Are we facing a new global economic system?

From May 31, Russian Foreign Minister Sergei Lavrov began a tour of the countries of the Gulf Cooperation Council. Lavrov’s main objective during these visits is to strengthen ties between Russia and the GCC countries in a global race for geopolitical dominance.

The Middle East, particularly the Gulf region, is vital to the current global economic order and is equally essential to any future overhaul of that order. If Moscow succeeds in redefining the role of Arab economies vis-à-vis the global economy, it will most likely succeed in bringing about a multipolar economic world.

The geopolitical reorganization of the world cannot simply be achieved through war or by challenging the political influence of the West in its various global domains. The economic component is perhaps the most important of the ongoing standoff between Russia and its Western detractors.

Before the Russian-Ukrainian war, any conversation about the need to question or redefine globalization was largely confined to academic circles. The war made this theoretical conversation a tangible and urgent conversation. US, European and Western support for Kyiv has little to do with Ukrainian sovereignty and independence and everything to do with genuine concern that a Russian success destroys or at least seriously damages the current version of economic globalization as envisioned by the United States and its allies.

After the collapse of the Soviet Union in the early 1990s, the world was no longer a contested space between two military superpowers – NATO against the Warsaw Pact – and two massive economic camps – the United States against the USSR. The American invasion of Panama (1989) and the war in Iraq (1990) are often mentioned to mark the undisputed American ascendancy in world affairs. What we often omit is that the military and geopolitical component of this war was accompanied by an economic component.

Greater leverage

While Panama and Iraq were meant to demonstrate US military dominance, the creation of the World Trade Organization (WTO) in 1994-95 was intended to illustrate Washington’s economic prospects in this new world order.

Although unprecedented in scale and ferocity, the anti-WTO protests in Seattle in 1999 appeared to be a desperate attempt to reverse the alarming trend in world economic affairs. While successful in demonstrating the power of civil society at work, the protests failed to produce real and lasting results. In the American-Western definition of globalization, small countries had little bargaining power.

While rich countries have successfully negotiated many privileges for their own industries, much of the Global South has had no choice but to play by Western rules. The Americans talked about free trade and open markets while maintaining a protectionist agenda on what they perceived to be key industries. Globalization was presented as a success for freedom and democracy when in fact it was only a cheap reproduction of the French economic doctrine of “laissez-faire” of the 18th century.

It is easy to criticize poor countries for not challenging US/Western domination. In fact, they tried, and the result was economic sanctions, regime change, and war. The only silver lining is that this predatory form of capitalism has encouraged smaller countries in the South to formulate their own economic blocs, so they can negotiate with greater leverage. However, even this has not been enough to influence, let alone dismantle, the skewed global paradigm.

Western economic hegemony

Major economies, such as China, were allowed to benefit from globalization as long as their massive growth served the interests of the global economy, namely the West. Things began to change, however, when China’s political and geopolitical reach began to match its economic influence. Former US Republican President Donald Trump devoted much rhetoric and ultimately declared economic war on the so-called “China threat”. The current Democratic administration of Joe Biden is no different.

The Marrakesh Agreement of 1994, the treaty on which the WTO was created, was concluded to replace the geopolitically defunct General Agreement on Tariffs and Trade of 1948. Note how each of these global economic treaties resulted from their unique global geopolitical orders, the latter after World War II and the former after the collapse of the socialist camp. If Russia is now mainly focused on Ukraine, it envisions another economic balance, with the hope that it will eventually force a renegotiation of the current globalization, therefore of the economic hegemony of the West.

Russia is clearly committed to a new global economic system, but not isolated from it. On the other hand, the West is torn. He wants to isolate Russia but without hurting his own economies in the process. This equation is simply unsolvable, at least for the next few years.

In a speech at the Eurasian Economic Forum, Russian President Vladimir Putin said trying to isolate Russia is “impossible, totally unrealistic in the modern world”. His words accentuate Russia’s full awareness of the West’s goals. The world may not be redefined geopolitically, but the very concept of globalization will be redefined for generations to come.

Ramzy Baroud is a journalist and editor. He is the author of six books.