Fernando Alcoforado*
This article aims to demonstrate that the war in Ukraine can lead to the end of contemporary globalization and the advent of a new international order. Russia’s recent invasion of Ukraine has generated an economic earthquake with the adoption by the United States, European Union, United Kingdom and other countries of unprecedented economic and financial sanctions against Russia. Among the measures are the exclusion of Russian banks from the Swift system of international financial transfers and the freezing of much of the Russian Central Bank’s reserves of around US$ 630 billion held abroad. Never in the history of humanity has an economy of worldwide importance like Russia’s been the target of economic and financial sanctions of this level. There is a high risk that Russia will face a financial crisis that could bring its biggest banks to collapse. The economic and financial war unleashed by Western powers to punish Russia for invading Ukraine is aimed at stifling its economic and financial system and turning Russia into an international pariah. The recent sanctions may be just the first steps towards a severe and lasting severing of Russia’s financial and economic ties with the rest of the world. The sanctions adopted have the political objective of forcing Russia to negotiate an end to the war on disadvantageous terms with Ukraine.
It is, however, an innocuous solution because the economic and financial sanctions will not make Russia abandon its intention to impose its objectives in Ukraine, that is, the overthrow of the Ukrainian government, the crushing of the neo-Nazi forces existing there, recognition of the people’s republics of Donetsk and Luhansk and, above all, preventing Ukraine from joining NATO. However, the continuation of the war will cause economic sanctions to have devastating potential for Russia’s economy that could also lead the world into recession. Economic and financial retaliation is likely to have negative consequences for the very countries that are imposing the sanctions and for the global economy. The war in Ukraine could affect the growth of the world economy in 2022 thanks to the impact of inflation, which could rise with the possibility that the prices of oil, natural gas and other commodities will skyrocket if there is a reduction or suspension of their supply by Russia. Rising inflation could cause central banks around the world to raise interest rates. With higher interest rates, the global economy tends to grow less. There is the possibility of a global recession or even global depression that could occur if the conflict spreads beyond the restricted sphere of Ukraine and spreads across Europe and the world.
The adoption by the United States, the European Union, the United Kingdom and other countries of economic and financial sanctions against Russia in an attempt to stifle the Russian economy signals that any country in the world that does not accept the impositions of the great world capitalist powers could incur the same penalties as those inflicted for the first time in history against Russia. This episode can lead each nation to reduce its economic and financial exchanges with the outside and seek its economic autonomy to avoid suffering the harmful consequences of the concerted action of the great Western powers if the country does not bend to its interests. Economic self-sufficiency is the condition for no nation to be asphyxiated by the power of the great Western powers, as was the case with Russia. Under these circumstances, all countries would seek to trade with the rest of the world without becoming extremely dependent on foreign countries, as is currently the case with the process of economic and financial globalization. This calls into question the contemporary globalization process that began in the 1990s, which was adopted to integrate world markets and received the support of most countries in the world, including Russia and China.
Economic and financial globalization was adopted after the end of the Cold War in the early 1990s to promote the integration of world markets when a consensus was created at the heart of world capitalism that opening up world markets could lead to political opening of Russia and China that would later align themselves with the new world economic order or that, at the very least, would be important economic partners and would not do anything that could destabilize the international system. It was with this perspective that Russia and China were admitted to the WTO (World Trade Organization). The world has become increasingly economically integrated over the last thirty years, free from geopolitical tensions capable of jeopardizing international trade and the flow of capital in the world. This has become possible thanks to the constructive economic relationship between major economies such as the United States, China, the European Union, the United Kingdom, Japan, Russia, as well as emerging economies such as Brazil and India. Due to the economic and financial globalization embraced by almost all the countries of the world, the international system of the last thirty years has been characterized by the absence of serious confrontation between the great powers (United States, Russia and China).
This absence of confrontation did not, however, prevent the great military powers such as the United States, Russia and China from developing actions aimed at strengthening them in the military field. The absence of confrontation between the great military powers did not prevent the various USA governments since 1990 from promoting the expansion of NATO towards Russia’s borders, which began with the end of the Soviet Union starting with the Baltic Sea and crossed Central Europe via intervention in the Balkans (ex-Yugoslavia) and reaching Central Asia and Pakistan, expanding the borders of NATO. At the end of the 1990s, the geopolitical distribution of the new USA military bases leaves no doubt about the existence of a new “sanitary belt”, separating Germany from Russia and Russia from China. The bombing of Serbia in the former Yugoslavia in 1999 clearly showed how much the siege strategy organized by the United States and its allies, through the programmed advance of NATO and the European Union in the areas formerly controlled by the Soviet Union, could represent a danger for the sovereignty of Russia. The arrival of Vladimir Putin to power in Russia in 2000 would radically change this geopolitical scenario, until then very unfavorable for the Russians, because it marked the beginning of the geopolitical recovery of Russia, whose position had been greatly weakened during the Yeltsin government in the 1990s. Putin considered that China could help in its resistance to USA geopolitical ambitions in Eastern Europe, the Caucasus or Central Asia. The Shanghai Cooperation Organization (SCO) was created in 2001 to establish an alliance between Russia and China in military terms.
To stop the rise of China as the hegemonic power of the planet, the USA military strategy is centered on the Asia-Pacific region. As an ally of the United States, Japan collaborates with the American strategy of “encircling” China, strengthening its military power. Another objective of the USA military strategy is also to pressure Russia’s alliance with China by developing NATO’s actions in Europe and by strengthening its military bases in Japan, South Korea and Diego Garcia and the Pacific Fleet. To deal with this situation, China has adopted 6 strategies: 1) achieve high levels of economic growth to surpass the United States; 2) continually raise its share of international trade to lead it; 3) stripping the US of economic and military leadership in Asia, which means hitting the core of USA power in the region; 4) prevent India from becoming an autonomous pole of economic attraction in Asia, possibly in alignment with the United States; 5) become an essential power for peace in the Persian Gulf between Persians (Iran) and Arabs (particularly Saudi Arabia) with the decline of US influence in this region; and, 6) to strengthen the economic and military alliance with Russia.
To ensure the progress of economic and financial globalization that began in the 1990s, the United States government has sought to maintain a constructive coexistence with China and Russia in the economic field since 1990, without, however, abandoning its purpose of maintaining itself as a hegemonic power, from an economic and military point of view, during all the governments, adopting the usual behavior of a dominant power that is to try to contain, economically weaken or simply destroy any other actor with the potential to challenge it in the future, as is the case of China and also of Russia. This has been the stance the United States has taken for the past hundred years to deal with its enemies. It was this attitude that guided the USA’s actions throughout the 20th century. Throughout this period, the USA government adopted the standard attitude of hegemonic powers, undermining its competitors before they could threaten it. This is also its stance towards Russia in the matter of the invasion of Ukraine and towards China in triggering a trade war and promoting the siege of both countries from a military point of view.
The actions of the great Western capitalist powers led by the United States during the war in Ukraine could bring the international order, which was inaugurated in 1990 after the end of the Soviet Union, to an end and happen the beginning of a new era in international relations whose configuration will still be materialized in the coming years. Concern about the end of an era was expressed by the UN Secretary-General, Antonio Guterres, on September 24, 2019, in a report presented to the United Nations General Assembly, when he wrote that he feared “the possibility of a major fracture: the world splitting in two, with the two largest economies in the world creating two separate and competing worlds, each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capabilities, and its own geopolitical and military strategies of zero sum”. It is very possible that the war in Ukraine will pave the way for a fracture in the current international system that has been working chaotically for a long time and that two systems will exist: one under the leadership of the United States and the other under the leadership of China and Russia. Governments, companies and citizens around the world need to prepare for this scenario that can arise with the fracture of the current weakened international system. In this scenario, we would live in a bipolar world similar to the one that existed from 1945 to 1990 during the Cold War when capitalist system under the leadership of the United States and socialist system under the leadership of the Soviet Union coexisted. The fracture of the international system will bring to an end the current globalization inaugurated in the 1990s and there will be the beginning of a new era with two economic systems led, respectively, by the United States and China.
This fracture of the current international system will accelerate the end of the international financial system led by the USA dollar that has long pointed to the accelerated loss of confidence in this currency. The loss of confidence in the dollar is manifested in the fact that central banks around the world have been excluding the USA currency from their reserves for some time and it is no longer used in many commercial transactions in the world. This loss of confidence results from the fact that the monetary system based on paper money issued freely and without collateral by governments around the world, as is the case of the United States, is something inherently unstable whose inevitable consequences of this process are artificial economic growth and the bad investments that such growth generates, and, finally, the economic depressions. The current international financial system will crumble with the likely collapse of the dollar, while banks and money are threatened in their existence. It should be noted that the collapse of the dollar as the world’s reserve currency is also driven by the possibility of the USA public debt bubble bursting, which will reach 140% of GDP by 2024. The end of the banks is near because technology is putting in check the banking market, given that, today, people are much more concerned with the possibility of paying anything with a credit or debit card, without having to withdraw money from the bank. This is making banks unnecessary. Money, in the traditional sense, died two decades ago, eclipsed by a digitized exchange economy. The death of the check, paper or metal money and the credit and debit card is accelerating which are being replaced by digital payments.
Countries like Brazil, which adhered to neoliberal globalization since 1990, have accumulated more losses than gains because social inequalities have increased, the country has deindustrialized and had poor economic growth to date. The serious economic and social problems experienced by Brazil at the moment and the prospect that the end of contemporary globalization will occur indicate the need for Brazil to abandon the neoliberal economic model that it has adopted since 1990 and replace it with a national developmental economic model that would prioritize the development of the internal market and of the productive forces capable of promoting its economic self-sufficiency. Furthermore, Brazil needs to establish the place it intends to occupy on the new map of international relations. Therefore, it is necessary to prepare a long-term strategic development plan.
* Fernando Alcoforado, 82, awarded the medal of Engineering Merit of the CONFEA / CREA System, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is author of the books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua convergência (Associação Baiana de Imprensa, Salvador, 2018), Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019) and A humanidade ameaçada e as estratégias para sua sobrevivência (Editora Dialética, São Paulo, 2021) .
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