A new global landscape
The world is going through major transformations demographically, technologically, economically, geopolitically and in many other ways. A new global economic landscape is emerging, and the economic center of gravity is moving away from the West. The Munich Security Report 2020, “Westlessness”, to which many prominent Western officials and policymakers contributed, acknowledged that, while “the world is becoming less Western”, the West itself “may become less Western, too.” In 2019, French president Emmanuel Macron said: “We were used to an international order that had been based on Western hegemony since the 18th century. Things change.” In April 2022, Christine Lagarde, president of the European Central Bank, gave a speech titled “A new global map: European resilience in a changing world”, in which she acknowledged the major changes in the global system, noting that the West did not have monopoly on power. Although the West is losing relative power, she observed, many Western policymakers are against proposals for wider power redistribution in global governance.
In today’s de facto multipolar world, no one single country or group of countries is taking the lead in addressing global challenges. No one nation or bloc of nations can monopolize or dominate global affairs. To ensure power in the world is institutionally and sustainably shared more broadly, outdated organizations of the bygone post-World War II era need to be reformed. Simply put, the status quo is unfair and unsustainable.
Old paradigms are disappearing – and new ones are surfacing
The emergence of a new order is evident, as many paradigms, long taken for granted, unravel or are discarded. These shifts are happening in the global economy, finance and geopolitics. Because of the weakening US fiscal and monetary fundamentals and due to Washington’s weaponization of the dollar as a tool of diplomatic coercion, many countries are naturally seeking cover and alternatives. Russia and China have shifted away from using the dollar in much of their bilateral trade.
Recently, the Chinese yuan has overtaken the US dollar as the most traded currency in Russia, on which the US and other mainly Western countries have imposed onerous sanctions, including exclusion from the SWIFT system for bank messaging and payments. Russian President Vladimir Putin has announced that his country wants to use the yuan in trade with other countries in Africa, Asia and Latin America. India, meanwhile, is actively promoting its currency in trade; 18 nations have agreed to use the rupee in bilateral trade, with more are expected to join. China and Brazil have decided to phase out the dollar in their trade and use their own currencies.
American policymakers who made the decision to weaponize the dollar against Russia when they froze half of Russian foreign-exchange reserves knew that they were rolling the dice, but they failed to understand how their actions would accelerate a trend that has been playing out for over two decades. From 1999 to 2022, dollar holdings in official forex reserves have fallen from 70 percent to below 60 percent. China has reduced its US treasury bond holdings to below US$900 billion, while Saudi Arabia has brought its holdings down to below US$120 billion. With recent geopolitical and trade shifts, the erosion rate of dollar dominance will only increase.
The China National Offshore Oil Corporation (CNOOC) and France’s TotalEnergies recently traded liquefied natural gas (LNG), sourced from the United Arab Emirates (UAE), using the Chinese yuan as the settlement currency for the first time. Saudi Arabia has publicly said that it is open to settling its trade, including energy, in currencies other than the dollar.
The multipolar regional order
Calamities such as the global financial crisis, the pandemic and the Ukraine war are not turning points as much as they are catalysts of trends that have been in motion since World War II. In this decade, there will be more such dramatic disruptions, which could finally prompt real reform of the world system.
Consider the Ukraine conflict, which is a microcosm of a larger global contest. The war can be resolved and lives saved if there is a compromise between the West and Russia on a European security framework. Global tensions can be eased if the incumbents and rising nations agree on a new power-sharing mechanism. Yet, those who have dominated the international system since World War II seem unable to think strategically and imaginatively about a new world order. They think in zero-sum terms and cannot fathom how reforms can be made on a win-win basis.
The growing multipolarity of the world is underpinned by new power realities across regions. The rising influence of nations such as China, India, Indonesia and Brazil is prompting major geoeconomic and geopolitical realignments in different parts of the world. This is certainly true in the Middle East and North Africa. It is only natural and sensible for Arab nations to diversify their strategic partnerships based on evolving interests and realities of power distribution.
The illegal and catastrophic invasion of Iraq in 2003 and the subsequent hostile “Freedom Agenda” of the US and its allies made it necessary for the Arabs to diversify their strategic partnerships and reduce dependency on any one single ally or group of allies. The disastrous “Arab Spring” events deepened the desire among Arabs for rebalancing the regional power structure. When Arab people were stirred up against their governments and leaders, some Western analysts rejoiced that “the Arab people have awakened”. That turned out to be a false awakening, however. The real Arab awakening is happening now, as the region and people unite for their future, fighting against the forces that are trying to maintain the status quo.