The peripheral role of Europe in a world in transition

The ongoing war involves not only Ukraine but, more or less directly, a large part of the world order.

Predicting the future in political matters has always been risky. It is particularly so in a context characterized by war. What initially appeared to be about Ukraine's borders with Russia has now become a confrontation involving much of the global system.

1.   At the end of 2021, everything seemed to be turning towards new collaborative relationships in Europe. It is no coincidence that Angela Merkel, on the eve of her retirement after 16 years as a Chancellor, had established important collaborative relationships with Russia. At the meeting in Moscow in September 2021, the opening of the second gas pipeline was defined, which will supply Russian gas to Germany and other European countries. 

It had been less than two months since Angela Merkel's departure in December 2021 and the opening of the conflict. Historians who explore these events, will be able to give us better explanations of a change, in many ways unpredictable, capable of radically modifying the international scenario. The government that succeeded Angela Merkel, led by Olaf Scholz, was made up of social democrats, greens and liberals, three parties with different positions on Russia and, more generally, on Germany's role in the European Union, and on the future of Ukraine.

In a country with diverse history and language like Ukraine, a regional organization would not have been an unprecedented. Belgium and Spain have different languages allowed in different regions. In Belgium, Walloon and Flemish are spoken; in Spain, in addition to Castilian, ten million citizens speak Catalan. In Ukraine, the legitimacy of the Russian language could have been recognized in regions where Russian is traditionally used. But today it is useless to dwell on what could have been done and has not been done.

2.   The ongoing war involves not only Ukraine but, more or less directly, a large part of the world order. Russia has its main ally in China. The Russian gas that was supposed to flow towards Europe, after arriving in Germany, has found new outlets in China and India. While on the one hand we see Russia as an ally of China, on the other we see the United States at the head of the G7 – the alliance that includes the most developed countries of the northern hemisphere: the United States, Canada, Japan and, in Europe, United Kingdom, Germany, France and Italy. Australia, in turn, is part of a new triangular alliance with the United States and the United Kingdom engaged in the construction of nuclear-powered submarines. Basically, in the line-up alongside Ukraine we see the major countries of world capitalism.

It is was not, however, the only alliance at worldwide level. Others somewhat unexpectedly have formed in the southern hemisphere. It is the case of the triangular aggregation between China, Saudi Arabia and Iran. An aggregation that has generated surprise and opposition in Washington, given that Saudi Arabia was the main ally of the United States in the Middle East. 

China's influence also extends into Central Asia. In May, XI Jinping met in Beijing with delegations from five countries  that have important relations with Russia: Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. And In addition to intensifying economic and trade ties, China has proposed the construction of a new railway line that crosses those countries pointing to the west and Europe as an alternative line to the Trans-Siberian that connects China to Moscow.

Russia, in turn, has established an agreement with Tehran capable of transferring gas from Russia to the Persian Gulf, and from there to Pakistan and India. An important alternative to the current route which, starting from Vladivostok in northern Russia, must reach the Pacific and Indian oceans with special "tankers" carrying liquid gas to land in the ports of the two major Asian countries.

The realignment of alliance salso affects the entire Middle East. After more than ten years of deadlock in relations, the Foreign Minister of Saudi Arabia has visited Damascus, inaugurating a new phase of collaboration with the Assad government. An initiative that opens up new prospects for collaboration with Iraq, Jordan and Egypt,. Essentially, a radical change of the Middle Eastern scenario traditionally dominated by the United States.

3.    The most relevant aspects of the new framework are linked to the trip to China by the President of Brazil Lula da Silva. A trip that follows the one to Washington where Lula met President Biden.

However, the trip to China has a wider meaning. With respect to the conflict in Ukraine, Brazil has a position of neutrality - radically different from the American one – inspired by the desire to open negotiations to resolve the problems relating to Ukraine's borders with Russia. But other aspects of the meeting with President Xi Jinping took on a broader significance.

First, monetary policy. According to Brazil it is necessary to overcome the domination of the dollar in international exchanges and in foreign exchange reserves. Dominion historically guaranteed not only by the economic power of the United States but by the role of the International Monetary Fund which has substantial control over it.

A political line in open opposition to the American one, but not isolated. Nobel laureates Joseph Stiglitz and Amartya Sen have considered the imposition of the dollar in international trade as a measure to the benefit of the United States and to the detriment of developing countries subject to fluctuations in the US currency.

With the meeting in Beijing, China and Brazil reaffirmed their decision to use their respective national currencies, Yuan and Real, instead of the dollar in trade relations. A model that can be adopted, according to Lula, by all developing countries trying to escape the dominance of the dollar. A crucial step in international monetary relations which implies the expansion of the role of the New Development Bank formed by the five countries belonging to the BRICS: Brazil, Russia, China, India and South Africa.

The agreement involves two important innovations. First of all, the designation of Vilma Rousseff, former president of Brazil, as head of the New Development Bank. The second novelty is the request to join of a large number of countries of different political colours including Iran, Saudi Arabia, the United Arab Emirates, Argentina, Indonesia, along with others on different continents. In other words, as an alternative to the domination of the dollar, a new polycentric monetary system.

A new reality was also felt in some European countries. In April, during his trip to Portugal, the president of Brazil was invited to give a speech to the Assembly of the Republic on the occasion of the anniversary of the end of the Salazar dictatorship. And on the following trip to Madrid, Lula was also invited to give a speech to the two Houses of Parliament exceptionally meeting in joint session.

4.   The new international arrangement found an unexpected position in Europe. Emmanuel Macron, during his trip to Beijing in April, first discussed the conflict in Ukraine with President Xi Jinping. Predictably, China reaffirmed its position in favor of a direct approach between Russia and Ukraine to find a solution. In any case, the most important aspect of the meeting between XI and Macron - assisted by around 50 representatives of the French economic and business system - was the reconfirmation and expansion of economic and trade relations between the two countries.

This was as expected.  What was surprising, however, was the French position on Taiwan - a position that generated alarm in the United States and the European Union.  The French president has, in fact, stated that the issue must be addressed and resolved through direct relations between China and the United States. "We cannot be involved - he said - in a crisis that does not belong to us" - being allies must not mean being "vassals". 

The unexpected French position has outraged many European countries, starting with Germany. However, a position not foreign to the French tradition characterized by a specific position on international affairs – a tradition at the center of Charles de Gaulle's policy of which Macron likes to feel heir. Predictably, Macron's position remained isolated in Europe.

In conclusion, on the basis of the current positions, the clash with Russia could have a duration and consequences on international politics that are difficult to predict in Europe and worldwide. The United States fought wars that lasted between ten and twenty years, first in Vietnam and in recent times, in Afghanistan, before withdrawing.

The current US sanctions against countries maintaining relations with Russia have their deeply negative side effects. “In recent years –Francisco Rodriguez, professor of international affairs, of the University of Denver, writes - sanctions have become western countries’ foreign policy tool of choice to deal with hostile international actors…They are typically followed by declines in spending on public health, education and food assistance…the evidence shows that, if forced to cut spending, they will protect the rents of cronies at the expense of more vulnerable population.” (The Financial Times, 5 May 2023).

European countries are also suffering the consequences of the conflict. The most evident case is Germany, subject to an unexpected recession in the last quarter of 2022, and a subsequent zeroing of growth in the first months of the new year. According to German forecasting institutes, 2023 will end with a growth of 0.4 percent – surprisingly lower than that forecast by the IMF of 0.7 percent for Russia. In essence, a reversal of forecasts that put Russia in a deep recession.

“The Financial Times” offers an interesting vision of the economic and social effects and divisions in Western countries. “Profit margins of US companies – it writes - hit their highest level since the aftermath of the second world war in 2022, research by economists at the University of Massachusetts Amherst has found. Eurozone businesses have also enjoyed the biggest expansion in their profitability since the 2008 financial crisis over the past two years, according to research by French bank Natixis” (Central banks warn business over price gouging”,31 March 2023).
It is difficult and improper to predict the future. But the current changes have already transformed the global scenario.  International economic and political relations have their center on the shores of the Pacific. Meanwhile, Europe faces the worst consequences of a war that was not its intention or in its effective interests.

Antonio Lettieri

Editor of Insight and President of CISS - Center for International Social Studies (Roma). He was National Secretary of CGIL; Member of ILO Governing Body and Advisor for European policy of Labour Minister. (