Columnists

Duncan Cameron
The Putin pivot: A new era in global politics

| May 27, 2014
Photo: Mark Turner/flickr

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A $400-billion agreement between China and Russia last week changed the global geopolitical landscape.

In a far-reaching memorandum of understanding between the two powers, China bought itself some energy security for the next 30 years, and Russia unlocked its Siberian natural gas reserves.

While on the surface it was about a new $77-billion "Power of Siberia" pipeline to be built by the two countries and a long-term gas contract, the deal signals a new closeness between two major powers that have been distanced from each other for decades.

China has been after an energy deal with Russia for years. Gazprom, the Russian energy company, had established itself as a leading broker of natural gas for much of Europe. Russia, under Putin, was cautious about building ties to China. Now it wants to diversify its exports.

Two unrelated initiatives by the U.S., one in Asia and the other in Europe, explain why China and Russia have begun a closer working relationship that will include transfer of Russian military technology to China and more Russian oil sales to China.

Under former secretary of state Hillary Clinton, the U.S. announced a "pivot" towards Asia. This was widely understood as a re-centring of U.S. foreign policy to meet mainly economic challenges from China.

The U.S. initiated discussions on a Trans-Pacific Partnership (TPP), a sort of super free trade zone that excluded China. Indeed, the TPP was designed to bring countries neighbouring China into closer economic relations with the U.S., on U.S. terms.

The TPP initiative has made little progress since Japan has been reluctant to allow the U.S. to dominate negotiations. To date, the U.S. Asian pivot has amounted to invoking military co-operation agreements with countries pressured by China on boundary and territorial issues.

In its European security policy, since president Bill Clinton, the U.S. has been aggressively pursing NATO expansion into the former Warsaw Pact countries once dominated militarily (by what amounted to armies of occupation) by the former Soviet Union. Most recently the U.S. has sought to exploit the democracy movement in Ukraine, and turn the country away from Russia.

With China wary of the U.S. and Russia facing aggressive U.S. intervention in its backyard, the stage was set for Russian and China to turn towards each other. Where the U.S. pivot has amounted to little, the Putin pivot opens a new era in global politics.

Since the fall of the Berlin Wall in 1989 it has been commonplace to consider the U.S. as the sole superpower. Militarily this was undoubtedly the case, but politically the global map shows other great powers taking on more importance. American hegemony, yes, but in a multi-polar world.

The European Union is the single biggest economic market. China grew its economy rapidly, and it will out-produce the U.S. by the end of the year, according to the World Bank. Russia emerged from a botched transition away from a command economy, and is now a market power with an energy- and resource-based strategy for building links to Germany and other European countries beyond its immediate neighbours. India boasts a diversified economy with thriving high-tech and entertainment industries and a vast domestic market.

Brazil joined with Russia, India and China to offer the world a counterweight to U.S. influence. The BRIC countries agreed in 2012 to launch a New Development Bank and undertake new financing arrangements with a variety of countries.

Since the 2007-08 collapse of U.S.-asset-backed securities, and the implosion of Wall Street, world finance has diversified away from the dollar. According to the IMF, the share of the U.S. dollar in central bank reserves is now only 61.8 per cent. Alternatives to dollar hegemony have been raised by China (the largest holder of U.S. dollar reserves) at Davos and the UN.

Among the significant aspects of the Putin pivot yet to be revealed is how the gas purchases will promote the role of the Chinese monetary unit, the yuan, as an international reserve currency.

The world's only superpower has officially remained calm about the rapprochement between China and Russia, that for many years its diplomacy worked to avoid. American establishment commentary exhibits barely repressed hysteria at the idea that Putin -- deemed a massive failure -- could have gained a distinct advantage for his country through astute energy diplomacy.

Canadian diplomacy -- described last week by former UN ambassador Paul Heinbecker, now at Waterloo University, as evolving from neoconservative militarism to neocommercialism -- takes another major hit from the Putin pivot.

The energy superpower strategy advanced by the Harper Conservatives is in deep trouble. Domestic opposition to bitumen development and transport, and the failure to secure U.S. approval for the Keystone XL pipeline have created stranded assets in the Alberta sands.

Now China has opened its market to Russian gas, making the B.C. liquid natural gas play even less attractive as a paying proposition than it already was, and creating uncertainty about China as a ready market for Canadian exports of bitumen, weakening further the case for building pipelines through the Rockies.

Meanwhile, the Harper government gives no indication it is aware of geopolitical shifts that affect Canadian interests.

Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.

Photo: Mark Turner/flickr

Comments

It would be ironic if the U.S.-led attempts to stir up anti-Russian sentiment in Ukraine contributed to the end of the U.S. dollar's reserve currencey status, which would be a disaster for the United States and probably for Canada too, but that now seems to be a distinct possibility. It's very hard to see how the Harper Government's backing of the coup in Ukraine will bring any benefits to Canadians, the people they're supposed to be working for.

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