June 14, 2022
The End of Laissez-Faire: Russia’s Attempt at Reshaping the World Economy
Image by Ignat Kushanrev.
Starting on May 31, Russian Foreign Minister Sergei Lavrov embarked on a tour to Gulf Cooperation Council countries, where he visited Bahrain, Saudi Arabia, United Arab Emirates, among others. Lavrov’s main objective of these visits is to strengthen ties between Russia and GCC nations amid a global race for geopolitical dominance.
The Middle East, especially the Gulf region, is vital for the current global economic order and is equally critical for any future reshaping of that order. If Moscow is to succeed in redefining the role of Arab economies vis-à-vis the global economy, it would most likely succeed in ensuring that a multipolar economic world takes form.
The geopolitical reordering of the world cannot simply be achieved through war or challenging the West’s political influence in its various global domains. The economic component is possibly the most significant of the ongoing tug of war between Russia and its western detractors.
Prior to the Russia-Ukraine war, any conversation on the need to challenge or redefine globalization was confined largely to academic circles. The war made that theoretical conversation a tangible, urgent one. The US, European, western support for Kyiv has little to do with Ukraine’s sovereignty and independence and everything to do with the real anxiety that a Russian success will demolish or, at least, seriously damage, the current version of economic globalization as envisaged by the US and its allies.
Following the collapse of the Soviet Union in the early 1990s, the world was no longer a contested space between two military superpowers – NATO vs Warsaw Pact – and two massive economic camps – US vs USSR. We often speak about the American invasion of Panama (1989) and war in Iraq (1990), to demarcate the uncontested American ascendency in global affairs. What we often omit is that the military and geopolitical component of this war was accompanied by an economic one.
As Panama and Iraq were meant to demonstrate US military dominance, theestablishment of the World Trade Organization (WTO) in 1994-5, was meant to illustrate Washington’s economic outlook in this new world order.
Though unprecedented in their scale and ferocity, the anti-WTO protests in Seattle in 1999 seemed like a desperate attempt at reversing the alarming trend in the world’s economic affairs. Though successful in demonstrating the power of civil society at work, the protests have failed to produce any real, lasting outcomes. In the US/Western-centered definition of globalization, smaller countries had little bargaining power.
While rich countries successfully negotiated many privileges for their own industries, much of the Global South was left with no other option but to play by the West’s rules. The Americans spoke of free trade and open markets while maintaining a protectionist agenda over what they perceived to be key industries. Globalization was branded as a success story for freedom and democracy while, in essence, it was a cheap reproduction of the 18th-century ‘laissez-faire’ France’s economic doctrine.
It is easy to criticize poor countries for failing to challenge US/Western dominance. 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 encouraged small countries in the Global South to formulate their own economic blocks, so they may negotiate with greater leverage. However, even that was not enough to influence, let alone dismantle, the skewed global paradigm.
Large economies, like 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 changing, however, when China’s political and geopolitical outreach started to match its economic influence. Former US Republican President Donald Trump dedicated much rhetoric and eventually declared economic war on the so-called ‘China threat’. The current Democratic administration of Joe Biden is hardly different. Though busy countering Russia’s military operations in Ukraine, Washington remains dedicated to its anti-Chinese rhetoric.
The Marrakesh Agreement in 1994, the treaty upon which the WTO was established, was reached to replace the geopolitically defunct General Agreement on Tariffs and Trades of 1948. Note how each one of these global economic treaties resulted from their unique global geopolitical orders, the latter following World War II and the former following the collapse of the socialist camp. Though Russia and its allies are now mostly focused on claiming some kind of victory in Ukraine, their ultimate goal is to sow the seed for a different economic balance, with the hope that it will ultimately force a renegotiation of today’s globalization, therefore the West’s economic hegemony.
Russia is clearly invested in a new global economic system, but without isolating itself in the process. On the other hand, the West is torn. It wants to drop on Russia the Iron Curtain of the past, but without hurting its 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 saidthat trying to isolate Russia is “impossible, utterly unrealistic in the modern world”. His words accentuate Russia’s full awareness of the West’s objectives, and Lavrov’s busy itinerary, especially in the Global South, is Moscow’s own way of animating an alternative global economic system in which Russia is not isolated. The outcome of all of these efforts will not only redefine the world from a geopolitical perspective, but will redefine the very concept of globalization for generations to come.