It is too early to say when and how the war in Ukraine will end but the outlines of its geopolitical legacy are already visible. The United States, NATO and Europe have shown remarkable cohesion and consistency in supporting Ukraine’s war efforts and have configured for a long struggle against Russia and in defence of an order based on universalism and collective security. But fluidity, variability and assertiveness have marked the policies of actors across the rest of the international community, particularly those whose markets and policies are orientated towards the East.
While many actors, both governmental and commercial, will strive to keep markets open and security collective, there is a risk that policy choices over both Russia and China deepen into a polarisation between a broadly Western and Eastern bloc. Although separation into blocs is neither economically nor politically desirable for either side, there is the risk of a virtual border emerging between East and West. Will such a Silk Curtain fall?
RecalibrationThe divisions exposed by the war are not confined to policy differences over the conflict itself, but extend to the nature and remit of the international order led and guaranteed by the US. In this period of adjustment, while the positions of China and Russia are predictable, including the closeness of the alliance between them, the policy choices of the middle powers of Asia and the Middle East are negotiable and influential. They could prove decisive in determining whether polarisation deepens or is mitigated into a manageable but qualified globalism.
These choices are manifesting already in the form of recalibrations of foreign policy rather than of wholesale changes in ideological alignment. There have as yet, for example, been no formal secessions from defence agreements with the US or its allies and no military assistance provided to Russia other than by states already heavily sanctioned. But the recalibrations over – in particular – ongoing relations with Russia are already posing challenges to traditional US domination in the ‘three Ds’: defence, diplomacy and the dollar. The recalibrations are short of a frontal challenge to the US, which even China has been careful to avoid. This is partly because the middle powers lack cohesion around a shared agenda, but also because the benefits of access to the US, for the majority, outweigh those of alienation. Investment levels by sovereign-wealth funds in the US, for example, far exceed those in Asia. But the challenges have been intensified and fuelled by the war in Ukraine. The trend-line is upwards.
China has engaged in a rush of diplomatic activity in the past three months. In March 2023, President Xi Jinping’s visit to Russia resulted in a powerful restatement of the Russo-Chinese axis and an articulation of their shared vision of the future. Shortly before that, Beijing hosted a deal between Iran and Saudi Arabia that marked China’s arrival as a power broker in a region where the US has traditionally served that role.
As a rising middle power, Saudi Arabia has meanwhile engaged in diplomacy between the warring factions in Sudan and played a key role in the rehabilitation of Syria’s President Bashar al-Assad. Turkey’s President Recep Tayyip Erdoğan has been diplomatically active across Eurasia in pursuing a distinctly Turkish, rather than NATO-aligned, foreign policy. China has also, despite its pledged closeness to Russia, grown its influence in Central Asia at the expense of Russia. While the official line is that the area is not one of competition, sustained and ambitious Chinese investment in the region has contrasted sharply with the declining credibility and attractiveness of Russia as a defence partner as its war effort in Ukraine has faltered. In a demonstration of strategic assertiveness of which Russia is not a beneficiary, President Qasym-Jomurt Toqaev of Kazakhstan, the region’s key middle power, has pointedly distanced himself from the Russian invasion while promoting economic cooperation with China and Europe.
Diplomatic balancingChina’s diplomatic gains have been tarnished by controversial statements from its senior diplomats on both the Tunbs islands and the sovereignty of countries of the former Soviet Union. Neither has the Chinese initiative on Ukraine gained any traction. But that is unlikely to deter China from continuing to expand into what it sees as diplomatic gaps or where it can deploy its relative advantage over the US as the mediator who can deliver ostracised regimes to the table. It is well placed to play a diplomatic role in the numerous conflicts in the Middle East to which Iran is a partner.
Key players elsewhere have made shifts in their diplomacy in favour of Russia rather than the US. In the Middle East, the 22 countries comprising the Arab League readmitted Assad at their 19 May 2023 meeting in Jeddah. The Gulf States and Jordan, close defence allies of the US and NATO, have been foremost in rehabilitating Assad, thereby turning their backs both on his atrocities and the United States’ continuing firm opposition to his regime, which includes extensive sanctions. Russia is a clear winner of both this and the Iran–Saudi deal. Its regional protégé, Syria, and its military ally, Iran, are now enjoying relations with the Arab world, including the wealthy Gulf states.
Multilateral organisations such as the Shanghai Cooperation Organisation and BRICS have assumed a newfound significance as fora in which states can find new alignments outside the US umbrella. For China, former grouping has the potential to gather political weight and form the basis of a global counterweight to the US and its allies. It may not attempt that transformation until Taiwan comes to the boil. Iran and Argentina, meanwhile, have both applied to join the BRICS.
The number of middle powers interested in confrontation with the US is limited. The language for the post-Ukraine order is neither settled nor shared. Binary terminology is inadequate for describing the spectrum of positions and visions across the international community. That in turn reflects whether the emerging order represents threat or opportunity, which is for many states a fine calculation. But for states that seek to operate in both camps, the red line for the US and its allies – inked in by the war in Ukraine – runs between transactional relationships with Russia and China and entering into strategic alliances that would give shape to an alternative and inimical global order. New agreements in the spirit of the Bandung Declaration would be manageable; a movement including Russia and China as formal leaders would not.
Military and financial leversIn the defence realm, the US retains its on-paper dominance, but it is juggling its commitments to NATO and Ukraine, the containment and deterrence of China and other continuing global commitments, such as to freedom of navigation and counter-terrorism. It is also constrained by domestic policy and security considerations regarding the level of assistance it can give to middle-power allies, either in the form of sensitive technology or physical deployments. For those countries reliant on US readiness to use its armed forces extraterritorially, a combination of the messy closure of two decades of expeditionary warfare in Afghanistan in 2021 and an American political culture that increasingly favours domestic security over direct foreign intervention is disconcerting and has forced them to engage in contingency planning.
China and others have found resultant gaps in the defence and security market that they can fill. This is particularly true for uninhabited aerial vehicles, the significance of which in modern warfare has been illuminated graphically by the war in Ukraine. Many countries now question the United States’ ability and willingness to project after its withdrawal from Afghanistan in 2021. Some of those seeking reassurance about US security guarantees have already begun diversifying their sources of defence equipment and training rather than seek new treaties or basing rights with the US.
The US dollar, meanwhile, is still king, but others are eyeing the crown. China has carefully managed its ambitions to make the renminbi (RMB) convertible, and recently engaged in renewed discussions with some of its major trade partners, such as Brazil’s President Lula da Silva, on settling deals in RMB. BRICS members too are showing an interest in trading in each other’s currencies. The deep ideological objection to US sanctions – and the United States’ continued influence over the economies of developing states – has fuelled the desire in some quarters to de-dollarise. The US is not the only international sanctioning body, but neither the United Nations nor the European Union have the ability to mete out punishment as severely as the world’s largest economy and owner of the most popular reserve currency. Economic statecraft has become a staple of US foreign policy, a development enshrined in the 2017 Countering America’s Adversaries Through Sanctions Act, a domestic law.
Sanctions, despite their mixed record as a policy lever, have retained bipartisan attraction in the US as a politically attractive, low-cost and sustainable alternative to armed intervention. They are unlikely, given trend-lines over the past decade, to lose their popularity. In most cases – Iran, Russia or Syria – they are unlikely to be reversed by Washington. Moreover, countries aligning too closely with sanctioned regimes, either openly or through connivance, run the risk of provoking the US to impose secondary sanctions and, if they are too assertive, might be sanctioned in their own right. This in turn will incentivise those who oppose the principle of US economic statecraft not only to seek workarounds but longer-term alternatives. The two most sanctioned countries, Iran and Russia, actively collude on the evasion of sanctions. Syria, also heavily sanctioned, is the close ally of both. Further challenges to the reign of the dollar seem inevitable and the position taken by rising middle powers who hold and trade in volumes of US currency with the East could be decisive. Their attitude towards US sanctions and dollar-based trade will be globally significant.
After the Second World War, a robust international order emerged and was managed through skilful US engagement and generous financing. Yet even that was not enough to prevent the Iron Curtain from falling. Another war is now challenging this order. The geopolitical and economic framework that emerges after the war in Ukraine will surely by different, but it will likely depend less on dominant actors than on the choices that are made by middle powers, in particular those in Asia. Although they may seek to be neutral, their policies and alignments will decide whether a Silk Curtain falls and again divides East from West.
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