By Samantha Barnes, International Banker
On February 24, all eyes were drawn to Ukraine as Russia embarked on what its leaders and some analysts called a “special military operation” in the country. For others, it was deemed an unprovoked invasion of another sovereign nation. Either way, with major conflict breaking out between the two Eastern European neighbours, it marked a major development on the path towards what many believe will lead the world towards a new Cold War. But is such an eventuality inevitable?
Taking a step back and looking at the situation in Eastern Europe holistically, one could argue that Russia’s invasion was a long time coming. The North Atlantic Treaty Organization’s (NATO) continued expansion towards Russia’s borders, alongside the alleged US-backed overthrow of Ukrainian President Viktor Yanukovych in 2014 and the installation of a regime more favourable to the West, had set alarm bells ringing in Moscow for quite some time. The subsequent withdrawal in 2019 of both nations—first the United States and then Russia—from the Intermediate-Range Nuclear Forces (INF) Treaty, which had been successful in removing thousands of American and Soviet nuclear and conventional missiles with ranges of 500 kilometres to 5,500 kilometres, only further escalated tensions between the two foes.
That withdrawal coupled with the outbreak of major violence in Eastern Ukraine’s Donbas region—which pitted NATO-trained Ukrainian forces against ethnically Russian separatists and claimed 14,000 lives between 2014 and early 2022, according to the Office of the United Nations High Commissioner for Human Rights (OHCHR)—meant that Moscow’s “red lines” pertaining to Russian security had been violated and thus a response was triggered. Should Russia’s actions be roundly condemned by the international community? That is a debate for another day. But what has become clear, especially given the tens of billions of dollars in funding Ukraine has received from the US since the war began, is that a proxy war is now being waged between the US and Russia.
With China steadfast in its alliance with its Eurasian neighbour and the European Union (EU) and United Kingdom (UK) just as firmly committed to the US, a major schism between the East and the West has now formed, with other strategically important nations under increasing pressure to “pick a side”. Indeed, tensions between the East and the West—specifically, the US and China—have been rising steadily over the last few years. The outbreak of war in Eastern Europe seems to have merely confirmed this enmity by solidifying the positions held by various countries and jurisdictions and the sides with which they have chosen to align.
A few weeks prior to the Russo-Ukrainian War, at the commencement of the Beijing Winter Olympics on February 4, China’s President Xi Jinping welcomed his Russian counterpart, President Vladimir Putin, to China’s capital city as the two reaffirmed the strong alliance between their respective nations. “The sides call for the establishment of a new kind of relationships between world powers on the basis of mutual respect, peaceful coexistence and mutually beneficial cooperation. They reaffirm that the new inter-State relations between Russia and China are superior to political and military alliances of the Cold War era,” a joint statement from the two countries read. “Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation, strengthening of bilateral strategic cooperation is neither aimed against third countries nor affected by the changing international environment and circumstantial changes in third countries.”
But does this increasingly definitive divide necessarily equate to the emergence of Cold War 2.0? The original Cold War, which lasted from approximately 1947 to 1991, was more clearly defined as an ideological battle between the capitalist West and the communist East. And while one might be tempted to describe today’s situation as one between Western democracies and Eastern autocracies, it is seemingly more complex than that—a lot more. The world is significantly more globalised than it was 30 years ago. Labyrinthine supply chains often weave their way through a myriad of countries before reaching the end-consumer, while the significantly more advanced geographical mobility of labour today means more workers originating from a single country can be found in other countries around the world than at any time previously. This means that countries have much more intricate, interdependent relationships with each other than they did during the Cold War.
More than anything, this emerging conflict is an economic one between the two biggest superpowers. Nominally, China lags behind the US as far as the world’s biggest economies are concerned—$20.89 trillion versus $14.72 trillion in terms of raw gross domestic product (GDP). But when adjusting for purchasing power parity (PPP), which takes into account the pricing differences between countries, the figure for China jumps to $24.27 trillion and thus makes it the clear leader. And given their respective growth rates in recent years, few would argue against China easily becoming the world’s biggest economy by either measure within the next decade or so.
More than anything else, it is this eventuality that the US seems intent on preventing by any means necessary. Indeed, the Russia-Ukraine conflict has been something of an unwanted headache—truth be told, the US would rather be focusing the bulk of its foreign-policy resources on countering the rising economic might of China. And yet it has already provided a whopping $54 billion to Ukraine, largely for military assistance, to counter the Russian threat.
The US has thus sought to vastly expand its presence in the Asia-Pacific, working with allies in the region such as Japan, Australia and Taiwan to establish a military, diplomatic and economic bulwark against Chinese expansion. This build-up can be traced back to policies enacted under the administration of former President Barack Obama, with his “Pivot to Asia” strategy dramatically accelerating the US’ military and diplomatic ties with the likes of Japan, Vietnam, Australia, the Philippines and South Korea. The main goal of this pivot has been to contain China’s growth and expansion as a superpower. “The Obama administration’s renewed focus on the strategic significance of Asia has been entirely appropriate,” Kevin Rudd explained in 2013 when he was prime minister of Australia. “Without such a move, there was a danger that China, with its hard-line, realist view of international relations, would conclude that an economically exhausted United States was losing its staying power in the Pacific.”
With the US under the presidency of Donald Trump beginning in 2016, however, that expansionist military strategy seemed to be eschewed in favour of ramping up economic warfare against China. Soon after entering office, Trump slapped tariffs on a multitude of Chinese goods in a bid to promote his country’s domestic industry and force China to eliminate what the US alleged were unfair trade practices and theft of intellectual property. Nonetheless, important security arrangements were put in place during Trump’s tenure, such as the Quadrilateral Security Dialogue (QSD, or “Quad”) with Australia, India and Japan.
But while many of those tariffs remain to this day and the impacts of the trade war on both countries are questionable at best, Trump’s successor, Joe Biden, has once again resorted to escalating the US physical presence in the region through military, diplomatic and economic expansion. “The Biden administration strategy can be summed up in three words: invest, align, compete,” US Secretary of State Antony Blinken confirmed in a speech in late May. “We will invest in the foundations of our strength here at home–our competitiveness, our innovation, our democracy. We will align our efforts with our network of allies and partners acting with common purpose and in common cause, and harnessing these two key assets we’ll compete with China to defend our interests and build our vision for the future.”
While Blinken explicitly pledged not to seek a new cold war with China, he also acknowledged that the US will aim to “shape the strategic environment around Beijing to advance our vision for an open and inclusive international system”. And yet the US’ actions in recent years continue to suggest otherwise. Despite formally adhering to the One-China principle, by which the US government acknowledges the Chinese position that there is but one China and that Taiwan is part of China, it continues to approve frequent sales of military equipment to Taiwan.
“This proposed sale serves US national, economic, and security interests by supporting the recipient’s continuing efforts to modernize its armed forces and to maintain a credible defensive capability,” the Pentagon stated in a notification to the US Congress in late April, upon the State Department’s approval of $95 million worth of weapons to the island, the third such approval since Biden took office. “The proposed sale will help to sustain the recipient’s missile density and ensure readiness for air operations. The recipient will use this capability as a deterrent to regional threats and to strengthen homeland defence.” Washington then approved a fourth sale of defensive equipment to Taipei City on June 10, worth $120 million.
China has repeatedly criticised Washington’s efforts to engage with Taiwan independently. According to Zhao Lijian, a spokesperson for the Chinese Ministry of Foreign Affairs, such arms sales “seriously violate the one-China principle and the stipulations of the three China-US joint communiques…gravely undermine China’s sovereignty and security interests, and severely harm China-US relations, as well as peace and stability across the Taiwan Strait.” But given the sizeable military advantage the US continues to hold over China and the rest of the world, it seems likely that this will continue to be a significant route through which American power will be projected over the coming years. Indeed, at $801 billion, the US spent approximately the same as the world’s next 10 highest military-spending nations in 2021, according to figures from the Stockholm International Peace Research Institute (SIPRI).
Much like the Quad, September 2021’s AUKUS trilateral security agreement with the UK and Australia is a testament to the US’ growing military ambitions in Asia, with the pact’s decision to provide nuclear-powered submarines to Australia underlining just how gravely the US perceives China’s growing global influence. “The sides are seriously concerned about the trilateral security partnership between Australia, the United States, and the United Kingdom (AUKUS), which provides for deeper cooperation between its members in areas involving strategic stability, in particular their decision to initiate cooperation in the field of nuclear-powered submarines,” the joint Russia-China statement in February read. “Russia and China believe that such actions are contrary to the objectives of security and sustainable development of the Asia-Pacific region, increase the danger of an arms race in the region, and pose serious risks of nuclear proliferation. The sides strongly condemn such moves and call on AUKUS participants to fulfil their nuclear and missile non-proliferation commitments in good faith and to work together to safeguard peace, stability, and development in the region.”
China, meanwhile, seems intent on advancing its influence on a purely economic and technological basis for the time being rather than on a military one. And why not? After all, China’s rise to superpower status to date has been overwhelmingly due to its unique economic model rather than by achieving any significant military conquest. Indeed, it has just one foreign military base stationed in Djibouti, an East African country that also hosts American, French, Italian and Japanese military bases. In contrast, the US operates almost 800 military bases in more than 70 overseas countries and territories abroad.
But it’s not just Eurasia where one can expect geopolitical flashpoints to emerge over the coming years. China has also formed crucial bilateral commercial relationships with countries throughout much of Latin America and Africa, which has often alarmed much of the Western world. Many of these relationships centre on infrastructure-investment deals that purport to help lower-income countries in their development journeys—deals that China describes as “win-win” cooperation. “The old mindset of zero-sum game should give way to a new approach of win-win and all-win cooperation. The interests of others must be accommodated while pursuing one’s own interests, and common development must be promoted while seeking one’s own development,” Xi explained in a speech in 2015. “The vision of win-win cooperation not only applies to the economic field, but also to the political, security, cultural and many other fields. It not only applies to countries within the region, but also to cooperation with countries from outside the region.”
As far as Latin America is concerned, China thus poses an economic threat to the US in a region that has colloquially been known for decades as its “backyard” (although Biden recently quipped that Latin America is actually the US’ front yard). Either way, key economic and strategic battlegrounds continue to be drawn as the world’s economic behemoths set out two competing—and highly contrasting—visions of how the world should operate in the 21st century. That may not necessarily equate to a new Cold War, but it does mean that global geopolitical conflict of Cold War proportions will continue to unfold over the coming years.