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觀點研討, 更多分歧, 現狀, 中國勝, 甚至返回美式和平 觀點研討會 More bifurcated? The status quo? China wins? Or even a return to Pax Americana? A SYMPOSIUM OF VIEWS https://static1.squarespace.com/static/5d59c0bdfff8290001f869d1/t/62bb31211d201742b75e19a7/1656434979403/TIE_Sp22_WorldAfterUkraine.pdf To what extent will the war in Ukraine, and the overwhelming global support for debilitating economic sanctions against Russia, lead to, first, a further decline in globalization, and second, a sharp turn to the bifurcation of the industrialized world powers? On one side would be the United States, Europe, the United Kingdom, Japan and other Pacific allies, and others. On the other would be Russia, China, Iran, North Korea and (maybe) India. Bifurcation of the global system could, for example, entail a move to separate currency systems, trading systems, SWIFT-like communications systems, technological infrastructures, and separate rules for space technologies, ocean navigation, even for accepted rules for warfare. Is this theory of a sharp turn toward bifurcation compelling? If so, where does India, with its large navy, fit in? In the United Nations vote on the Ukraine issue, India voted on the side of Russia and China. To what extent has Vladimir Putin’s handling of the war forced China in the direction of global bifurcation a lot sooner than Beijing would have preferred? Could this move lead to the potential return of Pax Americana with the West now seeming to believe in the American democratic ideal perhaps more than many Americans do? Or when the war is over, will the world simply return to the status quo? Or, as some are arguing, could China end up the long-term winner? The World After Ukraine Over two dozen international policy strategists offer their views.
Global bifurcation is imminent. By SCOTT BESSENT Founder and CEO, Key Square Group The world is on the cusp of a Great Reordering. Nobel Prize laureate Daniel Kahneman’s extensive writings on the bias of individuals and nation states to maintain status quo systems reveal an overwhelming inclination to preserve the current state of affairs. Retaining the current global trading systems and economic supply chains are clearly no longer plausible. Global bifurcation is imminent. Initially, this ambitious rearrangement will be largely drawn along developed and emerging lines. Western leaders achieved a bittersweet victory in a recent United Nations resolution calling for complete Russian withdrawal from internationally recognized Ukrainian borders: 141 out of 193 countries voted for the resolution. Countries voting against or abstaining represented more than 50 percent of the global population. Those countries abstaining were overwhelmingly emerging economies, including China and India. Heavily dependent on Russian oil, wheat, and vital commodities, they cannot survive immediate disconnection from Russian products. The world population’s twenty-four-month strife with Covid and the Russian assault on Ukraine have roused officials and citizens in Western democracies from complacency to action. In what may be the most important speech in her distinguished career, U.S. Treasury Secretary Janet Yellen outlined in clear and bold terms the early framing of a new U.S. doctrine, calling for “friend-shoring.” This crisis could not have come at a worse time in both the debt and inflation cycle for the global economy. Having substantially increased government debt levels to support households and businesses for the past two years, Western leaders must now come to terms with balancing rising inflation and debt service costs with additional defense and energy spending. The fall of the Berlin Wall yielded what came to be known as the peace dividend: military spending was diverted back to domestic priorities. Should we not expect that heightened geopolitical tensions will have a high price tag? Will governments transition from the increased Butter spending to combat Covid to increased Guns outlays to protect against the rising threats of autocracies? Given the current environment, should they attempt both? As the U.S. and Western allies implement friend-shoring, they should apply a muscular form of trade and economic statecraft to other countries—making it clear that qualifying as a most-favored-nation provider in the new supply chain paradigm will require adherence to a code of Western democratic values, regardless of a nation’s internal governance system. Naturally, as trade splinters along these lines, the role of the U.S. dollar in global payments and reserves will decline. However, no other currency alone will likely match the dollar’s central role. Rather, as new trading and security blocs coalesce, the invoicing currency of choice and the composition of foreign exchanges reserves will shift in kind. In conclusion, these shifts are bound to carry shortterm costs in the form of higher prices and less abundant product availability. However, the Covid-19 shock demonstrated the incredible resiliency and adaptability of free, democratic societies. The views presented in this article are purely the opinions of the author and are not intended to constitute investment, tax or legal advice of any nature and should not be relied on for any purpose. <<<<<<>>>>>> The war in Ukraine has given new life, and new purpose, to the security system in East Asia that arose out of the destruction of the Korean war. By DANIEL SNEIDER Lecturer in East Asian Studies, Stanford University Outside of Europe, the impact of the war in Ukraine is most visible in northeast Asia. Naked Russian aggression, carried out with the strategic backing of China, has reinvigorated the Cold War architecture forged by a similarly brutal war fought on the Korean peninsula more than seventy years ago. The Korean War offers a compelling historical precedent for the war now embroiling Europe. In the late 1940s, U.S. policymakers clearly grasped the strategic importance of Japan, both as an economic power and as a frontline for the American military presence in the region. Korea, on other hand, was a matter of debate. With the formation of rival states in the north and south in 1948, the United States had moved to reduce its military presence in South Korea. While some American policymakers argued that South Korea was key to the defense of Japan, the U.S. military disagreed. They had their eyes on Europe and the Middle East, where the Soviet challenge was manifest. The Communist victory in the Chinese civil war in 1949 bolstered the view that U.S. interests lay only in defending an offshore chain of islands that ran from Alaska through Japan, including the military bastion on Okinawa, and down to the Philippines, a view famously articulated by U.S. Secretary of State Dean Acheson in a January 1950 speech. The American defense line pointedly did not include the island of Taiwan, where the defeated Kuomintang had fled. Soviet leader Joseph Stalin gave the green light to the North Korean invasion of the south in June 1950, convinced that the United States would not defend it and was preoccupied with Europe. Chinese Communist leader Mao Tse-tung, focused on gaining control of Taiwan, reluctantly agreed to support the invasion. It was a profound strategic miscalculation. President Harry Truman, seeing the invasion as the start of a global challenge from Moscow, made the fateful decision to intervene in Korea. The West and its allies rallied to the defense of Korea. When General MacArthur’s troops neared the Yalu river border with China, Mao took the equally portentous decision to send a massive army into battle. The United States put the 7th fleet in the Taiwan straits and Chinese plans to finish the civil war were shelved. The result of these events was the creation of the Cold War security system in East Asia that remains remarkably intact to this day. Ukraine offers an eerie repeat of those events. The Russians have again miscalculated about American and Western will. China has again become a partner to this strategic disaster. Doubts about American staying power, fueled by the rise of China, are fading. In Korea, the Ukraine crisis clearly aided the narrow victory of a conservative in the presidential election in March, one committed to a closer security alliance with the United States, improving relations with Japan, and confronting North Korea. Japan has responded even more intensely to the Ukraine war, seeing it as a global struggle with clear reverberations for northeast Asia in the need to defend Taiwan and significantly increase defense spending in response to the challenges from China and North Korea. The Japanese public has embraced the Ukrainian struggle with surprising emotionalism. Ukraine has tightened the alliance system that stretches from Korea, Japan, and Taiwan down to Australia. The Japanese, with an emphasis on careful diplomacy, are working to bring India and Southeast Asia out of their currently non-aligned status, though it may take time. Whether China comes to regret its decision remains to be seen. Xi may be too locked into his bet on Putin to retreat. But what seems certain is that the war in Ukraine has given new life, and new purpose, to the security system in East Asia that arose out of the destruction of the Korean war. <<<<<>>>>> Not an end to globalization, but a temporary check. JAMES A. LEWIS Senior Vice President and Director, Strategic Technology Program, Center for Strategic and International Studies Globalization ebbs and flows with the tides of conflict. The highwater mark for last round of globalization was a decade ago. It has been receding ever since, as Russia and China assert themselves, as countries extend sovereign control over technology and trade, and as nations rejected the U.S.-centric world created in the 1990s. This is not the Cold War with two camps glowering at each other across an Iron Curtain. There are too many interconnections and too many other countries involved for globalization to be easily unraveled. This is not an end to globalization, but a temporary check. The Ukraine crisis accelerates globalization’s retreat as sanctions broke links in finance and trade and as countries like China quicken their efforts to become independent from the United States. Ukraine highlights decision points in a new competition. For China, its ambitions have received a temporary check. It, like Russia, assumed the West was in decline and could be challenged with impunity. The quick Western response and damaging sanctions on Russia were unexpected, since Xi, like Putin, is not presented with contrarian views and the Chinese, unfortunately, have a tendency to believe their own propaganda. China will not abandon its ultimate goals, but will soften its tactics—for now—in how it pursues them. Europe needs to make fundamental decisions on where it will stand in the world. American protection affords it the luxury of incomplete federalism. Some blame the United States for obstructing Europe’s aspirations, but European nations avoided hard questions on the limits of their sovereignty. Europe thinks of itself as a regulatory superpower, but this power is illusory as it relies on the willingness of other countries to accept the extraterritorial application of EU rules and does not reverse a slow European decline. It remains to be seen if Ukraine spurs the difficult reexamination Europe needs in order to recover from its failures in the twentieth century. Pax Americana ended years ago with the missteps in Iraq and Afghanistan. A nation can’t lose two wars and have a mob storm its capital and expect not to be challenged. Recognition of this in policy circles would be helpful. The dilemma with the end of Pax Americana is that no one else is able to pick up the burden of defending democratic values, but other countries ask whether American political and social turmoil weaken it too much to lead. This doubt complicates rebuilding partnerships with other democracies, particularly the European Union, something that will be difficult given Europe’s own indecision over its course. What will globalization look like after Ukraine? Some bifurcation with China is unavoidable (if only because it is a Chinese policy goal), but globalization’s next phase will be a competition over governance (who sets the rules and standards) that, unlike 1990, will not be based on shared assumptions on how the world should work. Ukraine did not produce a sharp break but it did accelerate an erosion of order and governance that we will struggle to repair. <<<<<<>>>>>> The United States is an island of security and stability. Over time that will shift investment and trade toward the United States. BY MICHAEL C. KIMMAGE Ordinary Professor and History Department Chair, Catholic University of America T he war in Ukraine is an event of such historical stature that there will be no return to the status quo ante. This is first and foremost true for Ukraine, which has been devastated by the war. It is also true of Russia, which has fundamentally changed its relationship to Europe and to the United States and is constructing a newly militarized and repressive social contract between its government and its population. Though formally a conflict between two countries, the war in Ukraine has already had global repercussions. These will continue apace. One foreseeable repercussion is not exactly the end of globalization. It is the fragmentation of a globalization already challenged by more than two years of pandemic. New patterns are emerging, dictated by a sanctions regime that thirty-plus countries have signed on to—for the sake of punishing Russia for its war and for degrading its capacity to wage war. Russia will attempt to build a network of trading partners and will be shifting its sales of oil and gas to Asia and to countries elsewhere that are not sanctioning Russia. The United States and its partners could respond with secondary sanctions that might force China and other countries to choose between doing business with Russia and retaining access to the U.S. and Western economies. Bifurcation is too simple a word for this dynamic. There will be overlapping zones of globalization, some of which interconnect and some of which do not. Neither trade nor capital will flow as freely and easily as they did before the war. Cui bono? To a degree, both the United States and China will lose out in this situation. Despite the friction often on display between these two countries, they have both benefited greatly from globalization, which is underwritten by the U.S. military (especially its navy) and by the economic dynamism of China and the United States. But it is China that stands to lose more. The United States is far from Ukraine and is an economic power with access to the Atlantic and Pacific Oceans. It has interests in Ukraine that stem from European security writ large; it has few economic interests. The United States is also partnered with many of the world’s most advanced economies in sanctioning Russia. For China, Ukraine falls within its Belt and Road Initiative. The war runs counter to major trading interests for China, and China is partnered with Russia, a country that has fallen into dictatorship and is locked in a criminal and destabilizing war. Russia is a burden to China. As globalization becomes more fraught and as regional war threatens to slide into world war, the United States is an island of security and stability. Over time, that will shift investment and trade toward the United States. China will finds ways of adjusting to this brave new world, but for Beijing, the road ahead is less certain and rockier than it is for Washington. <<<<<<>>>>>> A return of Pax Americana, China as the long-term winner, or a return to the status quo. My response? None of the above. MARINA V.N. WHITMAN Professor of Business Administration and Public Policy emerita, University of Michigan T IE’s query poses three possible scenarios: a return of Pax Americana, China as the long-term winner, or a return to the status quo. My response to this categorization of alternative future scenarios is “none of the above.” The immediate effect of the Russian invasion has been a reduction in globalization and an increased bifurcation between Russia and its allies on the one side and the industrialized West on the other. Although Russia’s share of overall world trade is only 1–2 percent, it accounts for a significant share of exports of two critical commodities: energy and grain. Its recent attack on Ukraine has produced both official sanctions by Western powers, including freezing the assets of the country’s biggest banks, and the creation of additional sanctions by private firms through over-compliance. These actions have led to reductions in Russia’s exports and imports and the disruption of global supply chains. All of these developments run counter to the nature of Pax Americana, which was predicated on globalization of trade and investment and the maintenance of business relationships between countries despite geopolitical differences. China as the long-term winner from Russia’s attack on Ukraine seems equally unlikely. China’s support for Russia’s actions has been half-hearted at best. It has abstained from a United Nations vote condemning the attack, but its support for Putin doesn’t appear to have gone much further than that. As one of the economic winners from globalization, China could hardly favor a bifurcation of the world’s industrialized countries into the United States and its allies on the one hand and Russia, Iran, and other opponents of this “Western” alliance on the other. At the moment, China is struggling to overcome the United States’ economic dominance, while at the same time continuing as a major exporter to the American market. From its point of view, a premature bifurcation of the global system would make its efforts to challenge the United States economically, as well as in a geopolitical struggle between the two systems of governance, even more challenging. It is hard to imagine how a return to the status quo could occur. Ukraine and Russia together account for close to half of world grain exports, and the shortages and global price increases their war footing are creating cannot be quickly overcome by new supplies. Russia is also a major source of oil exports and of certain metals essential to automobile manufacturing; its focus on war-related activities is contributing to shortages and price increases in these commodities. This distortion of global supply chains will inevitably have a negative impact on global growth. And these are only the economic effects. In geopolitical terms, the effect has been to pressure countries into “taking sides,” with Russia and its allies on one side and the West and its Asian partners on the other. Germany, for example, has strong trade ties with Russia, but it is reassessing its permissive stance toward that country in the face of its recent behavior. None of these developments is likely to be reversed under current conditions. <<<<<<>>>>>> The Ukraine war helps China because it absorbs U.S. strategic energies in Europe. JENNIFER LIND Associate Professor, Dartmouth College, and Associate Fellow, Chatham House T he international system had already been shifting in ways that advantage China, and the Russian invasion of Ukraine will exacerbate this trend. China has emerged as a formidable economic player, with not only decades of “catch-up” growth but also a shift toward innovation: defying the predictions of many in the West who thought this impossible given China’s authoritarian institutions. Between its economic rise and military buildup, China has emerged as a rival great power, putting an end to the era of U.S.-led unipolarity, and challenging American military dominance in the Indo-Pacific. The Ukraine war helps China because it absorbs U.S. strategic energies in Europe—at a time when, after the Afghan withdrawal, it looked as if Washington actually seemed ready to focus on the Indo-Pacific. Putin’s war is likely to poison U.S.- Russian relations for a long time to come. This is all to Beijing’s gain; for example, Moscow’s enmity toward the SPRING 2022 THE INTERNATIONAL ECONOMY 21 United States led it to interfere in U.S. elections, ushering in an era of domestic political instability and polarization. China, as ascendant power, thus faces a distracted and internally divided United States that, rather than trying to align with one of two hostile powers it faces (as Bismarck advised), is taking on both. Furthermore, Russia—isolated by the West—is ever more dependent on China. To Beijing, the tragedy in Ukraine is thus a geopolitical gift. <<<<<<>>>>>> My best guess is a world that is not bifurcated but trifurcated. EDWIN M. TRUMAN Senior Fellow, Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School, former Assistant Secretary for International Affairs, U.S. Treasury, and former Director, International Finance, Federal Reserve Board I n the wake of the Russian invasion of Ukraine compounding the disruption of Covid-19, the world economy and financial system will not return to the status quo ante circa 2019. That world itself was unsteady and uncertain and those forces have intensified. My best guess is a world that is not bifurcated but trifurcated. The collective actions in response to Russia’s aggression and the damage inflicted on the Russian economy and its place in the global system are likely to sideline that country for at least a decade regardless of the outcome on the battlefield, which could remain undetermined for at least another decade. The principal components of the trifurcated world will be the United States and other advanced and broadly democratic countries, China and other authoritarian states, and the rest of the world. China and the United States will continue their competition. The United States will endeavor to maintain a coalition of the willing to resist China’s more aggressive economic and political activities and new initiatives. Other countries large, such as India, and small, such as the low-income countries slowing recovering from Covid-19, will try to thread the needle between the U.S.-led and the China-led visions of the global economic and financial system. The structure of that system will not change substantially from what it was like in 2019. The system may evolve but will remain subject to substantial inertia despite being subjected to economic, financial, and political shocks. <<<<<<>>>>>> Not a world of bifurcation or of a return to “Pax Americana,” but rather a world of overlapping regional coalitions. EWALD NOWOTNY Former Governor, Oesterreichische Nationalbank A basic perspective on the world after Ukraine is one of diminishing globalization. This process of “deglobalization” began at the start of the millennium, intensified in the context of the coronavirus pandemic, and is now culminating in a sanctions regime, installed in reaction to the Russian aggression. The various economic sanctions will have strong short- and long-term effects on the Russian economy. But they will also trigger a wide range of supply and price effects on economies outside Russia. While the United States provides the critical military umbrella for these sanctions, it is economically in a rather safe position. A number of European countries, however, face the core challenge of high dependency on Russian gas. Meanwhile, the Near East is highly dependent on deliveries of Russian and Ukrainian wheat. U.S. support will not be enough to overcome these problems. In both cases, the long-term solution is a diversification of supply sources and a general decrease of external dependencies. But this will take time. A number of European countries have therefore exempted pipeline-bound Russian gas deliveries from the sanctions, so as to keep gas flowing to Europe. The alternative would be serious disruption throughout major European economies, Germany first and foremost. Fast and efficient sanctions have been imposed on the Russian central bank, especially the freezing of about 60 percent of its currency reserves. This, and in general the weaponization of the U.S. dollar, may, however, lead some central banks, especially the Chinese central bank, to reconsider the allocation of their—substantial—currency reserves. The U.S. dollar will remain the world’s leading reserve currency, but shrinking “dollar dominance” is already underway and may accelerate the trend towards an increasing multipolar international monetary system. This could make it more difficult for the United States to finance its excessive current account deficits, and imperil its role as the “consumer of last resort” of the world economy—leading to further economic deglobalization— and will contribute to the tendency of a downward trend of economic globalization. In general, war in Ukraine may lead to globalization being increasingly supplanted by more regional forms of economic cooperation. For the European Union, this means closer and more efficient cooperation within the European Single Market—a market with a population of 448 million and a nominal GDP (2020) of $17.1 trillion. (For comparison, the United States’ nominal 2020 GDP was $20.5 trillion, and China’s was $14.9 trillion). This may also contribute to compensating for the loss of the “peace dividend,” which resulted from historically low military expenditures in Europe. The European Union— and especially Germany—will also have to undergo major adjustments with regard to their current business model, which is heavily oriented toward export surpluses. China has already started such a reorientation toward less dependency from international markets. This will come with economic costs in the form of lower growth rates. But it is in line with the worldwide trend of emphasizing resilience, even at the expense of lower short-term efficiency. All in all, in my view the world after Ukraine will not be a world of bifurcation or of a return to Pax Americana, but rather a world of overlapping regional coalitions. Hopefully, in the long run such a world could also include a reformed, less nationalistic, and more democratic Russia and China. <<<<<<>>>>>> Putin has in fact already revitalized both the European Union and NATO, and will do the same for the principle of multilateralism. HAROLD JAMES Professor of History and International Affairs, Princeton University, and co-author of The Euro and the Battle of Ideas (2016) I find the bifurcation or competing blocs or deglobalization or end of globalization thesis (there are many competing variants) less and less probable as time goes on. In part, this is because of a centuries-old pattern: supply shocks have historically produced calls for more trade, more cooperation, and new institutional ways of managing recovery. There is also the politics of this particular challenge to globalization. Russian President Vladimir Putin may well have thought that a quick, overwhelmingly powerful, and successful action to bring Ukraine in line and change its government would win plaudits in China and appear as a neat balancing to American pretenses of unilateralism. But instead of a brilliant but brutal surgical strike, Russia mounted a spectacularly brutal and mismanaged war. The appalling extent of civilian casualties in Ukraine, the degradation of the Russian army, the threat of widespread nuclear contamination from the dangerous mishandling of reactors, if not from nuclear warfare: these are all so appalling as to have turned Russia into an international pariah. The consequence of the bungled war also presents a grave test of China’s continued commitment to a close relationship with Moscow. Putin and President Xi Jinping proclaimed themselves to be “best friends” in 2019, and earlier this year at the Winter Olympics in Beijing, they announced that that friendship had “no limits.” Well, now those limits are being severely tested. What lessons may be drawn from the experience of an aging and probably sick man in complete control of the levers of power? A well-known problem of autocracy is that advisers are reluctant to give honest truths or opinions to the autocrat, and that as a result decisions are flawed. At a moment when China’s previously successful no-Covid policy is being strained by mass outbreaks of disease in Shanghai and now Beijing, and when Chinese growth is faltering, any hints of a Putin-Xi analogy would be a gift to critics of Xi. The most likely result of the conflict then seems to me a return to a recognition that multilateralism brings substantial benefits, and that even autocrats need to be open to ideas and open to the world. Putin is the anti-globalist, the ideologue who sees only a zero-sum game behind globalization. He will go down in history—like the great dictators of the twentieth century—as an excoriated figure, whose doctrines are reviled, and whose leadership offers only a negative model, a pattern for how not to behave and how not to be successful. Putin has in fact already revitalized both the European Union and NATO, and will do the same for the principle of multilateralism. But the new order cannot simply be a Pax Americana version of multilateralism. That is why U.S. Treasury Secretary Janet Yellen’s recent striking speech reflecting on China’s ambiguous response to Russian aggression, and then calling for “friend-shoring,” may have been a mistake. Trying to identify friends will always be a deeply problematical exercise. But it would be unwise, and costly, to let votes in the United Nations General Assembly influence the future direction of trade. Trading-withthe-enemy legislation makes sense in all-out conflict. In or carbon dioxide emissions that move across borders and between continents—there are no enemies, but necessary partners. The same is true for the global threat of hunger that has been the terrifying outcome of Russia’s actions. Friend-shoring won’t feed people: and it is likely to make many, many enemies. <<<<<<>>>>>> Globalization’s future is more in doubt than at any time in the twenty-first century. ATMAN TRIVEDI Senior Vice President, Albright Stonebridge Group F or many world leaders, Russia’s brutal invasion of Ukraine harkens back to a dark and violent bygone era of international politics. Propelled by a reenergized transatlantic partnership that just recently had appeared adrift, the West has mounted a swift response to support Ukraine and also weaken Russia’s capacity to assault its neighbors. The war may be in its early stages, but American leadership and European resolve, together with the United Kingdom, Japan, and other Pacific allies have so far shown democracies can stand together to defend international order. Ukraine’s future is uncertain and may well end in stalemate. Yet the war’s initial phases have injected confidence into the West’s diplomacy after an underwhelming response to Covid-19, a disorderly endgame in Afghanistan, and the tumult unleashed by Trumpism and Brexit. The swift, ongoing implementation of biting transatlantic sanctions and U.S. efforts to freeze Russia’s foreign reserves point to a broad recognition that “this time is different.” Putin’s aggression has also accelerated calls for more “friend-shoring” and/or “near-shoring” of supply chains among democratic allies. The war is likely to continue a trend in which global politics trumps economics, and national self-sufficiency is the coin of the realm. While the West has been galvanized by Russian revanchism, the war has also brought China and its junior partner Russia closer together—an unwelcome trend that predated the invasion—and attracted autocracies like North Korea, Syria, and Venezuela. On frontier technologies with potential strategic and military applications, the war is accelerating growing mistrust between the West and the RussiaChina entente, producing further economic separation. At the same time, a third international camp composed of swing states—most prominent among them India, but also including significant powers such as Brazil, Indonesia, and South Africa—has emerged. These democracies prefer to stay essentially neutral on the war and hedge their bets. India’s calculus is unique among the non-aligned. China’s territorial ambitions in the high Himalayas have lent urgency to India’s tilt towards the United States on security matters. But it is that same preoccupation with its larger, more powerful neighbor that is driving New Delhi to undertake a delicate balancing act intended to keep Russia on side without fraying ties on either side of the Atlantic. The machinations of this third grouping, China’s influence over international politics despite a stalling economy, and, most importantly, the continuing political polarization within the United States all suggest a return to Pax Americana isn’t likely. But at this moment, the West appears poised to come out in better shape, with Russia weakened and isolated, and China’s awkward embrace of Putin hardening U.S. and now European skepticism about Xi Jinping’s rule. Germany’s shock at Russia’s land grab has contributed to Berlin’s growing doubts about China. The ongoing technological and economic competition between the United States and China will only intensify—expect Brussels’ views to grow more aligned with Washington’s because of the war. Beijing has been orienting its economic policymaking in preparation for decoupling but may not have anticipated the war’s role as an accelerant. Western sanctions and export controls have raised questions about a shift towards separate financial, trade, or currency systems by powers looking to insulate themselves from outside pressure. But the combined strength of the U.S., European/British, Japanese, and allied Pacific economies (about 60 percent of global GDP) make such tectonic shifts improbable over the near term. The dollar still represents the global reserve currency, followed by the euro—and things should remain that way for the foreseeable future. The world after Ukraine will be marked by continuing uncertainty, in no small measure because the war’s duration, scope, and ultimate outcome are far from predetermined. Emerging economies face acute financial pressures in the near term as supply chains convulse and prices spiral; more of them will likely follow debt-ridden Sri Lanka’s lead. More broadly, conditions could be ripening for a global economic downturn or even crisis. The U.S., European, and Chinese economies are all exhibiting varying degrees of fragility. Against this backdrop of intensifying major power competition and strong nationalist, populist, and economic headwinds, globalization’s future is more in doubt than at any time in the twenty-first century. <<<<<<>>>>>> Russia’s likely defeat in Ukraine will probably lead to a reinforced Western military and a new Pax Americana. ANDERS ÅSLUND Senior Fellow, Stockholm Free World Forum, and author, Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy (2019) Russian President Vladimir Putin’s war of aggression against Ukraine has been a wake-up call for the West. The collective West has come together as never before. In particular, this is true of the European Union, but also of countries such as Japan and South Korea. Suddenly, Europeans realized that Putin’s Russia posed a real threat to their national security, compelling them to act together and enhance their defense expenditure. This occurs after Freedom House has recorded a steady decline in democracy since 2006. U.S. President Joe Biden has perceptively caught on to this important issue by calling for new democracy building through his democracy summits and scolding international corruption. While the West is coming together, the developing world is split over a broad spectrum. It has been illuminated by the votes in the United Nations General Assembly on Russia’s aggression against Ukraine and on Russia’s ouster from the U.N. Human Rights Council. Some democratic developing countries side with the democratic West; a score of hard-core dictatorships side with Russia, while most are neutral. The developing countries are all over the map. China does not want to be captured by Putin’s mad policies, while India does not want to be forced to turn against Russia. Rather than a bifurcation of the world, the effect of Russia’s aggression against Ukraine appears to be that the Western world comes together around common values and fears, while the developing countries are going in multiple directions and are becoming more split and disoriented. A decade ago, the not very democratic BRICS appeared to represent a leading light, but currently none of them inspires. China’s growth has declined, and its repression and state control have become worse. India is losing its democratic luster and has stayed very poor. South Africa and Brazil are stagnant economies with uninspiring politics, while Russia is a sheer disaster. While China was a leader of the developing world, it no longer appears to carry its laurels. Russia’s likely defeat in Ukraine will probably lead to a reinforced Western military and a new Pax Americana. Thus, the West is likely to gain power and influence. It should take the lead and reform the international organizations so that they promote democracy and the rule of law, while kicking out violators of all international law, such as Putin’s Russia. Russia’s vetoes and unlimited lying in the U.N. Security Council have exhausted its right to hold such a seat. Under the leadership of the United States, the democratic countries should set up a new Community of (real) Democracies, in line with late Secretary of State Madeleine Albright’s excellent initiative. In parallel, a new international organization for the building of the rule of law should be set up. The democratic countries need to utilize their newly won consensus and initiative. <<<<<<>>>>>> We should put aside Biden’s vision of an inexorable struggle between democracies and autocracies, and focus instead on pressing common challenges. JEFFREY D. SACHS University Professor and Director of the Center for Sustainable Development, Columbia University While we can’t predict the future, we can state the future we’d like to see. For my part, I would greatly prefer a quick negotiated end to the conflict based on Ukrainian neutrality, an end to NATO enlargement, practical solutions for other outstanding issues (for example, implementation of the Minsk II terms for the Donbas), and Russia’s complete military withdrawal from Ukraine. Russia would direct some of its frozen reserves into a Ukraine rebuilding fund, and the United States and Europe would recycle some of their new SDR holdings for this purpose. The sanctions on Russia would be rolled back on a timeline consistent with the implementation of the peace accords. With the war ended, we would try to rebuild an international order based on the United Nations Charter, the SPRING 2022 THE INTERNATIONAL ECONOMY 25 Universal Declaration of Human Rights, a reform of global finance to direct more flows to developing countries and towards the energy transition, and a real attempt to surmount the escalating geopolitical tensions. We would put aside Biden’s vision of an inexorable struggle between democracies and autocracies, and focus instead on pressing common challenges facing all nations: the pandemic, climate change, global supply chains and regional security, nuclear disarmament, and many others. Our common interests can and should take priority over our differences. As President Kennedy famously said, “And if we cannot end now our differences, at least we can help make the world safe for diversity.” <<<<<<>>>>>> Putin’s attack should galvanize real foreign policy, defense policy, and industrial policy cooperation among democratic, allied nations. ROBERT D. ATKINSON President, Information Technology and Innovation Foundation When considering the impact of Putin’s aggression on globalization and alliances, there is the ought issue of what should happen, and the will be issue of what is likely to happen. Unfortunately, I don’t believe they are aligned. The ought is a world in which democratic, rule-oflaw nations, especially those in the European Union, finally accept the reality that the world is not moving to an “end of history,” “no two countries with McDonald’s restaurants will go to war” world, and that countries have to pick sides. This would mean no more countries wanting their cake and eating it too: relying on the United States to defend their national security interests but opposing U.S. efforts fight against China’s rampant innovation mercantilism and, in the case of the European Union, enacting policies that discriminate against U.S. technology companies. Rather, Putin’s attack should galvanize real foreign policy, defense policy, and industrial policy cooperation among democratic, allied nations. This would mean U.S. allies ending their free riding on U.S. military capabilities and increasing their own defense spending, engaging in real cooperation on advanced technology development, and most importantly, cooperating to limit the benefits China achieves from its innovation mercantilist policies. The reality is that while this scenario should happen, the odds of it coming to fruition are challenging. It is not at all clear that nations/regions like Europe, South Korea, and India will view the world all that much differently, assuming that the Russian aggression ends with the pre-status quo being mostly restored and China does not invade Taiwan. While the current consensus around Russia is likely to hold, it’s not at all clear that this consensus will extend to China. The incentive for these nations to continue to freeride on America, or at minimum, to not choose a side, is quite high. When EU policymakers continue to see American technology companies as the biggest threat to the EU economy, at a time when the European Union runs a massive trade surplus with the United States, suggests that the European Union is likely not to view Russian aggression in system-redefining terms. This is particularly true for Germany, which exports more than $100 billion to China annually and sees the China market as key for a number of their important industries, including autos and chemicals. China’s carrots and sticks will only increase, as will its willingness to use them to enforce either subservience or neutrality. So will leading democratic allied nations agree to cooperate and ban Chinese imports of goods based on intellectual property theft and/or massive subsidization? Will they agree to collectively impose appropriate export controls on technology? Will they stop penalizing U.S. companies and instead turn their focus on China? We can hope that the answers to these questions are in the affirmative, but I fear that is wishful thinking <<<<<<>>>>>> It is time to chart a path to a new multilateralism. MOHAMED A. EL-ERIAN President, Queens’ College, Cambridge University, and Professor, Wharton School, University of Pennsylvania E conomic and financial globalization is changing— away from ever-closer and more efficient cross border links supported by rule-based multilateralism and toward greater fragmentation and adhocracy. The 26 THE INTERNATIONAL ECONOMY SPRING 2022 result is an even more uncertain global economy and greater inequality. The are several drivers for this ongoing regime shift. Most of them, including greater geopolitical tensions and growing economic protectionism, were present before Russia’s invasion of Ukraine, and have now been turbocharged by it. Cross-border supply chains have become more fragile, disrupted, and disruptive. The sanctioning by governments of trade and individuals has been accompanied by major restrictions on international payments and settlement. The private sector is also playing a role in driving this regime change, from the greater emphasis on resilience (versus just-in-time efficiency) to the self-sanctioning commercial activities. All this has exposed long-standing structural weaknesses in the multilateral system at a time when its ability to respond and to facilitate global policy coordination are undermined by profound disagreements and mistrust among country shareholders. Left to its own devices, this combination of factors would solve to the least favorable common denominator. In addition to a stagflationary impetus, it would serve as yet another unequalizer, both within and across countries. Rather than try to revert to a status quo ante that is no longer feasible, it is time to chart a path to a new multilateralism. |
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