Jonathan Rogers_ifraweb
Jonathan Rogers
As I write this, a horrendous, nightmarish scenario is unfolding. MH17, a Malaysian Airlines plane carrying 298 passengers and crew, has been shot down over Ukraine for the loss of all on board. This comes barely four months after the disappearance of another Malaysian Airlines flight, MH370, with the plane yet to be recovered.
Regardless of who is responsible for this latest tragedy, the incident serves to demonstrate the advancing instability of the global power order and its inherent dangers.
Vladimir Putin is attempting to be the prime mover in this rebalancing, not only in establishing a reversal of the breakup of the old Soviet Union but also in establishing an Asiatic alliance, with China and Russia acting in concert against the hegemony of the US.
Putin’s annexation of Crimea was the first decisive move of the would-be master architect, and the West’s response to his audacious move was pitiful. Weak responses to provocative geopolitical actions are dangerous, as Neville Chamberlain’s coddling of Adolf Hitler in the prelude to the Second World War laid plain, and I sense that the US will become far more engaged with the Ukrainian issue in the aftermath of this latest aeronautical disaster.
China’s response to the downing of flight MH17 will be interesting, too. Clearly there will be an emotional engagement given that most of the passengers on the missing flight MH370 were Chinese nationals. But just what will China say about the threat Ukraine poses to global stability? So far, China is playing along with Mr Putin’s script and cosying up to him just as he wishes, believing that their alliance will help break what they perceive as US dominance. The fallout from MH17 may well test the limits of that relationship.
JUST HOW FIRMLY China and Russia have their hands gripped on the levers of world power in an attempt to shift it eastwards was clear at last week’s summit in Brazil that announced the creation of a Brics development bank. The Brics parties – Brazil, Russia, India, China and South Africa – not only agreed to stump up US$100bn between them to capitalise the bank, but they also settled on Shanghai as the host city for the bank’s headquarters.
Brazil’s president Dilma Rousseff must have needed some kind of tonic following her country’s drubbing at the hands of Germany in the World Cup semi-finals, and this distraction was just what the doctor ordered.
“Shanghai is a great financial centre,” Ms Rousseff gushed as the ink was drying on the memorandum of understanding to establish the bank, which will be up and running by 2015. That it is, but there was apparently a lot of diplomatic wrangling to be done to get India to agree to planting the bank’s headquarters in Shanghai rather than Mumbai.
India got the bank’s first presidency as a consolation prize, although the idea is that the governorship of the bank will rotate through the five members via a fixed term.
The establishment of a Brics bank has been talked about for some time, and although the economic grouping may not be as stellar as it once was in terms of growth, with Brazil, India and Russia having switched from the rampant growth of seven years ago to something far more lacklustre, the five countries together represent around a quarter of global GDP.
CLEARLY THE BRICS countries are trying to make a statement about the perceived inequity of the big Western development banks – the International Monetary Fund and the World Bank – where the Brics countries are underrepresented in terms of equity and voting rights versus their global economic clout.
In the IMF the Brics vote is just over 10%. By contrast the UK, France, Germany and Italy have a combined 17.6% vote despite accounting for just over 13% of global GDP. The IMF’s head is always a European while the World Bank’s is always American. All of this has galled the Brics countries for years, and China in particular, with its eye firmly on becoming the world’s largest economy within the next decade. Hence the new bank’s equity and voting rights will be shared equally, as will its governorship.
There was a starkly demonstrated sense of a shift in the world order last week. The Brics development bank summit and its press conference photographs of a beaming Putin and his equally beaming Brics counterparts (China’s premier Xi Jinping appears to out-beam Putin) was its carefully crafted manifestation. The downing of flight MH17, meanwhile, had Western politicians wondering whether they had bungled their response to Russian expansionism. That was the story of last week: the malaise of the West and the seemingly unstoppable rise of the East. That dual dynamic seems unlikely to reverse any time soon, with all the attendant dangers that it entails.
