Ben Aris in Moscow -
Over the last year the world has changed in a fundamental way. It is being split by a "Great Schism" that divides the developed world in the west from the developing world in the east, with the pair holding increasingly different views on how the world should be run.
Two recent articles highlight this. The always excellent Dmitri Trenin, director of the Carnegie Endowment for Peace in Moscow, wrote said in an article entitled "Russia's new national strategy" last week: "Amid the ongoing crisis over Ukraine, the Kremlin has adopted a new national strategy that crystallizes trends that have been gaining ground in Russia over the past two years. This development goes beyond the current crisis in Russian-western relations and has important consequences for Russia’s neighbours, especially the EU. Essentially, the Kremlin sees Russia’s future as separate from the rest of Europe’s."
Trenin goes on to argue that until recently Russia was still hoping to create a "greater Europe" that had Russia's partnered with its "natural ally" to stretch from Lisbon to Vladivostok. However, the Kremlin has abandoned that dream after being "cold-shouldered by many in the EU," Trenin contends. "Instead, Russia will largely rely on its own resources as it seeks to develop its economy, consolidate its political system, and build a strong military." In this context the conflict in Ukraine is a symptom, rather than a cause, of this change in attitude.
What's driving this change? After two decades of transformation the emerging world is increasingly operating on a par with the west. At the most basic level the combined GDP of the emerging markets is already on a par with that of the developed world.
Yet the "rise of the rest" is still not reflected in the attitudes of the West. The very terms "emerging market" and "developed market" suggest a hierarchy that is increasingly misleading. Incomes and the quality of life in emerging markets have been converging.
Of course the process is not complete and there is still a lot of catch up to do, but the progress already achieved is enough to bring the world to a geo-political tipping point. Emerging market governments have gone from simply trying to survive day-to-day, as Russia did in the 1990s, to having the stability to allow them to think about where they want to go in the long-term. They want to make that choice for themselves.
This is not an idle rhetorical device. Per capita income in Russia has already overtaken that of nominally "developed" Portugal, and is now chasing that of Spain. Last year, the United Nationals Development Programme upgraded Russia to a "high-income country" which puts it into the same class as the likes of the US and Germany – the only "emerging market" to achieve this honour. Russia is officially no longer an emerging market.
Iron Shower Curtain
Mark Adomanis pins the point down with a commentary in bne focusing on the motivations of the five BRICS countries (Brazil, Russia, India, China and South Africa) to set up the New Development Bank.
"Founded during the most acrimonious period of relations between Russia and the West in the past 25 years, the NDB is a living, breathing rejection of the idea that Russia is "isolated," Adomanis writes. "No matter how frequently the US state department's press office states otherwise, the simple fact is that Russia is not in any way isolated from the international community, and actually enjoys productive diplomatic and economic relations with the world's most populous and dynamic countries. As the foundation of the NDB underscores, relations between Russia and the other BRICS are on a positive trajectory, and seem likely to further strengthen.
"First of all, it highlights a dramatic shift in Russia's grand strategy; from cautious integration with the West to full-scale rejection," he continues. "Outside Russia, the NDB further underscores the continuation of a long process of multi-polarization. The NDB is perhaps the single most concrete example of the "rise of the rest" and the concomitant breakdown in the West's privileged position in the international system."
This clash between east and west has been characterised by many as the start of a new Cold War, but the new relations are more subtle than that. Trenin points out that despite the rejection of the West, the two sides will continue to do business with each other – a new much flimsier "Iron Shower Curtain" has fallen over Europe, rather than Churchill's more impenetrable version – but the way relations are organised is going to change.
"Russia’s development model will not be autarkic, but neither will it rely too much on exploiting the fruits of globalization," writes Trenin. "Recent sanctions against it have taught Moscow that these fruits can suddenly grow sour. Instead, Russia will be in the business of import substitution industrialization, promoting domestic agricultural production, and seeking to create a measure of financial autonomy."
And while the attention is focused on Russia, which is arguably on the verge of war with the West, Russia is far from alone in wanting this change. The NDB is a striking manifestation of the emerging world's solidarity on its goal to change the nature of international relations and promote themselves from the junior "emerging" partner to a fully fledged equal partner with the rest of the world.
The trouble is that this rebalancing of global politics is likely to be a very difficult and painful process. Diplomatic inertia means that the US is very unlikely to give up its self-perception of being the dominate global power. Likewise, the EU will never let Russia into the bloc because it is too large and powerful and would necessarily swamp European institutions. An EU led by Russia, rather than Germany, would be anathema to the politicians in Brussels, but given Russia is already the second biggest consumer market in Europe (and soon to be the biggest) a Moscow takeover would be inevitable.
The growing difference in perceptions between east and west will lead to arguments as painful and destructive as those that have wracked Christianity since the first ecumenical Council of Nicaea in AD325, called to decide the "true nature" of Jesus (divine or human?). Like in Christianity, the subsequent debate on the nature and role of emerging markets will be fought on ideological grounds, and the proponents will be as uncompromising as the Church's fathers.
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