The Rise Of A Not-So-New World Order

by Sarang Shidore

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For decades the United States has sat atop a unipolar world, unrivaled in its influence over the rest of the globe. But now that may be changing as a new, informal alliance takes shape between China and Russia. The two great powers have a mutual interest in overturning an international order that has long advantaged the West at their own expense. And as the Earth's sole superpower turns inward, they will seek to carve out bigger backyards for themselves. Will their marriage of convenience once more give rise to the bipolarity that characterized the Cold War, or will it unravel in the face of a natural rivalry rooted in geopolitics?

An Informal Alliance Emerges

First, a few observations about the Cold War. The multidecade conflict was much like the classical great-power contests that have taken place since the advent of the modern nation-state: Two blocs of roughly equal power (NATO and the Warsaw Pact) participated in a continuous arms race, waged proxy wars and engaged in the politics of securing spheres of influence.

But the Cold War also contained some striking new elements. Chief among them were the feud's pervasive reach into most sovereign states, the presence of nuclear weapons, the two participants' radically different economic and political systems, and the missionary zeal each superpower had for exporting its ideology worldwide. Moreover, membership within each alliance was sizable and stable, though developing countries occasionally shifted their loyalties after a revolution or military intervention by the United States or the Soviet Union.

On their face, any parallels between today and the Cold War of decades past seem overblown. The United States leads most formal alliance structures; Russia and China have no obvious ideology to export; and variations of capitalism have won out worldwide, leading to a deeply integrated global economy. Furthermore, Russia and China appear to have too many conflicts of interest to form an enduring partnership.

A closer look at recent events, however, suggests otherwise. Despite lacking an official alliance, Russia and China have acted virtually in lockstep on many major security issues. Both were first neutral, then opposed to, NATO's intervention in Libya in 2011. Both have taken nearly identical positions on the Syrian conflict and cybergovernanceat the United Nations. Both have issued a joint proposal to resolve the crisis on the Korean Peninsula by freezing North Korea's nuclear and missile programs in exchange for halting joint military exercises between South Korea and the United States. Both are firmly opposed to undermining the Iranian nuclear deal. And both have lobbied against U.S. missile defenses in Central Europe and Asia, as well as the Western doctrine of intervention known as "responsibility to protect." Meanwhile China - a well-known defender of the principle of national sovereignty - has been noticeably silent on Russia's intervention in Ukraine.

At the same time, Beijing and Moscow have symbolically demonstrated their compact in the realm of defense. They have conducted joint military exercises in unprecedented locales, including the Mediterranean Ocean and the Baltic Sea, as well as in disputed territories, such as the Sea of Japan and the South China Sea. Weapons deals between them are likewise on the rise. Russian arm sales to China skyrocketed in 2002. After temporarily dropping off between 2006 and 2013 amid suspicion that China was reverse-engineering Russian platforms, Russia's sales to China resumed. Moscow agreed to sell its most sophisticated systems, the Su-35 aircraft and the S-400 surface-to-air missile systems, to its Asian neighbor.

The two great powers have signed several major energy deals of late, too. Russian oil has made up a steadily growing share of China's energy portfolio for years, and in 2016 Russia became the country's biggest oil supplier. China, for its part, has begun to substantially invest in Russia's upstream industry while its state-run banks have heavily bankrolled pipelines connecting the two countries. Beijing, for instance, recently acquired a large stake in Russian oil giant Rosneft. Russian exports of natural gas, including liquefied natural gas, to China are climbing as well. These moves are rooted in grand strategy: Russia and China are privileging each other in energy trade and investment to reduce their dependence on locations where the United States is dominant.

With their robust indigenous defense industries and vast energy reserves alone, China and Russia satisfy the basic requirements of presenting an enduring challenge to the United States. But both have also begun pushing for greater financial and monetary autonomy by distancing themselves from the dollar-dominated order of international trade and finance. China has already partially seceded from the SWIFT system of global banking transactions by creating its own system, CIPS. Russia is following suit, and it too has started to build an alternative network. Moreover, the Chinese yuan recently entered the International Monetary Fund's Special Drawing Rights currency basket. Now most Asian currencies track far more closely with the yuan than the dollar in value. China plans to introduce an oil futures contract in yuan that can be fully converted to gold as well. This, along with Beijing and Moscow's decision to boost their gold reserves, suggests that they may be preparing to switch to a gold standard someday. (The convertibility of gold is an important intermediate step toward boosting investor confidence in an up-and-coming currency like the yuan, which still suffers from many constraints such as illiquidity and significant risk in its country of origin.) The seriousness of their effort indicates their determination to move away from a system ruled by the U.S. currency.

Of course, China and Russia still suffer huge deficits with respect to the United States in technology, innovation and global force projection. But the gap may be closing as China makes substantial investments into sunrise technologies such as renewable energy, biotechnology and artificial intelligence. Plus, the projection of power to every corner of the globe probably isn't their immediate goal. Rather, the two powers seem to be aiming for maximum autonomy and a proximate sphere of influence that encompasses Eastern Europe and parts of the Middle East and Asia. They also seek to overhaul international rule-making with the intention of gaining greater influence in multilateral institutions, securing vetoes over military interventions, increasing global governance of the internet (albeit for their own self-interest), ending U.S. pressure regarding democracy and human rights, dethroning the reigning dollar and accounting for their interests in the design of the global security order.

A Durable Marriage of Convenience

China and Russia are not natural allies. They have a long history of discord and at least three areas of conflicting interests: overlapping backyards in Central Asia, competition in arms sales and a growing asymmetry in power that favors Beijing.

Over the years, the two countries have taken on somewhat distinct roles in Central Asia. Russia has become the leading security guarantor in the region by founding the Collective Security Treaty Organization (CSTO), a formal alliance with a mutual self-defense clause, and by building military bases in Kyrgyzstan and Tajikistan. Russia has also integrated Kazakhstan into its air defense system. By comparison, China is rapidly emerging as the leading energy and infrastructure partner in the region. The country's Belt and Road Initiative is well underway, and several oil and natural gas pipelines connecting China to its Central Asian neighbors are already functional. That said, both powers have a stake in the region's security and economic integration, as evidenced by the presence of the Russia-led Eurasian Economic Union and the China-led Shanghai Cooperation Organization there.

Despite their dependence on China and Russia, Central Asian states still enjoy considerable autonomy and cannot be deemed satellites of either great power. The recent resistance of Kazakhstan, a CSTO member, to Russian pressure to deploy troops to Syria is a case in point. Of the five Central Asian countries, Kyrgyzstan, Tajikistan and Kazakhstan are most closely intertwined with China and Russia; Uzbekistan and Turkmenistan have kept a greater distance.

The dynamic Chinese economy's steady outpacing of its Russian counterpart would ordinarily cause deep consternation in Moscow. However, Russia seems to have largely accepted the reality of China's rising power - an acceptance that is key to the formation of a compact between them. Beijing, for its part, has tactfully walked back from its historical claims to Outer Manchuria, paving the way for the settlement of its long-standing border dispute with Moscow. China has also worked to keep its economic competition with Russia from degenerating into political antagonism.

Russia is still wary of China, though. Against the wishes of Beijing, which has a long-standing competition with New Delhi, Moscow supported and facilitated India's accession to the Shanghai Cooperation Organization. The Kremlin also keeps close ties to Vietnam and maintains an ongoing dialog with Japan. However, Russia has also compromised with China on some of these matters, including by agreeing to Pakistan's simultaneous admission to the bloc. It has also limited its cooperation with Tokyo, dragging its feet in settling its Kuril Islands dispute with Japan.

These concessions indicate Moscow's pursuit of a hedging strategy, not a balancing one. If Russia were truly trying to balance China, their rivalry in Central Asia would take on a security dimension, resulting in factionalization or, in the worst-case scenario, wars between their local proxies. So while some structural tension certainly exists between China and Russia and could lead to a security rivalry in the long run, their leaders have actively managed and largely contained it thus far. This marriage of convenience will likely prove lasting, given its goals for dramatically transforming the international system. And even if a formal Russia-China alliance never comes to pass, the durability of their partnership already makes it feel like one in many ways. That the two countries feel no need to formalize their alliance, moreover, indicates that informality will increasingly serve as a template for strategic partnerships in the future.

The Resurgence of the Middle

Could an alignment between Russia and China expand to new states? The country most likely to join their compact is Iran. A revolutionary state with deep enmity for the United States and its allies, including Israel and Saudi Arabia, Iran has a strong desire to rewrite the rules of the current global order. As China's Belt and Road Initiative has taken off, Chinese investment in Iran has started to rise. And though Iran and Russia have their differences, their security interests have recently aligned. In the Syrian civil war, for instance, they have closely coordinated their air and ground operations over the past two years. Iran, meanwhile, would add to the two great powers' energy heft and welcome any attempt to shift global energy markets away from the dollar. Under the current circumstances, Iran has every reason to strengthen its strategic ties with Russia and China, even as it woos global investors.

Iran isn't the only core state candidate that may join the Sino-Russian compact. China's Belt and Road Initiative is a formidable gambit, partly intended to draw several states into its orbit. Among them are Pakistan, Myanmar, Bangladesh, Turkey, Sri Lanka and Thailand. All of these nations, in theory, could join the Sino-Russian core. Still, it is doubtful whether most will. Turkey, a member of NATO, has worked more closely with Russia and Iran in the past few months to manage the Syrian conflict, and it is heavily reliant on Russian energy supplies. But Turkey will find it difficult to abandon its commitments to NATO; instead it will most likely play a transactional game with all three powers.

On the Asian continent, it is in Sri Lanka's and Bangladesh's best interests not to antagonize their next-door neighbor, India, by tilting too far toward China. Moreover, Myanmar has a complex history with China, while Thailand is a U.S. treaty ally that lately has sought a middle ground between Washington and Beijing. Pakistan has been close to China for decades while maintaining an intense (if transactional) security relationship with the United States and complicated ties with Iran. If relations between Islamabad and Washington as well as New Delhi and Beijing deteriorate sharply, Pakistan may find that aligning with Russia and China brings more benefits than costs. But when all is said and done, any attempt to transform the Sino-Russian compact into an expansive, international alliance would encounter massive roadblocks.

Meanwhile, all is not going as planned within the United States' own bloc. Washington's treaty ally, South Korea, staunchly opposes any U.S. military action against North Korea. The United States' ties with another major partner, Turkey, are deteriorating. The Philippines is trying to balance between the United States and China, as is Thailand. Australia is increasingly torn between its deep economic dependence on China and its commitments to the United States. Wide rifts have opened between the United States and Europe over trade, climate action and Iran. Hungary has moved closer to Russia as populist nationalism - in some cases laced with support for Russian President Vladimir Putin - rises across the Continent. Then there is Germany, which the United States has long worried is less than fully committed to balancing against Russia. On top of all this, a nationalist upswing in U.S. politics has made the superpower more hostile to trade agreements and foreign entanglements.

On the other hand, the United States is bolstering its security relationship with Indiaand Vietnam, finding ready partners against China and Russia in Japan and Poland, respectively, and enjoying the prospect of a post-Brexit United Kingdom that is more beholden to Washington than ever before. With a population of more than a billion people, India's future is particularly consequential to the global order - but only if it can transcend its many domestic challenges. And though India could become a core member of the U.S.-led bloc in the future, its historical autonomy and deep defense ties with Russia could limit just how close New Delhi can get to Washington and Tokyo.

Added to these factors are the non-state challenges to state power that have emerged since the 1990s and now show no sign of going away. Giant technology corporations, criminal networks, transnational terrorist groups, global civil society and growing environmental threats often weaken the system of sovereign nation-states, and they will continue to do so in the years to come.

Two Poles, Much Smaller Than Before

The upshot of these changes is that bipolarity, though not inevitable, is likely a foundational feature of the future. But it would be much diminished, compared with that of the Cold War - a "bipolarity-minus" of sorts. Each side in such a world would boast a much smaller set of core members: Russia, China, probably Iran and plausibly Pakistan, on one side, and the United States, the United Kingdom, Canada, probably Japan and plausibly India and Australia on the other.

Though all other powers may lean in one direction or another, they would have more malleable relationships with each bloc and with each other. At the same time, there would be ample space for non-state actors and fluid minor coalitions to try to maximize their own freedom by, among other things, limiting the intensity of bipolarity among the great powers. Core states would have to work that much harder to win over the many swing states scattered across the globe, and alignment based on specific issues will become the norm. Existing institutions of global governance will either become moribund or will shrink as competing institutions with different approaches form and gain traction.

The Cold War years offered a faint preview of this world. The Non-Aligned Movement and the G-77 influenced issues such as decolonization, foreign aid and disarmament, while OPEC briefly shook the world with an oil embargo. Core bloc members occasionally demonstrated radical autonomy - the Sino-Soviet split of 1959, "goulash communism" in Hungary and Ostpolitik in West Germany are only a few examples. Still, these deviations never seriously undermined the global system, dominated as it was by two superpowers.

Today a new constraint on the emergence of true bipolarity exists: the intertwining of the U.S. and Chinese economies. Interdependence determinists will argue that such ties are incompatible with bipolarity and will ultimately prevent it. However, the limited nature of a bipolarity-minus world may allow the phenomena to coexist, albeit uneasily, as they did in a highly interdependent Europe before World War I. Alternatively, the United States and China may reorder their supply chains to reduce this interdependence over time. Technological advances are already shrinking these supply chains, a trend that could accelerate if the United States becomes far more protectionist.

If the future does indeed hold a bipolar-minus world, the United States may not be ready for it. To be prepared, Washington would have to recalibrate its strategy. In a world in which many major powers are uncommitted and have large degrees of freedom, tools like open-ended military interventions, unilateral sanctions, extraterritoriality and hostility to trade will likely yield diminishing returns. By comparison, incentivization, integration, innovation and adroit agenda-setting can be smarter and more effective options. The United States historically has been a pioneer of these approaches, and it may prove able to wield them persuasively once again. But perhaps most important, the superpower will have to resolve its internal polarization if it hopes to position itself as a cohesive leader of the international community. Only then will it once again become, as former U.S. President Ronald Reagan so eloquently put it, "a shining city upon a hill."

"The Rise of a Not-So-New World Order" is republished with permission of Stratfor.