recover. But its fast-shrinking population, and its reliance on energy and commodity exports, makes that recovery very fragile. The Kremlin will soon discover that it is far more vulnerable to outside developments than it has so far acknowledged.

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    1. Portrait of Christopher T. Mahoney

      CommentedChristopher T. Mahoney

      As someone said a few years ago, the emerging markets are the developed markets plus leverage; in other words a high-beta bet on global growth. They add nothing to a portfolio besides risk and volatility.

    2. Commentedj. von Hettlingen

      Mr. Merritt, since the demise of the Soviet Union, Russia has become a middleweight bully. It has neither the hard nor the soft power to play an important role on the international stage. With Putin's uniteral move in Crimea, he has shown total disregard for international law and the "post-Russian world order" will see a resurgence of countries in Putin's backyard, aligning themselves more closely.
      Russia has already been expelled from G8. Its membership in G20 and BRICS will be a subject of deliberation among other members. The next BRICS summit will be held in Brazil in July and Austrialia will host the G20 summit 2014 in November. As the G7 is made up of Western democracies, the unanimity to kick Russia out was easily reached.
      Does Mr. Merritt believe that "The first result of the West’s standoff with Russia is that it spells the end of the BRICS"? Brazil might gang up to impose sanctions against Putin, as it doesn't depend on Russia's energy supplies. South Africa's Jacob Zuma is a leader, who has no integrity and ingratiates himself with the rich and powerful. India and China don't share our concerns and will exploit Russia's geopolitical isolation to extract better deals with Moscow. Indeed, Russia will remain an important partner within the BRICS. Yet Putin knows well that he doesn't have an easy game with its members, which don't share much in common, culturally and ideologically.
      Russia and China set up the Shanghai Cooperation Organistaion (SCO) in 1996 to sort out border disputes between China and its post-Soviet neighbours. The organisation, originally called the Shanghai Five - China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan - was joined by Uzbekistan in 2001. Since then SCO has developed as an organisation concerned with regional security, focusing on counter-terrorism, defence and energy cooperation. The rising importance and coherence of the SCO worries Washington - as well as its closest Asian ally, Japan.
      The SCO is becoming a rival block to Western organisations, yet Putin wants something of his own, without China, so he can be the boss. His "Eurasian Union", a "trade bloc", will make up of former vassal states of the Soviet Union. He is enraged that Ukraine will not be part of it. Will he still go ahead with his pet-project?

    3. CommentedRik Rijs

      Why should Putin care? Israel got away with a brutal occupation that is lasting for 47 years now. Never did the West consider it in violation of the international laws. No sanctions at all. On the contrary: strong support from the West. Even from Germany, with it's long history of occupying other countries. A case in which the Germans can't say wir haben es nich gewusst. And will India and China follow the Western boycot? They may profit from cheap gas. With their poor populations they have other priorities. A Western boycot may be a gift from heaven for them. And will improve their competitiveness. And in the long term? The West should know that Ukraine, even after Maidan, is ruled by oligarchs. Corruption and despotism is their trademark. I really wonder if Ukraine will be a democracy 20 years from now.

    4. CommentedGerry Hofman

      Now i understand that all these experts have been given the task of writing an essay to explore the many different and colorful ways that Russia, under the guidance of Putin, will come to a crashing halt and surely collapse. And they apply themselves with exemplary zeal to this. At present the only person in this team of writers with some common sense, in my view, is Gareth Evans, who is still prepared to deny any purpose to the world's doomsday weapons. Can't we just go back to having some intelligent discussions instead of this round of state sponsored political advertising?

    5. CommentedEdward Ponderer

      I think Hari Naidu calls the external reality of the matter right here, and Zsolt Hermann touches upon a longer term, deeper reality here.

      Listen how Mr. Kerry takes "peacemaker's" pride in America's reconciliation with Vietnam. Er, Hanoi withdrew from Saigon (remember that name) right, or perhaps they brought back the Boat People? Yep, there is nothing to be prouder of than selling out the powerless, and allying yourself with those who have crushed them the moment it is in your national interest. ["And how many divisions have the Ukrainians?"] And they taught that old chemical demon Assad a thing or two, yes indeed. And of course we see how tough the US and EU have been regarding Iran's nuclear development--please Mr. Rouhani, anything you want sir!... Now Mr. Putin has those soft blue eyes, and can also tell us the right pretty pretty diplomatic words, and certainly long after we vaguely remember that crimea was the Russian word for gas station (or was that ukraine?)--in a year of two if that long, the US and EU will "reconcile"with their good Eurasian Union trading partners too. -- Russia's funeral? They'll be drinking vodka and doing the bear dance. Like Elsa of the famous song from Cabaret, Russia will be the happiest corpse you've ever seen.

      But deeper, long term--Mr. Hermann sees it. No one will be dancing, drinking, or trading anywhere if this keeps up. That is, no agreement worthe the paper its written on internationally, nationally, locally, etc., etc. Without honor and trust, who guards the guardians indeed. We are working hard to destroy the last vestiges of individual ethics, family values, and sense of community even at local levels. All this in a world being forced to globalize, literally by mathematical forces. A baseball is thrown to us, and we can make the winning catch. But instead of trying to catch it with a mutually responsible, collaborative joint glove, we are trying to do it with our teeth--separate, with cavities and big holes between them. We can expect at least a trip to the dentist office, probably the hospital, and potentially the morgue--but certainly not the baseball hall of fame.

      We need to educate ourselves to integration, to promote its proper social environment through the media, and find our way to mutually responsible collaboration over ruthless, destructive competition. In short, that baseball is heading over the plate, and we better start getting that glove up in front of our face.

    6. Commentedhari naidu

      Giles is either getting old or listening to spring birds in Brussels.

      First, neither Merkel nor Obama can afford to seek to punish Putin – other than economic sanctions - for the plebiscite on Crimea and its de facto annexation. The historical fact however is that Crimea – like Kiev – was the citadel of ancient Tsarist Russia. And Crimea is finally restored to its Russian land lord; but it will need to be modernized and developed, if it eventually becomes the trading nexus of Putin’s Eurasian Customs Union.

      Second, what about international law and UN Charter when GWB invaded and occupied Iraq? Afghanistan? Was that not incendiary to global politics? Are you practicing double-standards or what?

      Third, China and Indian political support was mentioned by Putin in his address to both Houses of Duma in Kremlin. So your vision of BRICS sounds like a day-dream. The rest of your perspective is geopolitical nonsense. Principally because Germany and its more than 6000 (DAX) firms and their Trillions of FDI in Russia is Putin’s bridge to Berlin.

      Fourth, as far as G-8 and G-20 future goes, Merkel has advised both USA and its EU partners that there is no question of removing Russia permanently. Berlin has only agreed to suspension of membership.

      Finally you sound very much like the (UK) guy from Chatham House comparing it to Hitler’s invasion of Sudetenland.

    7. CommentedZsolt Hermann

      The article is anticipating "new alliances".
      The problem is not who is joining whom, but on what basis.
      At the moment nobody is making genuine agreements, even international laws do not work as nations, individuals only accept anything when it serves their own self-interest.
      Today the western countries want to uphold the " international laws", yesterday they did not need them as they had to pursue selfish goals above them.
      This is the great lesson of the Ukrainian crisis, today nobody has any moral ground to criticize or stop anybody else.
      Suddenly we fell into a vacuum, Russia opened up a very dangerous and unpredictable Pandora's box.
      Of course I am not blaming them since they simply reacted, following the line established by the West, especially by the US, thinking they were above anybody else, free to do whatever they wanted. Now suddenly someone else stood up and nobody knows what to do.
      The bad news is that in a global, integral world this "free for all", "grab whatever you can" attitude represents a body where cancer breaks out in multiple locations.
      We are all sitting on the same boat, and even before the boat started sinking from multiple holes, now the boat is in an extremely dangerous state.
      If we continue with our present behavior, attitude we will reach the edge of the cliff and fall within a very short time.
      Today things can escalate within days, the Ukrainian conflict reached today's state within weeks.
      In a global, integral system we evolved into, where everybody, individuals and nations alike are fully interdependent, we have to rise above our differences and hatred, and start establishing new negotiations, agreements based on equality, mutual responsibility.
      The previous ruthless competition, imperialism, succeeding at the expense of others has to give way to globally mutual complementing cooperation.
      These are not moral, ethical slogans, requirements any more, we are endangering our own survival.

    8. CommentedStepan February

      More like Post-American World Disorder
      In a world where semi-developed countries like the BRICS or MIKTA can be aggressive without developed countries' permission, nothing is all that clear.
      When the policeman leaves the street, the youths take off their boyscout uniforms.
      How long until China finds an opportunity to adjust the status of Taiwan and South China Seas without being punished? Or Turkey flexes its might? Or India shoves Pakistan?

        CommentedAleksa Mustur

        I agree with you. General rules of sovereignty of countries should be imposed, so the future potential conflicts - as ones you mentioned - could be prevented. However, I have to note that this crisis with Crimea is, in reality, result of the NATO intervention in Kosovo, where NATO; lead by USA; attacked Yugoslavia without mandate of UN General council and helped Kosovo (at a time part of sovereign county, just as Crimea is/ was part of Ukraine) gain independence. So, I hope you see my analogy. I have to say this is not argument against Kosovo independence, as it is not my concern, but against double standards. Kosovo case introduced precedent in international order, that is now legitimizing Russian actions in Crimea. Kosovo is boomerang that is returning to US and EU as Crimea. I am sorry to note that this analogy between Kosovo and Crimea is almost completely ignored by US and European media.

    9. CommentedJose Martins

      I would only like to call attention to the fact that the association of Brazil, India China and South Africa, without Russia, exists formally since Nov. 2009. It is called BASIC( This new acronym you created is even less likely to be remembered than the ones the investment wolfs of Wall st. create every week to steal from greedy uninformed investors. Congratulations! The other forecasts are not worthy of comments, sorry.

    10. CommentedLászló-Zoltán Szalay

      Now this is some nice idealistic picture. Truth be told I think that the only think that matters for banks and markets is the PROFIT. If the governments of major powers don't step up their game the Russian economy will not crumble or not even weaken. Russia`s economy is literally gas propelled and without the EU governments, China and Japan cutting them off from their markets political isolation won`t matter. Banks will still invest since they see opportunities for profits, they see a leader in Putin who strengthens Russia`s position and the Eurasian union is also an idea that could very well launch a new economic growth in the region.