In our current times, the global geopolitical landscape is a dynamic arena where the balance of power is constantly evolving. In the past year alone, the Russia-Ukraine war and mounting tensions between China and the USA have led to a reconfiguration of power dynamics. Today, we will explore the current state of affairs between Western countries, Middle Eastern countries, and Asia, with a focus on China and India, as these regions navigate the complexities of international relations.
The Russia-Ukraine Conflict:
The ongoing conflict between Russia and Ukraine has had far-reaching implications on the balance of power. It has strained relations between Russia and the Western countries, leading to economic sanctions, diplomatic tensions, and heightened security concerns. The West, comprising primarily the United States and European Union, has supported Ukraine, imposing sanctions on Russia and providing military aid to the Ukrainian government. The conflict has shifted the balance of power in favor of the West, as it strengthens alliances and galvanizes support against Russia's expansionist ambitions. A year after Russia's invasion of Ukraine sparked the largest conflict in Europe since World War II, the repercussions continue to reverberate around the world. Not only has the war in Ukraine set off a geopolitical realignment, but it has caused economic hardship far from the epicenter of the fighting.
The Feb 2022, invasion has touched off a refugee crisis, as Ukrainians flee the conflict in their homeland and many Russian men seek to avoid conscription. More than eight million refugees have fled Ukraine in what the World Health Organization [WHO] describes as "the largest movement of people in the European Region since the Second World War." Many have been involuntarily relocated by Russia. Others have put a strain on resources, as well as schools and hospitals, in Poland and Germany. However, one of the positive effects has been that Ukrainian refugees are filling factory jobs left vacant by Europe's labor shortage. The political effect has been the faster process toward expanding NATO, with Finland and Sweden pursuing membership after decades of official neutrality.
A 21st century war in Europe, led by a nuclear power, is pushing the world toward realignment. It has rattled NATO, the European Union and the U.N., forcing countries to take sides in ways that have led to escalating tensions and diplomatic shifts. For example, Turkey, despite being a NATO member, has increased trade with Russia since the start of the war and has strenously objected against Sweden and Finland joining the NATO alliance.
There is a push back to the US efforts to widen this war into a global conflict. When NATO’s secretary-general called on South Korea to supply military assistance to Ukraine, stressing Kyiv’s “urgent need” for more ammunition, Seoul refused. Despite being a NATO member, Turkey has refused to join Western sanctions against Russia or to supply Ukraine with weapons, instead pushing the two to begin peace talks. South Africa went ahead with joint military exercises with both Russia and China despite Western criticism; and Iran has acknowledged that it is providing Russia with attack drones.
India has refused to take sides in what it views as essentially a power struggle between the East and West. India has instead opted to walk the middle path: preserving its time-tested relations with Russia, seeking to improve relations with China, and strengthening relations with USA and Japan. India’s middle-path approach has gained greater relevance and urgency with its leadership of the G-20 this year. Prime Minister Modi has reinforced India's long-standing policy of nonalignment, and creatively rephrased it as “multi-alignment”. Multi-alignment, according to India's Foreign Minister Dr. Jaishankar, is “more energetic and participative.” India currently balances its memberships in the Shanghai Cooperation Organization, alongside Russia and China (the SCO), and the Quadrilateral Security Dialogue (known as the Quad) with Australia, Japan, and the United States. India has placed a significant emphasis on debt relief for developing economies, and Prime Minister Modi recently expressed his concern for the unsustainable debt that threatens the “financial viability” of many countries.
The Middle East set-back to USA
The Middle East, long characterized by geopolitical complexities, finds itself in a unforeseen position amidst the Russia-Ukraine conflict. Historically, the region has been influenced by both Western powers and Russia, primarily due to its strategic importance in terms of energy resources and geopolitical significance. The old US Middle East policy strategies of the US which asked Arab partners for their undivided loyalty, and which assumed collective enmity toward Iran, does not work anymore. There was a time when USA was able to impose, or at least rudely communicate its preferences to its Arab partners. But that time is now gone. The USA does not have the leverage it once had in the region. It is also less trusted by its Arab partners, who have interpreted the US withdrawal from Afghanistan and tolerance of Iranian aggression in the region to mean that it is headed for the exit from the region.
There is no doubt that USA has stepped back from diplomatic leadership on the Middle East peace process and conflict management across the region. Only on issues related to Iran, the USA has a sustained but not consistent, focus. Other actors have been inserting themselves into regional decision-making. As these two dynamics converge, a new geopolitical structure is evolving. It has seven primary countries: Saudi Arabia, Iran, Turkey, Israel, the United States, India and Russia. Others, like Egypt, maintain some of their past influence, although at significantly diminished levels. The Iran - Saudi Arabia peace pact, brokered by China has the potential of bringing about a higher level of peaceful co-existance, that the USA has not been able to achieve over decades.
US officials understand very well that asking regional partners to downgrade their economic relations with China is a nonstarter (since, China is Saudi Arabia’s largest trading partner). They also recognise that encouraging these partners to limit their political relations with China is not an option either. These partners are likely to increase their cooperation under the principle of non-interference in the internal affairs of states. The one major area where the USA still has enough influence to shape the policy agenda with its Arab partners, is defence and security. The big challenge for USA will be to offer substantial incentives to its Arab partners to refrain from military cooperation with China, while ensuring they (the USA) do not promise anything it cannot deliver, including, most notably, a formal defence pact or official security guarantees. Economic interests have compelled several regional powers to increase their trade and do more business with China, and Gulf Arab partners’ new diplomatic approach to security has sought to pacify and normalise ties with Iran.
In the Middle East, India is not supporting another country’s empire but advancing its own interests. When the United States, India, Israel, and the United Arab Emirates set up a new joint working group to coordinate strategy earlier this month, the four-country combination inevitably drew comparisons with the Quadrilateral Security Dialogue, the Indo-Pacific Quad that joins the United States and India with Australia and Japan.
Two factors have played an important role in India’s relations with Middle Eastern countries: economics and India’s internal politics. The economic factor is centered on the oil trade and remittances from the sizable Indian diaspora in the Middle East. The second factor is India’s internal politics with regard to its own large Muslim population. Over a period of time, however, India has diversified its relations beyond these factors. Especially in the case of Saudi Arabia, where India has been developing an extended strategic partnership over the past few years, leading to an agreement to set up a Indo-Saudi Strategic Partnership Council, and to increase cooperation on counterterrorism.
China's Rising Influence:
China's rapid rise as a global power has been a defining feature of the 21st century. With a robust economy, expansive military capabilities, and an assertive foreign policy, China seeks to challenge the dominant global position of Western countries and reshape the geopolitical landscape in Asia and beyond. The ongoing trade tensions and ideological differences between China and the United States have strained relations and increased the likelihood of armed confrontation. As the world's two largest economies, any conflict between China and the United States would have profound consequences for global stability and the balance of power.
On his recent visit to China, Brazilian President Luiz Inácio Lula da Silva pledged to work with Beijing to “rebalance” global politics and expressed a desire to settle more trade in a currency other than the U.S. dollar, another interest that is shared by China. In addition to Lula, heads of state or government from the European Union, France, Malaysia, Singapore and Spain have visited China since late March 2023, and senior Chinese officials have met with their counterparts in multiple countries. French President Emmanuel Macron in particular raised eyebrows after voicing support for Chinese narratives and releasing a joint statement pledging cooperation in areas of nuclear energy and food security. China is waging what could be termed a new “great game” for geopolitical dominance. While China frequently deploys military coercion tactics to back up its extensive territorial claims, it seeks to secure global dominance not by a risky campaign of military conquest, but by a more subtle and gradual approach of amassing political and economic influence.
The balance of power in the 21st century is characterized by a complex interplay between Western countries, Middle Eastern countries, India and China. The Russia-Ukraine conflict has led to the consolidation of Western alliances, bolstering their position vis-à-vis Russia. However, the rise of China, which is being countered by the rise of India, introduces a new dynamic, as it challenges the Western-led order and seeks to assert its influence regionally and globally. 2023 looks set to be a transition year for geopolitics. An end to the war in Ukraine does not appear in sight. Putin looks unlikely to win decisively and Ukraine will not give up. The West still lacks a common strategy on how to end the war. The war will continue to modify the post-Cold War world order, but no clear alternative structure is emerging. While Western unity has been strengthened, particularly through NATO and the G7, the partnership between China and Russia remains strong. Amongst this fragmentation and uncertainty, one thing is clear: the China-US relationship will remain the single most important fault line in geopolitics.
To counter China's 'Belt and Road Initiative', national security advisors from India, the United Arab Emirates (UAE), and the United States met with Saudi Crown Prince Mohammed bin Salman in Riyadh to discuss an ambitious connectivity project to link the Middle East to India through roads, rails, and seaports. The connectivity project aims to leverage India’s capacity as an infrastructure provider. Its track record includes the construction of the world’s largest rail system in Asia and contributions to cross-border electricity-sharing arrangements. Through the new initiative Indian officials hope to develop a deeper infrastructure footprint in the Middle East to counter China’s BRI. This Middle East-India connectivity initiative is still purely aspirational, but its potential is vast, linking India with a region critical to its interests and in cooperation with some of its top partners. It is planned that India could eventually benefit from land and sea trade routes stretching from Israel and the UAE all the way to Greece’s Piraeus port and onward into Europe.
Despite remaining strong in 2022, Western unity will be tested. The EU and the US do not share the same approach towards China. The EU itself is divided, with Germany advocating for a more balanced approach. Tensions between the EU and the US are also growing on trade and subsidies following the US Inflation Reduction Act which provides massive subsidies for US green industries, threatening European industry at a time when it is already facing high energy prices. The EU has announced that it will develop its own subsidy package in response.
Many countries in the ‘Global South’ will seek to insulate their interests from big power competition. This new form of non-alignment is motivated by practical concerns, including leveraging market access to and support from the West and China for investment, technology and debt. They may still align with either side on different issues on a case-by-case basis. Three major developing countries will chair the G20 in 2023, 2024 and 2025: India, Brazil and South Africa allowing them to influence the geopolitical agenda.
The possibility of an armed confrontation between China and the United States poses significant risks. It could potentially destabilize the global economy, disrupt international trade, and escalate tensions in the Asia-Pacific region. The USA, recognizing China's growing influence, has adopted a more assertive stance, strengthening alliances in the region and engaging in economic and military partnerships with countries like Japan, South Korea, and Australia. These alliances serve as a counterweight to China's ambitions and contribute to maintaining a balance of power.
Against this backdrop, the global economic situation will remain uncertain and challenging throughout the year. Geopolitical instability will continue in 2023 and has become a key driver of policy developments. Geopolitical developments are directly leading to rapid policy changes in energy, digital, tech, trade, and defence areas as well as to investment screening rules. Corporates and investors need to anticipate and analyse these trends and understand how they will impact governments’ priorities. Businesses are facing governments that are becoming economically less rational. The political dimension is now taking a leading role in business policy decisions. Understanding the political context of these decisions is key to understanding and anticipating future policy changes and engaging with governments effectively.
Today, Geopolitical instability remains prominent, 30 years after the Cold War and the alleged “end of history.” State-sponsored cyber risk, pandemics, adaptation to climate change, economic retrenchment, accelerating technological change, and demand internalization are all combining to create a risk environment that is unprecedented in terms of the challenges it poses. Financial disruptions, national and global security issues, supply chain vulnerabilities, existing and emerging cybersecurity threats, disruptions in food security, sudden and unexpected changes in the environment, and concerns about public health are interrelated like never before and therefore risk management must become an increasingly collaborative enterprise, and there is a clear and urgent need for uncommon collaborations in risk management.
Essentially, there are many new policies and actions that are needed. Failures to accurately assess risk are, at their foundation, failures of imagination. Therefore, all stakeholders must embark on a focused “campaign of learning” to build a wider and stronger foundation of relationships and knowledge that allows them to see connections that they may not otherwise notice.
We can win the race to reduce our vulnerability to risk and take advantage of the opportunities that arise. That is, if we acknowledge the extent to which things have changed, allow ourselves to be less comfortable in what we think we know, take ownership of the challenge, and act; early and often.
References & Citations:
https://en.majalla.com/
https://www.npr.org
https://www.csis.org
https://www.discoursemagazine.com/
https://flint-global.com/
https://www.dw.com/en/
https://foreignpolicy.com/
