Yves here. Just a reminder: while the efforts of various countries to conduct trade outside the dollar system does vitiate using sanctions as a weapon (not that they were all that effective to begin with), dollar-based cross border transactions related to investments have long dwarfed the use of the dollar in trade. So escaping the US sanctions leash is not tantamount to dethroning the dollar. As we’ve said, that will take a long time.
But even more critical is the loss of the US status as “the indispensable nation” The fact that China has pried Saudi Arabia away from the US and has brokered a Saudi-Iran rapprochement is undeniable evidence of a major drop in US influence.
By Medea Benjamin and Nicolas J. S. Davies, the authors of War in Ukraine: Making Sense of a Senseless Conflict, published by OR Books in November 2022. Medea Benjamin is the cofounder of CODEPINK for Peace, and the author of several books, including Inside Iran: The Real History and Politics of the Islamic Republic of Iran
Drawing by Jerzy Wasiukiewicz
In his 1987 book The Rise and Fall of the Great Powers, historian Paul Kennedy reassured Americans that the decline the United States was facing after a century of international dominance was “relative and not absolute, and is therefore perfectly natural; and that the only serious threat to the real interests of the United States can come from a failure to adjust sensibly to the newer world order.”
Since Kennedy wrote those words, we have seen the end of the Cold War, the peaceful emergence of China as a leading world power, and the rise of a formidable Global South. But the United States has indeed failed to “adjust sensibly to the newer world order,” using military force and coercion in flagrant violation of the UN Charter in a failed quest for longer lasting global hegemony.
Kennedy observed that military power follows economic power. Rising economic powers develop military power to consolidate and protect their expanding economic interests. But once a great power’s economic prowess is waning, the use of military force to try to prolong its day in the sun leads only to unwinnable conflicts, as European colonial powers quickly learned after the Second World War, and as Americans are learning today.
While US leaders have been losing wars and trying to cling to international power, a new multipolar world has been emerging. Despite the recent tragedy of Russia’s invasion of Ukraine and the agony of yet another endless war, the tectonic plates of history are shifting into new alignments that offer hope for the future of humanity. Here are several developments worth watching:
De-Dollarizing Global Trade
For decades, the US dollar was the undisputed king of global currencies. But China, Russia, India, Brazil, Saudi Arabia and other nations are taking steps to conduct more trade in their own currencies, or in Chinese yuan.
Illegal, unilateral US sanctions against dozens of countries around the world have raised fears that holding large dollar reserves leaves countries vulnerable to US financial coercion. Many countries have already been gradually diversifying their foreign currency reserves, from 70% globally held in dollars in 1999 to 65% in 2016 to only 58% by 2022.
Since no other country has the benefit of the “ecosystem” that has developed around the dollar over the past century, diversification is a slow process, but the war in Ukraine has helped speed the transition. On April 17, 2023, US Treasury Secretary Janet Yellen warned that US sanctions against Russia risk undermining the role of the dollar as the world’s global reserve currency.
And in a Fox News interview, right-wing Republican Senator Marco Rubio lamented that, within five years, the United States may no longer be able to use the dollar to bully other countries because “there will be so many countries transacting in currencies other than the dollar that we won’t have the ability to sanction them.”
BRICS’s GDP Leapfrogs G7’s
When calculated based on Purchasing Power Parity, the GDP of the BRICS countries (Brazil, Russia, India, China and South Africa) is now higher than that of the G7 (United States, United Kingdom, Canada, France, Germany, Italy, Japan). The BRICS countries, which account for over 40% of total world population, generate 31.5% of the world’s economic output, compared with 30.7% for the G7, and BRICS’s growing share of global output is expected to further outpace the G7’s in coming years.
Through the Belt and Road Initiative, China has invested some of its huge foreign exchange surplus in a new transport infrastructure across Eurasia to more quickly import raw materials and export manufactured goods, and to build growing trade relations with many countries.
Now the growth of the Global South will be boosted by the New Development Bank (NDB), also known as the BRICS Bank, under its new president Dilma Rousseff, the former president of Brazil.
Rousseff helped to set up the BRICS Bank in 2015 as an alternative source of development funding, after the Western-led World Bank and IMF had trapped poor countries in recurring debt, austerity and privatization programs for decades. By contrast, the NDB is focused on eliminating poverty and building infrastructure to support “a more inclusive, resilient and sustainable future for the planet.” The NDB is well-capitalized, with $100 billion to fund its projects, more than the World Bank’s current $82 billion portfolio.
Movement Towards “Strategic Autonomy” for Europe
On the surface, the Ukraine war has brought the United States and Europe geostrategically closer together than ever, but this may not be the case for long. After French President Macron’s recent visit to China, he told reporters on his plane that Europe should not let the United States drag it into war with China, that Europe is not a “vassal” of the United States, and that it must assert its “strategic autonomy” on the world stage. Cries of horror greeted Macron from both sides of the Atlantic when the interview was published.
But European Council President Charles Michel, the former prime minister of Belgium, quickly came to Macron’s side, insisting that the European Union cannot “blindly, systematically follow the position of the United States.” Michel confirmed in an interview that Macron’s views reflect a growing point of view among EU leaders, and that “quite a few really think like Emmanuel Macron.”
The Rise of Progressive Governments in Latin America
This year marks the 200th anniversary of the Monroe Doctrine, which has served as a cover for US domination of Latin America and the Caribbean. But nowadays, countries of the region are refusing to march in lockstep with US demands. The entire region rejects the US embargo on Cuba, and Biden’s exclusion of Cuba, Venezuela and Nicaragua from his 2022 Summit of the Americas persuaded many other leaders to stay away or only send junior officials, and largely doomed the gathering.
With the spectacular victories and popularity of Andres Manuel Lopez Obrador in Mexico, Gustavo Petro in Colombia, and Ignacio Lula da Silva in Brazil, progressive governments now have tremendous clout. They are strengthening the regional body CELAC (the Community of Latin American and Caribbean States) as an alternative to the US-dominated Organization of American States.
To reduce reliance on the US dollar, South America’s two largest economies, Argentina and Brazil, have announced plans to create a common currency that could later be adopted by other members of Mercosur — South America’s major trade bloc. While US influence is waning, China’s is mushrooming, with trade increasing from $18 billion in 2002 to nearly $449 billion in 2021. China is now the top trading partner of Brazil, Chile, Peru and Uruguay, and Brazil has raised the possibility of a free-trade deal between China and Mercosur.
Peace between Iran and Saudi Arabia
One of the false premises of US foreign policy is that regional rivalries in areas like the Middle East are set in stone, and the United States must therefore form alliances with so-called “moderate” (pro-Western) forces against more “radical” (independent) ones. This has served as a pretext for America to jump into bed with dictators like the Shah of Iran, Saudi Arabia’s Mohammed bin Salman and a succession of military governments in Egypt.
Now China, with help from Iraq, has achieved what the United States never even tried. Instead of driving Iran and Saudi Arabia to poison the whole region with wars fueled by bigotry and ethnic hatred, as the United States did, China and Iraq brought them together to restore diplomatic relations in the interest of peace and prosperity.
Healing this divide has raised hopes for lasting peace in several countries where the two rivals have been involved, including Yemen, Syria, Lebanon and as far away as West Africa. It also puts China on the map as a mediator on the world stage, with Chinese officials now offering to mediate between Ukraine and Russia, as well as between Israel and Palestine.
Saudi Arabia and Syria have restored diplomatic relations, and the Saudi and Syrian foreign ministers have visitedeach others’ capitals for the first time since Saudi Arabia and its Western allies backed al-Qaeda-linked groups to try to overthrow President Assad in 2011.
At a meeting in Jordan on May 1st, the foreign ministers of Jordan, Egypt, Iraq and Saudi Arabia agreed to help Syria restore its territorial integrity, and that Turkish and US occupying forces must leave. Syria may also be invited to an Arab League summit on May 19th, for the first time since 2011.
Chinese diplomacy to restore relations between Iran and Saudi Arabia is credited with opening the door to these other diplomatic moves in the Middle East and the Arab world. Saudi Arabia helped evacuate Iranians from Sudan and, despite their past support for the military rulers who are destroying Sudan, the Saudis are helping to mediate peace talks, along with the UN, the Arab League, the African Union and other countries.
Multipolar diplomatic alternatives to US war-making
The proposal by President Lula of Brazil for a “peace club” of nations to help negotiate peace in Ukraine is an example of the new diplomacy emerging in the multipolar world. There is clearly a geostrategic element to these moves, to show the world that other nations can actually bring peace and prosperity to countries and regions where the United States has brought only war, chaos and instability.
While the United States rattles its saber around Taiwan and portrays China as a threat to the world, China and its friends are trying to show that they can provide a different kind of leadership. As a Global South country that has lifted its own people out of poverty, China offers its experience and partnership to help others do the same, a very different approach from the paternalistic and coercive neocolonial model of US and Western power that has kept so many countries trapped in poverty and debt for decades.
This is the fruition of the multipolar world that China and others have been calling for. China is responding astutely to what the world needs most, which is peace, and demonstrating practically how it can help. This will surely win China many friends, and make it more difficult for US politicians to sell their view of China as a threat.
Now that the “newer world order” that Paul Kennedy referred to is taking shape, economist Jeffrey Sachs has grave misgivings about the US ability to adjust. As he recently warned, “Unless US foreign policy is changed to recognize the need for a multipolar world, it will lead to more wars, and possibly to World War III.” With countries across the globe building new networks of trade, development and diplomacy, independent of Washington and Wall Street, the United States may well have no choice but to finally “adjust sensibly” to the new order.