A BRAVE NEW WORLD: THE SHIFTING BALANCE OF GLOBAL POWER
profiting from cheap trade (all this time China has been buying oil at US $20 below Brent crude); secondly, that China is now capable of making other nations rich, without the help of the West (as is shown by Russia’s ever-increasing current account); and thirdly, and perhaps most crucially, that China is developing its own financial framework, as shown by the use of its CIPS system to trade with Russia in lieu of SWIFT, from which the majority of Russian banks were cut off. This presents a stronger China to the world, showing that it enjoys most of the economic perks that the US previously monopolised, such as the ability to make or break economies with its trade. A more indirect and perhaps much more important impact is the drifting away of the developing world from the US sphere of influence. Sanctions introduced a supply-side shortage of fuel in the world, making energy more expensive for businesses. The resulting increase in production costs most affected the developing world, which could no longer afford food (40% of the CPI in sub-Sa- haran Africa is now made up of food) owing to current account deficits, thus considerably worsening quality of life for the average citizen. High food prices are directly linked to political instability, and in the eyes of the already western-scep- tic populations, they are evidence of the failings of American-led globalisation. A perfect storm has been created: we should listen to the public outcry, in much of the world’s population, that the system has left them behind; we should note the willingness of the US to seize a large proportion of a country’s wealth; and we should see on the horizon an alternative system led by China, with human rights abuses increasingly overlooked. The brave new world may not yet be here, but it is certainly coming. ◎
Alex Gerasimchuk (Year 12) argues that, far from being at the end of history, we are currently moving towards a new era of global power relations
I n 1992, the political philosopher Francis Fukuyama published a book titled The End of History and the Last Man in which he argued that history is a progression from one political epoch to another, and that we have reached the end stop on this dismal trainline with the uni- versalisation of western liberal democracy and globalised, western-dominated markets. Writing in 2023, it seems to me that Fukuyama was wrong: this is not the end point, but rather the birth of a brave new world, which is divided rather than united. As outlined by Fukuyama, the world currently operates under a system of dollar imperialism, which has afforded the United States a unique position in the global financial system. Given that the world reserve currency is the US dollar, countries are compelled to keep large quantities of the dollar on hand for international trade (denominated in dollars). As a result, 60% of the world’s foreign currency reserves are held in dollars. This wealth is stored as US treasury bonds, as they give the most security against vol- atility and are therefore the safest proverbial basket within which countries can keep their financial eggs. This system gives the United States extraordinary political and economic power. It means that the US government can take out huge amounts of sovereign debt, on a scale unavailable to any other country. The political benefits, however, are even greater: the US is able unilaterally to turn any nation into a pauper state at the drop of a hat, A perfect storm has been created: we should listen to the public outcry, in much of the world’s population, that the system has left them behind
both directly, by seizing its dollar assets (which likely make up the majority of a country’s wealth), and indirect- ly, by excluding them from the dollar market and instruct- ing all US allies and subordinates (anyone with a shred of globalisation in their economy) to exclude them as well. This system is known as ‘dollar diplomacy’, as well as ‘dollar imperialism’ by those who are more critical, and it may be coming to an end. The beginning of the end of US global economic and therefore political hegemony was brought forth by the failure of the sanctions against Russia to deliver the an- ticipated knockout blow. As a result, some countries with China is now capable of making other nations rich, without the help of the West questionable systems of government and poor human rights’ records reconsidered the benefits of being subordi- nate to the US. An early direct impact of the failed sanctions was to high- light China as a potential competitor to the US as a ‘moth- er country’, in a financial sense. The US has been unique (since the collapse of the USSR) in possessing the ability to prop up a regime through trade, or to provide access to the financial institutions of the global economy. However, recent events show that China is now able to provide that service as well. The sanctions led to the development of Sino-Russian relations; two-thirds of Russian oil previously delivered to the West is now flowing to China, and gas deliveries there have increased by 60%. This showed the world three things: firstly, that the US doesn’t hold the monopoly on
Artwork by Alexander De Almeida (Year 11)
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THE ALLEYNIAN 711
OPINION, INTERVIEWS & FEATURES
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