April 02, 2023

Eurasia is America's Top Worry!

B Arjun

THE China-Russia border saw intense fighting in March 1969. The skirmish continued for a month resulting in hundreds of casualties and elevated levels of bitterness between the two communist giants.  This proved to be the final nail in the relationship.

America that had been waiting and also encouraging division in the communist world was quick to grab the opportunity. In the late 1960s, President Richard Nixon directed his national security adviser Henry Kissinger to approach China. In July 1971, Kissinger embarked on a secret visit to Beijing.  And in February 1972, Nixon was in Beijing triumphantly claiming the Sino-Soviet split that America endeavoured for since China embraced communism in 1949.

 More than fifty years later, the animosity between Russia and China seems to belong to a very distant past – so distant that Chinese President Xi Jinping and his Russian counterpart, Vladimir Putin, now claim to be in a “no limits” embrace. The tables have turned to such an extent that the two Eurasian nations have forged a new bond – with the American hegemony as their common concern once again. The major difference this time is that the former superpower is now Chinas junior partner in the relationship.

 Since Xi Jinping took office, the two countries have broadened security and economic cooperation. China, an economic powerhouse, now fully backs Putins offensive against Ukraine by defying western sanctions against Russia and attempting to be a peacemaker. China has released a 12-point formula for ending the Russia-Ukraine war, which as expected has been dismissed by America.

 The element of fear and distrust among the two Eurasian powers has disappeared. For Moscow, Beijing is now an indispensable partner – a source of capital, technologies and markets. Russia is even collaborating with Beijing in the Central Asian region that for long was considered to be its exclusive sphere of influence.

 The US is now convinced that the Sino-Russo renewed collaboration will expand and diversify in the years ahead and it will be the single biggest factor threatening US primacy in global affairs.

 If American sanctions on Russia have nudged it closer to China then it is equally true that the American determination to roll back Chinas world-power aspirations – and to restrict its trade and access to technology – has pushed Beijing closer to Moscow.

China has drawn closer to Russia not just because of Moscows military might, veto rights in the United Nations Security Council, but also because of the imperatives imposed by geography.

Recently before concluding his visit to Moscow, the Chinese leader Xi Jinping said Right now there are changes – the likes of which we havent seen for 100 years – and we are the ones driving these changes together”.

Zbigniew Brzezinski, in his book, The Grand Chessboard (1997) predicted “The United States may have to determine how to cope with regional coalitions that seek to push America out of Eurasia, thereby threatening America's status as a global power.”

Brzezinski had added, Potentially, the most dangerous scenario would be a grand coalition of China, Russia, and perhaps Iran, an “anti hegemonic" coalition united not by ideology but by complementary grievances. It would be reminiscent in scale and scope of the challenge once posed by the Sino-Soviet bloc, though this time China would likely be the leader and Russia the follower.”

Brzezinski's analysis is spot on. A counter hegemonic coalition between Tehran, Moscow and Beijing is building up to prevailing unipolarity in global politics.

Russia and China have conjoined to strengthen their counter-hegemonic efforts against America on multiple fronts. Americas strength comes from its navy. China now has the merchant marine force, modernised ports as well as the state-of-the-art warships to pose a credible challenge to the US sea power.

Moscow and Beijing are not only denting Americas sea power through military means but also by  building alternative trade routes across Eurasia that  challenges the western monopoly of  global supply chains.  

The ongoing sanctions against Russia have forced many of the overseas investors connected to the Russian energy company Gazprom to increase yuan-denominated bond holdings, and switch from the dollar to the yuan for part of their payments, bolstering the currency's standing.

The evolving financial relations between Russia and China are also worrying America. The war in Ukraine is boosting yuan’s standing and in the postwar scenario too yuan is likely to grow because China will be investing heavily in Russia. 

 China and Russia are also chipping away at the US dollar's dominance in global payments. Plans are afoot to create a new international reserve currency based on a basket of currencies of BRICS members Brazil, Russia, India, China, and South Africa. According to reports this “envisions a BRICS version of the International Monetary Fund's special drawing rights – a reserve asset that IMF members can tap during a cash crunch.”

The BRICS-based reserve currency is expected to provide a new instrument for expanding transactions in currencies other than the US dollar. Such an alternative to the dollar-based global payments system would render the American power, to impose economic sanctions, ineffective. The BRICS currencies in terms of stability, liquidity and the ability to retain value are currently weak, yet Russia and China have taken baby steps to lay the foundation for an alternative payment system.

China created the Cross-Border Interbank Payment System, or CIPS, in an attempt to offer an alternative to the SWIFT messaging system, in 2015. The Chinese yuan’s popularity is growing. It is being increasingly used for international settlements. According to the Peoples Bank of China February 2023 report, “Almost half of the total value of Chinas cross-border payments and receipts in 2022 were settled in yuan, the People’s Bank of China.”

The American aim, as in the Cold War, is to split Eurasia. The US grand strategy is focused on creating fissures between China and Russia and also ensuring that Berlin and Moscow are kept apart. By triggering the war in Ukraine and aiding its continuation, the US intends to weaken Putin and hopes to have a regime in Moscow that would wean away from China and break Eurasian connectivity.  The success or failure of the US strategy will determine the shape of the future world.  However, what is different in the present context is that the counter hegemonic forces are equally strong and well financed.