It is unclear to what extent Washington fully appreciates the profound change in its triangular relationship with Russia and China over the recent decades, however it clear that it is the big loser.
The days when Presidents and strategists took advantage of the Sino-Soviet rivalry are gone. The strategic equation has changed and growing Sino-Russian alliance signals a major shift to Washington’s distinct detriment that was mostly self-inflicted as US actions actually pushed the two countries closer together.
There is little evidence that today’s US policymakers have enough experience and intelligence to recognize this new reality or even understand the implications for US freedom of action. They are also unlikely to appreciate how this new nexus may affect their ‘full-spectrum dominance’.
The Sini-Russian affection is very real even among their citizens.
Instead, the Trump administration – following along the same lines as the Bush-43 and Obama administrations – is behaving with arrogance and a sense of entitlement, firing missiles into Syria and shooting down Syrian planes, blustering over Ukraine, and dispatching naval forces to the waters near China.
It is quite possible to predict a Chinese challenge to “US interests” in the South China Sea or even the Taiwan Strait in tandem with a US-Russian clash in the skies over Syria or a showdown in Ukraine.
However, a lack of experience or intelligence may be too generous an interpretation and Washington’s behavior rather stems from a mix of the customary, naïve exceptionalism and the enduring power of the US arms lobby, the Pentagon, and the other deep-state actors.
They are all determined to thwart any lessening of tensions with either Russia or China and stirring up fear of Russia and China is a tried-and-true method for ensuring that the next aircraft carrier or other pricey weapons system gets built.
Like in the old days, the US military budgeted to fight wars on multiple fronts simultaneously and recent weeks saw the following:
• The USS Stethem destroyer sailed within 12 nautical miles of the Chinese-claimed Triton Island in the Paracels in the South China Sea and the Chinese Foreign Ministry immediately branded this “a serious political and military provocation.”
• The US announced a $1.4 billion arms sale to Taiwan, placed sanctions on a Chinese bank for its dealings with North Korea and labeled China the world’s worst human trafficker.
• Earlier, President Trump condescendingly tweeted that China tried but failed to help restrain North Korea’s nuclear program, saying: “It has not worked out. At least I know China tried.”
In an interview, Chinese President Xi focused on missile defense, an issue particularly close to Vladimir Putin’s heart. He said that the deployment of Terminal High Altitude Area Defense (THAAD) missiles by the US in South Korea is “disrupting the strategic balance in the region” and threatening the security interests of all countries in the region, including Russia and China.
He also stressed that Beijing is urging Washington and Seoul to back off military pressure on North Korea. He also expressed hope that South Korea’s new President will react more sensibly than his predecessor who authorized THAAD deployment that has made the North even more nervous about a possible preemptive strike.
Recently, Putin and Xi met on the sidelines of a Shanghai Cooperation Organization summit in the Kazakhstan’s capital, Astana where Putin predicted that their planned bilateral meeting in Moscow would be “a major event in bilateral relations.”
He added: “By (recent) tradition, we use every opportunity to meet and to discuss bilateral relations and the international agenda.”
Old grievances between them included China’s claim of 1.5 million square kilometers of Siberia taken from China under “unequal treaties” of 1689 that had led to armed clashes during the 1960s and 1970s along the long riverine border where islands were claimed by both sides.
In the late 1960s, the USSR reinforced its ground forces near China from 13 to 21 divisions and this had grown to 44 divisions in 1971. Chinese leaders began to see it as a more immediate threat to them than the US who fought Chinese troops during the Korean War in the 1950s and maintaining the fiction that Chiang Kai-shek’s Nationalists on Taiwan remained the legitimate government of China.
Hostility between Beijing and Moscow was abundantly clear and US analytic reports underscored the reality that Sino-Soviet rivalry was, to both sides, a highly debilitating phenomenon. They forfeited the benefits of cooperation and were compelled to devote huge effort to negate the policies of the other, especially after the US moved to cultivate better relations simultaneously with both. They saw themselves in a crucial race to cultivate good relations with the US (at the expense of each other).
However, they failed to notice how all this had increased the bargaining position of the US and CIA analysts saw them as cemented into an intractable adversarial relationship by a deeply felt set of emotional beliefs, in which national, ideological, and racial factors reinforced one another.
Although the two countries recognized the price they were paying, neither seemed able to see a way out and the only prospect for improvement was the hope that more sensible leaders would emerge in each country.
It took decades to chip away at the heavily encrusted mistrust between the two countries but by the mid-1980s, US analysts warned policymakers that “normalization” of relations between Moscow and Beijing had already occurred slowly but surely.
The US could not imagine back then, that 20 years later, Russian President Putin would visit Beijing to finalize an agreement on border issues and brag that relations had reached “unparalleled heights.” They also signed an agreement to jointly develop Russian energy reserves.
A revitalized Russia and a modernizing China began to represent a potential counterweight to US hegemony as the world’s unilateral superpower. Washington’s reaction of accelerated its strategic maneuvers to surround both Russia and China with military bases, its adversarial alliances and pressing NATO up to Russia’s borders, rather reinforced the Sino-Russian alliance than weaken it.
The US-backed coup in Ukraine in early 2014 also marked a historical breaking point as Russia finally pushed back by approving Crimea’s request for reunification and by giving assistance to ethnic Russian rebels in eastern Ukraine who resisted the coup regime in Kiev.
Putin also fleshed out the earlier energy deal with China, including a massive 30-year natural gas contract valued at $400 billion, demonstrating that the post-Ukraine economic sanctions by the West posed little threat to Russia’s financial survival.
As their relationship grew closer, they also adopted congruent positions on international hot spots, including Ukraine and Syria and military cooperation also increased steadily.
Hence, the hubris-tinged ‘delusional’ consensus in the US imagined that despite the marked improvement in ties between them, each retained a greater interest in developing good relations with the US than with each other.
The days of the US playing China and Russia off against each other is no more.
The rise of BRICS countries is further proof of this tendency as it is growing economically because:
• Cheaper labor in developing economies;
• Labor laws and rights are virtually nonexistent;
• Expenses on creating a safe and healthy work environment are minimal;
• Regulatory framework is lax;
• Expenses on environmental protection are negligible;
• Taxes are low; and
• Windfalls for multinational corporations are huge.
Hence, BRICS is a threat to the global economic monopoly of the Western capitalist bloc (North America and Western Europe) and the difference between the manufacturing and services sector must be understood.
Manufacturing sector is the backbone of the economy it cannot be created overnight as it is based on hard assets: raw materials; production equipment; transport and power infrastructure; and a technically-educated labor force. It takes decades to build and sustain a manufacturing base.
However, the services sector, like the Western financial institutions, can be built and dismantled in a relatively short period of time.
Although the Western capitalist bloc had retained some of its high-tech manufacturing base, it is losing to the cheaper and equally robust manufacturing base of the developing BRICS nations and ‘everything’ is made in China these days.
Except for high-tech microprocessors, software, a few internet giants, some pharmaceutical products, some energy and the all-important, military industrial complex, little remain in the West.
Moreover, the entire economy of the Western capitalist bloc is based on financial institutions such as the behemoth investment banks dominating and controlling the global economy: JP Morgan Chase, Citigroup, Bank of America, Wells Fargo and Goldman Sachs in the US; BNP Paribas and Axa Group in France; Deutsche Bank and Allianz Group in Germany; and Barclays and HSBC in the UK.
As the Western economy was mostly based on its financial services sector, the realization dawned on the world that although it takes time to build a manufacturing base, it is relatively easy to build or DISMANTLE an economy based on financial services.
What if Arab billionaires withdrew their shares from Western banks and invested it in an OIC-sponsored bank in accordance with Sharia? What if they withdrew their petro-dollars from the Western financial institutions and only accept Rubles or Yuan for their oil and gas?
Can the fragile financial services-based Western economies sustain such a loss of investments?
In early July Xi Jinping and Vladimir Putin held their twenty-first official meeting, coordinating their next moves concerning the international issues on the G20 summit’s agenda.
More than twenty agreements were also signed, amounting to almost twelve $12bn worth of investment. This reflects and defines their bilateral relations as the most balanced and fundamental in the world. The ease at which these complicated and wide-ranging agreements were realized also emphasized the level of confidence and cooperation that has developed between them.
The most prominent themes on the G20 agenda were also discussed in order to coordinate their next steps together on the world stage, expressing a common point of view on several themes, mutually reinforcing their positions in the process – such as developments in Syria and North Korea.
Moscow and Beijing intend to mutually support each other in negotiations with Washington in order to strengthen their common strategy of reaching beneficial arrangements for all parties involved.
Whereas, the American ‘deep state’ wishes to sustain a model where unilateral decisions are imposed on the rest of the world because they still live in a world where America is the sole super-power since 1990 - it had been almost completely superseded by a multipolar world order.
Putin and Xi Jinping will have the important task of trying to bring Trump closer to their strategic vision on these delicate issues. They hope to influence the American decision-making process, despite the strong internal divisions within the US and Trump’s limited capacity to personally make autonomous decisions in international politics, preferring to delegate those decisions to his subordinates instead.
Chinese President Xi Jinping delivered a speech at the 12th Summit of the G20 where he expressed his desire to discuss ways of building a bridge of cooperation to advance our shared prosperity.
He said that the global economy is showing signs of moving in the right direction. The related international organizations forecast that it will grow by 3.5 percent this year, the best performance that we have seen in several years.
“Firstly, we should stay committed to building an open global economy. This commitment of the G20 to build open economies saw us through the global financial crisis, and this commitment is vital to reenergizing the global economy.
“We must remain committed to openness and mutual benefit for all so as to increase the size of the global economic “pie”.
“Secondly, we should foster new sources of growth for the global economy. Innovation, more than anything else, is such a new source of growth. Research shows that 95 percent of the world’s businesses are now closely linked with the Internet, and the global economy is transitioning toward a digital economy.
“This means we should boost cooperation in digital economy and the new industrial revolution and jointly develop new technologies, new industries, new business models and new products.
“Thirdly, we should work together to achieve more inclusive global growth. Currently, global economic growth is not balanced, and technological advances work against job creation. According to the projection of the World Economic Forum, artificial intelligence will take away more than 5 million jobs in the world by 2020.
“To achieve this goal, we must ensure synergy between economic and social policies, address the mismatch between industrial upgrading and knowledge and skills, and ensure more equitable income distribution.
“Fourthly, we should continue improving global economic governance. In the wake of the global financial crisis, the G20 has done a lot to improve macroeconomic policy coordination, reform international financial institutions, tighten international financial regulation and combat tax avoidance, thus ensuring financial market stability and recovery.
“We should build on these achievements. In particular, we should strengthen coordination of macroeconomic policies, forestall risks in financial markets and develop financial inclusion and green finance to make the financial sector truly drive the development of the real economy.
Then he shifted into a higher gear and said: “China recently hosted a successful Belt and Road Forum for International Cooperation. Acting in the spirit of extensive consultation, joint contribution and shared benefits, the forum participants achieved fruitful outcomes in terms of boosting the connectivity of policies, infrastructure, trade, finance and people.
“Guided by a new vision of governance, we built a new platform of cooperation to tap into new sources of growth. The commitment of the Belt and Road Forum is highly compatible with the goal of the G20.”
Meanwhile, China and Syria have commenced discussing post-war infrastructure investment with a 'Matchmaking Fair for Syria Reconstruction' held in Beijing. The China-Arab Exchange Association and the Syrian Embassy organized a Syria Day Expo crammed with hundreds of Chinese specialists in infrastructure investment. It was a sort of mini-gathering of the Asia Infrastructure Investment Bank (AIIB).
Serious follow-ups are expected such as: a Syria Reconstruction Expo; the 59th Damascus International Fair next month, where around 30 Arab and foreign nations will be represented; and the China-Arab States Expo in Yinchuan, Ningxia Hui province, in September.
The deputy chairman of the China-Arab Exchange Association, Qin Yong announced that Beijing plans to invest $2 billion in an industrial park in Syria for 150 Chinese companies.
Nothing would make more sense. Before the tragic Syrian proxy war, Syrian merchants were already incredibly active in the small-goods Silk Road between Yiwu and the Levant.
The Chinese won’t forget that Syria controlled overland access to both Europe and Africa in ancient Silk Road times when, after the desert crossing via Palmyra, goods reached the Mediterranean on their way to Rome and a secondary road followed the Euphrates upstream and then through Aleppo and Antioch.
Beijing always plans years ahead and the Syrian government is implicated at the highest levels. The Syrian Ambassador to China, Imad Moustapha confirmed that China, Russia and Iran will have priority over anyone else for all infrastructure investment and reconstruction projects when the war is over.
The New Silk Roads, or Belt and Road Initiative (BRI), will feature a Syrian hub complete with legal support for Chinese companies involved in investment, construction and banking via a special commission created by the Syrian embassy, the China-Arab Exchange Association and the Beijing-based Shijing law firm.
Few remember that before the war. China had already invested tens of billions of US dollars in Syria’s oil and gas industry. Naturally the priority for Damascus, once the war is over, will be massive reconstruction of widely destroyed infrastructure and China will be part of that via the AIIB.
This would be followed by investments in agriculture, industry and connectivity: transportation corridors connecting Syria to Iraq and Iran, the other BRI hubs.
What matters most of all is that Beijing has already taken the crucial geopolitical and geo-economical step of being directly involved in the final settlement of the Syrian war. It has a special representative for Syria since last year and has already been providing humanitarian aid.
It will work non-stop for the Iran-Iraq-Syria triumvirate to become a key hub in the BRI and we may see a booming Shanghai-Latakia container route!
Meanwhile, Russia is promoting the Arctic route as a shorter alternative to shipping via the Suez and although cautious, Beijing seems ready to invest.
Earlier, Chinese President Xi Jinping and Russian Prime Minister Dmitry Medvedev met on expanding cooperation and jointly building an "Ice Silk Road."
Noting that Russia is an important partner in the construction of the Belt and Road Initiative (BRI), Xi urged the two countries to carry out the Northern Sea Route cooperation so as to realize an "Ice Silk Road," and earnestly implement various connectivity projects.
He added that with a vast potential and a broad prospect for their practical cooperation, China and Russia should upscale cooperation in economy and trade, investment and energy, implement major manufacturing cooperation projects, strengthen high-speed rail cooperation and push for an early start of the Moscow-Kazan high-speed railroad project.
They should also enhance cooperation in various areas including education, culture, sports, tourism and media, so as to promote mutual understanding and traditional friendship, he said.
He also hailed the fruitful results of bilateral cooperation in trade and investment against the backdrop of a sluggish global economic growth and gloomy international trade and investment.
Later, Russian President Vladimir Putin also held talks with visiting Chinese President Xi Jinping in the Kremlin where they discussed a host of issues including bilateral ties and international hotspots like Syria and North Korea.
“We invariably have economic matters at the top of our agenda, but they are not the only issues we address. We also coordinate our efforts on the international stage, in the area of security and in the fight against modern threats and challenges,” Putin said.
Putin also announced Russian plans to create a joint investment forum with the Bank of China at a joint press conference following talks with the Chinese President.
The Russian Direct Investment Fund and the China Development Bank (CDB) also agreed to establish a Russian-Chinese investment fund worth 68 billion yuan ($10 billion).
The new fund, to be called the Russia-China RMB Cooperation Fund, “will give a powerful impetus to increase the volume of cross-border direct investment and significantly increase the number of jointly implemented projects” according to Russian Direct Investment Fund chief Kirill Dmitriev.
Meanwhile, Reuters reported how the Saudis are running up a huge deficit—and won't be able to obediently gobble up US Treasuries like they usually do, hence we may be witnessing the "waning power of the petrodollar".
When the Federal Reserve starts reducing its holdings of U.S. Treasuries as expected later this year, some of the most consistent buyers of US bonds over the last 15 years may be less than willing to fill the breach.
Before the financial crisis, the flow of "petrodollars" was one of the most powerful forces driving the US bond market and the dollar, as oil exporters invested their booming trade surpluses into Treasuries.
But this flow may be about to dry up even further. The Fed's $1.7 trillion bond-buying stimulus had also crowded out demand from oil exporters and their once huge trade surpluses have shrunk thanks to sluggish oil prices and even the Saudi-led war in Yemen.
Far from having plenty of fresh cash to invest abroad, these countries are shoring up finances and safeguarding stability at home.
With oil below $60 a barrel for the last two years and even below $50 for most of that time, their finances are under pressure and OPEC countries ran a collective current account deficit in 2015 for the first time since 1998. Saudi Arabia's deficit last year was 8.7 percent of GDP compared to a surplus of nearly 30 percent in 2005.
As the Fed starts its gradual withdrawal from the Treasuries market, Saudi Arabia and other oil exporters are less likely to fill the gap as they would have done only a few years ago.
It is common knowledge that the Chinese are extremely cautious and diplomatic, to a fault really, in their official pronouncements. Yet, the Global Times, the English language publication of the People's Daily, similar to Russia's RT or Sputnik, explained that the "US is the biggest source of global strategic risks", arguing that relentless US military pressure on both Russia and China are forcing them to fight back.
The editorial explains what would be blindingly obvious to any first-year political science freshman: "The US is unable to beat down the Chinese dragon and the Russian bear at the same time.", and throws in that both powers are "fed-up" with American behavior.
The editorial goes on to explain that neither China nor Russia want a confrontation with the US, and would far prefer friendly diplomatic relations, but the US is making this impossible.
Enough is enough, already!