By Observer R for the Saker blog

February 9, 2023

BACKGROUND

Slightly over a year ago, in December 2021, Russia published a proposal for setting up a new security architecture for Europe. Russia also warned of unspecified serious consequences if this proposal was not acted upon. The United States and other Western countries either ignored the Russian offer or more or less laughed at it.

Russia wanted the line of NATO forces moved back to where it was when the Warsaw Pact was dissolved. This meant getting NATO out of the former Eastern European countries, including Ukraine. The Russian proposal was widely termed the “Not-Ultimatum” for ease of discussion, since the Russians were polite about it but at the same time threatening action. Analysts were busy trying to figure what exactly Russia might do and offered many different scenarios.

Instead of negotiating with Russia, NATO continued moving closer to Russia and building up heavy forces in Ukraine. These forces were poised to move into the separatist areas of Eastern Ukraine and put an end to their independence effort. There were rumors or indications that Ukraine would move against the separatists at the end of January or the beginning of February 2022. In any event, Russia struck first and launched a “Special Military Operation” (SMO) against the Ukrainian forces on February 24, 2022. Thus began the “consequences” that Russia had warned about.

Very little has been done to develop a new security architecture for Europe, as the attention has been on the war in Ukraine, with conflicting claims over which side is winning and what might happen when the ground freezes enough to support heavy tanks. There is also enormous controversy over what weapons NATO should send to Ukraine.

Analysts are again busy trying to figure out what Russia might do next, and again there are many different scenarios being discussed. In the meanwhile, and mostly out of sight of the public, vast changes are taking place in international diplomatic, economic, and military affairs. In fact, analysts now commonly assert that we are already in WWIII and that the Ukraine War is only one battle out of many being carried on all over the world. Therefore, the quest for a new security architecture will not stop with Europe but will expand to envelop the entire globe.

This struggle has allowed cracks to develop in the “International Rules-Based Order” that was developed and managed by the US since WWII. Numerous nations that felt disadvantaged by that Order have begun to exercise their sovereignty and decline to take direction from the US. Washington can sense that Western control is slipping away but is unable to agree on a suitable course of action to counteract the ongoing breakdown.

Part of the problem is that the mainstream media in the West has not been very forthright in explaining the situation to the public. The media has concentrated on portraying all things Russian as bad and how the world should support the plucky little Ukraine in defending against the big bad wolf Russia.

This prevents the think tanks and foreign policy journals from properly analyzing the global situation and offering possible new courses of action. Also, the media does not properly prepare the public (and the politicians) for the momentous changes that are rising to the surface.

PETRODOLLAR

One of these changes concerns the US dollar and its exchange rate with foreign currencies. The US dollar has been supported by arrangements with some of the major oil-producing countries, especially Saudi Arabia. This arrangement, in effect since President Nixon, had oil sold only in US dollars, forcing oil-importing nations to acquire dollars, thus keeping the dollar very strong. This allowed for relatively cheap imports of consumer goods into the US, thus keeping up a high standard of living and low inflation.

This has been one important component of the Rules-Based Order supporting US hegemony. However, Saudi Arabia is now making deals to sell oil in Chinese currency, and other big producers such as Russia, Iran, and Venezuela are doing likewise. If this trend keeps up, the Petroyuan will replace the Petrodollar.

One reason for the wars in the Middle East and Africa has been to force countries to stay with the Petrodollar. These Western military adventures failed to achieve that purpose, as the US military is gradually being forced out of various oil-producing nations. The consequences of having the OPEC+ nations sell oil for gold or currencies other than the US dollar is not presented to the Western public in any understandable fashion.

The US uses its financial power to crash the exchange rate of other countries’ currencies when the US is promoting a regime change operation. When Russia began the SMO in Ukraine, the US sanctions on Russia collapsed the ruble in an effort to make things very difficult for Russia to continue the war. Many analysts were surprised that the tactic did not work as expected. Instead, Russia had prepared for it and proceeded to survive without the Western imports.

Suppose the end of the Petrodollar causes the US dollar to similarly collapse; would the US be able to survive as well? The US think tanks and foreign policy experts need to calculate and explain what would happen to prices and availability of goods at Walmart if the Petroyuan replaces the Petrodollar.

CHINA

The breakdown in the global order also affects the US-China relationship. The US has declared China to be the number one enemy for the future and is heating up the controversy over Taiwan. The US is already putting some sanctions on China, but the question is whether they will have the desired effect, or will they backfire as is the case with Russia?

A shooting war around Taiwan would interrupt commercial shipping between the US and China, thus causing many shelves in big box stores to go empty. Analysts disagree on which country would be worse off: China for lack of exports to the US, or the US for lack of imports from China. This is a very serious question since the answer is the basis for the strategy of both countries. Foreign policy journals might well devote themselves to answering this question instead of demonizing the leader of China.

NUCLEAR

Other aspects of the WWIII scenario involve nuclear weapons issues. When it seemed that Russia was gaining ground in Ukraine, there was talk of the losing side (Ukraine) possibly using a “dirty” nuclear bomb. When the tide changed and Ukraine was reported to be gaining ground, there was talk of the losing side (Russia) using tactical nuclear weapons. This is not very helpful for letting the pubic or the politicians understand the issues involved.

For example, just how small can a nuclear weapon be made? When and how have nuclear explosions been used? There seems to be quite a lot of discussion on this issue in the “alternative” media. What about the “neutron” bomb possibility that was in the news a while back? How powerful can nuclear weapons be made and still be put on the tip of the missiles used by US and Russia? Under what conditions is it possible to survive a nuclear war? Where is the concept of mutually assured destruction (MAD) these days? How about the spread of nuclear weapons?

There has been endless discussion about Iran, but now Japan, South Korea, and Saudi Arabia are in the news concerning acquiring such weapons. Do some countries have a “God-given right” to have nuclear weapons, while others are denied? As the International Rules-Based Order breaks down, who is going to decide the nuclear proliferation question?

As for the delivery of nuclear weapons, Russia is just putting in service the first nuclear powered torpedo attached to a new, extra-large, nuclear powered submarine. The nuclear warhead on the torpedo would be used to create tsunami conditions in coastal areas. Other Russian missiles have such a long range that they can fly over the South Pole to attack the US from a relatively undefended direction. Obviously, a new security architecture needs to have a global reach and much more creative thinking.

INDUSTRIAL

It has recently dawned on the West that it takes lots of factories to produce weapons and ammunition for a long war. The war in Ukraine has vividly illustrated this point, with NATO scrounging the world trying to find more military hardware and ammunition to send to Ukraine. It would also be preferable to have said factories nearby and under one’s own control.

The US has declared China to be Enemy Number One, while at the same time most goods sold in the US come from factories in China. This has prompted a belated change whereby the US subsidizes the building of factories in the US, with a prominent example being those for making computer chips in Arizona.

However, the US attempts to fix the factory problem have led to disagreements with Europe over protectionism. The US actions harm the manufacturers in Europe, adding to their other difficulties in obtaining cheaper gas, oil, and other natural resources from Russia. Other storm signals are on the horizon, with China and Russia both seeking to increase their exports of motor vehicles. Russia appears to be very slow, however, in ramping up production, considering that Russia has so many of the needed raw materials and does not need to import them or energy from abroad.

Currently, the US and Europe are the only major producers of commercial airplanes, with Canada and Brazil minor producers of regional jets.

This may change in the future, as China is building the C919 and Russia the MC-21 to compete with the US 737 and the European A320. Both the Chinese and Russian planes were originally to have engines, electronics, and many subsystems produced in the West by the same companies that supply the Western plane makers.

However, while the C919 has gone ahead with Western components and is nearly ready for commercial service, the MC-21 had to abandon the Western parts due to sanctions on Russia. Consequently, Russia has had to design and build indigenous parts to substitute for the Western versions. This has delayed the MC-21 but will give Russia full control over the design and production as well as increase the need for more factories in Russia to produce the parts.

On paper, the MC-21 looks superior to the other three planes – but it remains to be seen if the Russian prowess in building military jets will transfer to building commercial jets. If Russia is successful, it will be another case of the counter-productive nature of sanctions.

INTERNATIONAL ORGANIZATION

The Rules-Based Order is running into more problems related to the international organizations that have been set up to manage and enforce the US-backed system. The UN Security Council is a case in point: Who has the right to decide which countries can be permanent members? If Russia is one, then why not Japan? If China, then why not India? If Britain and France, then why not Germany and Brazil?

So far it appears that most current permanent members of the Security Council have not been eager to make way for new members. This is odd, since both Russia and China keep referring to the UN as the basis for world political order.

The possible breakout is that a British official has recently stated that the Security Council could be expanded to include several more countries.

Russia has indicated support for giving India a permanent Security Council seat.

North Korea has already strongly protested against the idea of placing Japan on the Council.

Yet, as the relative power among nations shifts, with some growing in relative economic and military status, the pressure to admit new members and perhaps remove old members will only intensify. Eventually the new major powers will have to be accommodated or the UN will lose whatever effectiveness it still possesses.

Although the US continues to try to manage the organizations, competing organizations are being formed and appear likely to gain ground in the turf battle. Even now, the US is complaining about Africa getting in debt to China while overlooking the history of that continent’s indebtedness to Western financial interests. Other countries are lining up to join the SCO, BRICS, Asia Development Bank, and the “New Silk Roads” from China.

The US seems slow to come up with an effective solution, so the US influence over international organizations continues to ebb away.

Part of the problem was recognized way back in 1776, when Adam Smith published his Wealth of Nations tome. Smith claimed that empires did not advance the wealth of nations from the “national interest” standpoint so much as advancing the wealth of “special interests” in the nation. This question would seem to be an appropriate one for think tanks to study in depth if they are seriously concerned with the “national interest” and the plus and minus of foreign adventures. Was Smith correct or not?

SOCIAL

The WWIII scenario is not only being fought with dollars and gold, weapon systems, cybersecurity, and biological warfare, but also with social policy. Information is now appearing to suggest that human groupings do better in the long run if they practice restraint in sexual behaviors, and sociological work indicates that the “Wokeism” policy of the West is not especially attractive to the majority of humans living in the East and South.

Thus the vaunted “soft power” of the West is being rapidly eroded in much of the world. The contest for the hearts and minds of billions of people across the globe has in the past been a slam-dunk for the West and Hollywood. Now, however, with Hollywood putting out films and shows promoting Wokeism, there are grounds for concern as to the effect this will have on US hegemony. Once again, think tanks and foreign policy journals are slow to investigate and report on this factor.

OLIGOPOLY

Instead, these organizations in the West spend time claiming that the US is promoting democracy in foreign lands, blissfully ignorant that folks in these foreign lands are mostly bemused by this since they are aware that professors at famous US universities have evidence that the US is really an oligopoly.

This is an important point, since China has recently awakened to the issue of whether the Party controls the oligopolists or the oligopolists control the Party. As a result, China cracked down on the extremely rich and made it clear that the Communist Party was on top. The worry was that the very rich in China would find kinship with the very rich in the West, and by degree become part of a “Plutocrat Party” thereby undercutting the authority of the Communist Party.

It is noteworthy that last month the World Economic Forum (WEF) met in Davos, Switzerland, and no folks from China (or Russia and Iran) were on the attendance list. There were attendees from Hong Kong, but they were listed under “H” as in “Hong Kong, SAR, China”–thus appearing to try to straddle the fence.

The attendance by politicians seemed to be down, with only the German leader out of the G7 countries on the list. The Vatican did not appear either, although it may have been under some heading other than “V”–a high level representative was thought to have attended the previous meeting.

Perhaps the press surrounding the controversial WEF program has made public figures hesitant to be too closely associated with the Great Reset. In Russia, the oligopolists created during the Yeltsin Era have either agreed to support the current regime or have left Russia for more hospitable locales, often Britain, Israel, or the US. Thus people from around the world who have no desire to be part of the Great Reset promoted by the WEF have every reason to distance themselves from the major supporters of the WEF – the US and Europe.

CIA’s WORLD FACTBOOK

The taxpayers of the US shell out billion and billions of dollars each year to support an institution known as the Central Intelligence Agency. A portion of this money goes to support the research, writing, and publication of a document called The World Factbook. The latest edition is dated January 26, 2023, and can be found on the internet with an easy search. The book contains a wealth of information about each and every country in the world.

One such factual listing is a page ranking the countries by Gross National Product (GNP).

According to the CIA, the country with the largest GNP is China, followed, in order, by the US, India, Japan, Germany, and Russia. The Russian economy (Number 6) is close in size to that of Germany and not too far behind that of Japan.

However, many writers, analysts, editors, bureaucrats, and politicians in the US do not seem to be familiar with the CIA effort. There are still many cases where the US GNP is still referred to as Number One, and the Russian GNP, for some reason, as being the size of Spain, Number 16. People held under the sway of this delusion might easily believe that Russia was a weak and small country economically speaking that would crumble under the weight of comprehensive sanctions.

Perhaps the Ukraine misadventure could have been avoided if the CIA book had had been more widely known and consulted. In any event, Russia will likely soon surpass Germany due to the latter’s energy problems leading to noncompetitive industries.

CONCLUSION

The proposal by Russia for negotiating a new security architecture for Europe was rejected by the US That was extremely unfortunate for everyone, as it could have prevented the subsequent war in Ukraine. Then, following the Russian SMO, Ukraine and Russia sat down to negotiate in Turkey and came to some sort of agreement, presumably along the lines of the Minsk Accords.

Unfortunately again, this agreement was scuttled when the British Prime Minister flew to Ukraine and had a talk with the officials there. This action indicated that Ukraine was not actually in charge of its own destiny, but rather that the war was being controlled by the NATO powers. The powers in the West clearly thought that they would come out on top in the war and that this would somehow preserve US hegemony.

Unfortunately yet again, the West guessed wrong and made what will likely be viewed in hindsight as a catastrophic decision. Russia cannot be defeated in a conventional war in Eurasia, and presumably the military experts and intelligence folks in the West should have been aware of this fact.

Furthermore, the sanctions against Russia were counterproductive. Russia was already highly self-sufficient and the sanctions greatly sped up import substitution. The dream of a regime change in Russia was likewise a case of hope over reality.

Additionally, by refusing diplomacy, the US turned a problem in Eastern Europe into a de facto WWIII. Now the negotiations over a new security architecture will have to cover the entire globe. This will be a much more difficult undertaking and a problematical outcome for the West. The West is not in a military, nor economic, nor social position to be very successful in negotiations with the East and South. Even having negotiations is problematical, since the East and South view the West as being “not agreement capable.”

Thus it will dawn sooner or later on the Western leaders that they bit off more than they could chew.