AS OF THE writing of this article, the Ukrainian-Russian war of 2022 is still ongoing, but one day, it will end, and when it does we will emerge to a whole new world. This new world will have a few key elements.
First, the Western World has dramatically injured its diplomatic power by removing Russia from the world’s global trading system, SWIFT.
If the US and Europe can do that to a sovereign country, it can do that to others and they will be looking for alternatives. This course of action may, at the very least, erode confidence in Western Trade.
Second, the West had shut off the Russian Central Bank’s access to its own foreign reserves, a stupid and insane act. That’s the equivalent of a bank shutting a person out of his savings, and such measures will be noted by other clients.
It’s important to remember that the dollar’s value as the global reserve currency is partly supported by trust in the global financial system. If that very same system can shut down a country’s access to its own reserves then more countries may have second thoughts about the dollar and the global trade system in general.
Third, the North Atlantic Treaty Organization (NATO) has been weak in its response. Ukraine has expected Western military support, and aside from a few volunteers and weapon sales, NATO hasn’t really done much. This can greatly weaken the alliance, and may trigger further problems for it in the future.
Couple the military with the economic / financial consequences of what the West has done in this war and I can see that the Russian-Ukrainian War may have further accelerated the decline of Pax Americana.
China and Russia will want to move away from the world order.
Even India and the United Arab Emirates have signaled that they will not impose sanctions on Russia, and may follow their own independent paths.
Given time, I think all these things will lead to a coming apart of the global system./PN
