Globalization was supposed to bring peace through capitalism, but the Kremlin and Beijing used its benefits to become even more aggressive.
After the end of the Cold War, the United States and other Western countries began to promote a great idea. By associating themselves economically with their enemies, they wanted to avoid the dark cycle of conflict between the great powers. That is why Germany has encouraged gas and oil imports from Russia in recent decades, despite Vladimir Putin's growing aggression against his neighbors.
Edward Alden, a member of the Council on Foreign Affairs and a professor at the University of Western Washington, writes about this in the pages of the Washington Post. Europe and the United States have increased trade with China by expanding ties with it. At this time, Beijing itself was becoming the world's largest exporter and supplier of critical goods. The German philosopher Immanuel Kant said that “the power of money is probably the most reliable of all forces.” And it will force countries to “stop the war where there is a threat of its beginning.” Western countries seem to have believed in this for decades.
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However, now it seems an extremely naive belief. Putin invaded Ukraine despite the West's unequivocal threats that Russia would be immediately isolated from the global economy through sanctions. Under Xi Jinping's leadership, China has destroyed democracy and freedom of the press in Hong Kong, is threatening Taiwan's army, and has joined an alliance with Russia to challenge the US-led world order. Instead of holding back the ambitions of authoritarian leaders, their growing wealth only persuaded them to come into conflict with Western democracies. It turns out that economic integration was a catastrophic failure?
The so-called “theory of the capitalist world” in its purest version was very optimistic. She predicted that economic interests should naturally hinder war. Western leaders hoped that trade would not only curb the ambitions of their rivals, but also educate the middle class, which would demand democratic reforms in their countries. In Germany, there was a special term for such a policy – “Wandel durch Handel”, ie “change through trade”. Berlin stubbornly adhered to this approach, despite the fact that wealthier Russia and China were launching increasingly brutal repression. German-Russian trade grew by about 6% annually from 1995 to 2021. The EU's trade with China reached $ 828 billion. And this is even more than between Europe and the United States.
Similarly, the United States welcomed China's accession to the WTO in 2001. Robert Zellick, Deputy Secretary of State in the George W. Bush administration, said in 2005 that China's integration into the global economy was “particularly successful.” national interests, “said the American official.
There were many reasons to think so, as China seemed to be carrying out major reforms in the 1990s and 2000s. Putin also encouraged investment when he became president of Russia in 2000. But economic growth ceased to be a priority for Vladimir Putin and Xi Jinping when they bluntly decided that their historic mission was to revive “national greatness.” And Western politicians were all too convinced that these leaders would not be able to contain the power of capitalism. President Bill Clinton ridiculed Beijing's attempts to take control of the Internet, comparing it to trying to “nail nails to the wall.” But China has built the largest censorship system in history.
However, despite all the terrible events, according to the author, it is too early to say that Kant was wrong about the “power of money”. The strength of Russian weapons has already shown its flaws in Ukraine. But the success of money has never been so significant. Sanctions against Russia have cut off access to hundreds of billions of dollars of its foreign exchange reserves. The ruble has virtually lost any value outside of Russian territory. Russian production: from steel to cars – stopped due to the cessation of imports of Western spare parts and technology. Access to foreign markets is blocked. Russian citizens have lost access to Western goods and services. Western companies, from McDonald's and H&M to Visa and Mastercard, have left the country. Thousands of Russians have fled the country. This was a very powerful outflow of educated people from Russia. The Institute of International Finance predicts that the Russian economy will shrink by 18% by the end of 2023. Thus, Russia will lose 15 years of its economic growth.
China, which only a month ago declared “boundless” friendship with Russia, is closely following the events. Beijing is enforcing Western sanctions. However, despite this, he still loses capital. Investors, looking at the massive losses in Russia, began to reassess the risks in authoritarian countries. If China were subject to the same sanctions, it would have far more ways to respond than Moscow. The Chinese economy is more diversified. Its trade with the Association of Southeast Asian Nations is now greater than with the United States or Europe. Beijing has invested heavily in developing countries through the Single Belt initiative. And now all those who received Chinese money may not want to enforce Western sanctions. In addition, China enjoys a de facto monopoly in some critical sectors, such as the processing of rare earth metals. But it still depends on the advanced technologies of the West, in particular, it is semiconductor and industrial equipment. In economic conflict, its vulnerabilities outweigh its strength.
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Of course, the West's economic rapprochement with China and Russia was not just about consolidating peace. The business made a lot of money. But that's the whole point. Economic interdependence only strengthens peace if the cost of severing ties is too high. And it is extremely important that all parties recognize this.
If the West is able to maintain unity on sanctions imposed in response to Russia's invasion of Ukraine, Russia will suffer very great and long-term losses. This unity is already being tested for strength. In Europe, there is growing pressure to stop importing gas and oil after the Bucha massacre in Russia. Germany fears its economy will fall into the abyss of recession without Russian supplies. But the demonstration of unity will make Xi Jinping think twice before following in Putin's footsteps. In order not to exhaust themselves, the United States and its allies must work together to make economic vulnerabilities as unilateral as possible. The Biden administration is doing the right thing by returning strategic production to the United States, including semiconductors and batteries for electric vehicles, while blocking the supply of advanced American technology to China and Russia.
Washington is working with Europe to find an alternative to Russian gas and oil. The Biden administration must also set aside a narrow policy under the slogan “Buy American” and build supply chains with allies that would limit Chinese and Russian influence. The United States and Europe must also ensure that sanctions do not hurt developing countries.
It is safe to say that Kant's ideals have been hit. The line between economic independence and peace turned out to be quite a “curve” at best. But the power of money was underscored by the West's strong reaction. Demonstrating the economic cost of war to countries is still one of the best ways to maintain peace.
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