Is the Ukrainian war nothing more than a mist of clouds in a clear sky? This seems to be an optimistic view of some elites in Western democracies who, like French President Emmanuel Macron, are eager not to humiliate Vladimir Putin by making a passing decline.
But the truth is that Putin’s war has shaken the world order in ways that can affect us all for a long time.
Over the past seven decades, that is, after World War II, what is known as the current world order has been based on three principles that, although not always adhered to, have helped keep the building intact.
The first principle was the so-called international law based on the Charter of the United Nations and the more than 10,000 international treaties and protocols supported by a majority of the 198 member states. The invasion of Ukraine violated this principle in a fundamental way. Because the aggressor is a member of the Security Council with a veto, the United Nations cannot even address this issue in an official capacity.
In other words, the court of last resort closed its doors completely.
The second principle is consensus in favor of free trade subject to bilateral and – or international agreements. It took decades of negotiations at various levels before the General Agreement on Tariffs and Trade (GATT) became the World Trade Organization. With the advent of globalization supporting the free flow of goods, capital and, in some cases, labor, ideological divisions between the larger nation-states are cutting.
This principle was also violated as a result of the Ukrainian war. The embargo imposed by some 40 countries on energy imports from Russia is a clear violation, in addition to Russia’s decision to stop Ukraine’s agricultural exports by closing the ports of the Azov Sea while concluding many international agreements with freedom of navigation is violated. Today we see scenes that remind us of the Middle Ages rather than the twenty-first century; Turkey, presumably through Russia’s tacit agreement, is preparing wheat and maize from Russia and Ukraine for possible sale on the gray market.
The gray market around Russian oil also developed, and China received discounts in exchange for switching imports from Iran. Meanwhile, Senegalese President Macky Sall has called on his Russian counterpart to reach a gray market agreement on wheat and maize exports to Africa. Some reports also claim that Egypt is also trying to reach an agreement to replenish its grain reserves, which are scheduled to last for another four months.
The third principle, which helped to spread globalization around the world, was the protection of capital by the large Western economies. After the assets of Russian oligarchs were seized, the confidence of the United States, the European Union and their smaller allies was shaken by a system that trillions of dollars, some of which are dirty money, from China, Russia, Ukraine and more than 100 dollars lok. other countries to European and American banks and stock exchanges.
Putin has done his best in this direction by seizing the assets of Western companies operating in Russia, or at best selling them by force at a fraction of their fair value.
Suddenly, the global economic system, which worked like clockwork, faces many challenges. Indeed, the culture of “empty inventory” under which Western companies operate, through direct supply of goods, industrial parts and raw materials, has been largely shaken. The big economies suddenly discover their dangerous dependence on foreign imports. This in turn led to the emergence of a new wave of economic nationalism under the slogan “resettlement”. Suddenly, the game of comparative advantage and specialization was central to globalization, which seems too risky for even the most powerful economies.
European TV these days is full of reports about companies closing their doors or reducing the size of their factories in China, and about the so-called “tigers” of the Third World who try to manufacture the same cheap products that come from abroad.
Fear of shortages also affects China, especially in terms of energy and food.
Beijing collects oil in hastily built depots, even in oil tankers floating at sea. It also buys agricultural land in Africa and Central Asia to grow future food crops.
All this has led to inflation, the beast at the door, thanks to the cheap labor from China and the “Tigers”, in addition to the cheap energy coming from Russia, the Middle East, Africa and Central America.
And when we talk about inflation, we mean a decline in the purchasing power of the average citizen, a topic that is high on the agendas of most Western democracies.
In dealing with Europe, the United States and Canada have abandoned decades of dogmatism over balanced budgets, borrowed on an uncalculated basis for the future, and handed out political bribes to their respective constituents.
How long this indulgence in spending lasts depends on each person’s imagination.
Thanks to the mountains of cash flowing into the world market and historically low interest rates, the policy of consumer support can continue for some time. But it is likely to exacerbate inflation, which in turn will lead to demands for higher wages, leading to a vicious cycle leading to stagflation.
Western democracies have deceived themselves into believing that central banks, or the US Federal Reserve, can always tame inflation with a gesture. For almost two decades, it seemed so, making the central bank or the Federal Reserve such heroes.
One day, Ben Bernanke, former chairman of the Federal Reserve, joked that she and other central bankers’ motto was “98 percent of statements, 2 percent of actions.”
In other words, when the weather is nice and the sails are high, a captain can look like a hero just because he’s there.
Now the weather is changing with storms piercing the sails. Which means shock therapy may be necessary, especially as the cost of defending Ukraine, now about $ 5 billion a month, continues to rise. Putin, in turn, is witnessing a rapid depletion of the $ 400 billion war fund he created in preparation for his operation, as he owes much of his support to Russia’s economic recovery since 2010 and the demand for of the Russian people now. to tighten their belts will not be easy.
Finally, Putin’s war may have damaged the democratic process, even in Western democracies. One example is the decision by Sweden and Finland to join NATO after a moderate parliamentary debate. The massive defense spending, again without thorough discussion and public information, is another example.
Another example is the rapid approval of funds to fund the Ukrainian resistance of governments that for decades played the role of Venetian merchant Shylock and now play the role of the defeated Greek king Croesus.
As we can see, the problems we now face are far greater than the attempts to humiliate “Tsar” Vladimir.
* Quoted from “Middle East”
All published articles represent only the opinion of its authors.