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The Invasion of Ukraine, the Return of Great Power Competition, and the Fragmentation of Globalisation

17 Mar 2022
By Professor Stephen Nagy
Pro-Europe, anti-Russia protests in Trafalgar Square in January 2022. Source: Alisdare Hickson, Flickr,

The Ukraine crisis provides clarity as to how competition and great power rivalry will be executed moving forward. Actors will increasingly utilise the multilateral weaponisation of the financial system and cyberspace while building resilience to deter potential aggressor states.

Russia’s invasion of the Ukraine has reanimated deep concerns about the possibility of large-scale conflict in Europe. It has made EU policymakers deeply aware that the post-WWII international order that was built to limit the power of states and to minimise the chance of conflict is not necessarily permanent without greater economic, military, and multilateral investment.

The result of Putin’s efforts to dismantle the democratically elected Ukrainian government and the long-term implications of Russia’s invasion of Ukraine are yet to be written. Nonetheless, we can glean several important trends that are associated with this critical juncture in our understanding of the future of international order and the international institutions that act as a cohesive to maintain that international order.

First, the invasion of Ukraine has highlighted that in the European context during a time of war, politics trump economics. Germany’s quick shift away from a decades long pacifist approach to its foreign policy, one which tried to balance politics and economics with Russia has given way to more robust German support for the building of defence capabilities to preserve, not only German sovereignty, but also European integration. German Chancellor Olaf Scholz’s announcement of US$112.7 billion for the military and a commitment to spending 2 percent of GDP on defence to meet NATO requirements, represents a fundamental shift in how Germany understands the precariousness of their security, but also their commitment to maintaining a united European Union.

Second, to the dismay of China and Russia, the instinctual reflex to revert to alliances and institutions such as NATO and the EU in the wake of Russian aggression means alliances will be a key feature of great power competition. States will actively seek alliances and partnerships that enhance their integration into multilateral relationships. Applications for EU and NATO membership, a growing number of Reciprocal Access Agreements (RAA) like that between Japan and Australia, and participation in exclusive trade and economic partnerships (EPA) — such as the Japan-EU EPA — will be seen as tools to enhance security.

Three, EU and US coordination on sanctions and financial tools applied to Russia, suggests that they — and other like-minded countries like Japan, Canada, Australia — will deploy their fiscal and economic comparative advantages to preserve the current international order. That order is founded on rules, rules which limit the power of states to ignore the sovereignty of neighbours and other states.

Here, China’s position remains hypocritical. It conflicts with Beijing’s Five Principles of Peaceful Coexistence that, for decades, have stressed mutual respect for sovereignty and territorial integrity, mutual nonaggression, noninterference in each other’s internal affairs, equality and mutual benefit and peaceful coexistence.

Russia’s invasion of the Ukraine clearly violates these principles. Beijing has been reticent to explicitly criticise Moscow, as evidenced by its abstaining from the United Nations General Assembly (UNGA) vote on a resolution condemning Russia’s invasion of Ukraine and accidentally leaked internal media directives ordering Chinese media outlets to “not post anything unfavourable to Russia or pro-Western.”

Putin’s invasion has placed Beijing in an awkward position. China is increasingly being put in a position of contradicting the founding principles of their foreign policy or retracting their public statements of support for the Russian Federation.

Fourth and deeply worrisome is the inability of the US to commit to an explicit defence of Ukraine. The lesson for rogue states around the world is that nuclear weapons will be critical to maintaining one’s autonomy, strategic sovereignty, and ability to limit alliances to push back against a naked aggression to a neighbour.

This has negative consequences for nuclear proliferation and the long sought after comprehensive, verifiable, irreversible denuclearisation (CVID) of North Korea. For rogue states like Iran and revisionist powers like China and Russia, they now clearly understand that there are limits to what the US, EU and their allies are willing to bare when confronted with naked aggression.

This has implications for long term nuclear proliferation in areas of contestation. The Korean Peninsula and the Indo-Pacific region in general, with a specific focus on China, potentially Taiwan, and other states, will now have come to the conclusion that nuclear weapons are the ultimate guarantor of their security.

Fifth and importantly, the Russian invasion and responses by the US and its partners have provided us clarity as to how competition and great power rivalry moving forward will be prosecuted. Key tools will include but not be exclusive to the multilateral potential weaponisation of the financial system, economic sanctions, cyberspace and the investment in economic, technology and military resilience to deter potential aggressor states.

Ukraine’s unexpected resistance against Russian force have also demonstrated the utility of investment in economic, technological, and military resilience to deter potential aggressor states. Taiwan, being at the forefront of friction in the Indo-Pacific, may invest further in a porcupine approach to security or adopt a strategy of denial, making any attempt at forced reunification as painful as possible for Beijing.

In the South and East China Sea, Southeast Asia territorial claimants and Japan may take similar approaches to their concerns over Chinese terrestrial claims. Japan is already considering investing in their own A2D2 system to deter China from seizing the Senkaku islands.

On the economic front, despite Putin’s efforts to sanction-proof his economy, the Peterson Institute for International Economics’ Joshua Kirschenbaum and Nicolas Véron (PIIE) argue that the weaponisation of the financial system has led to the “incapacitation of the Central Bank of the Russian Federation’s (CBRF) use of its international reserves in … all the core reserve-currency jurisdictions of the world bar China.” This has caused a collapse in the ruble and isolated not only the central banking system but ordinary Russians from the international economy.

Policymakers in Beijing implicitly understand the possibility of a similar tactic being deployed on China in the case of a Taiwan contingency or other explicit large-scale military action in the Indo-Pacific. This would quickly hobble the trade dependent China, jeopardising decades of growth and a domestic commitment to socio-economic growth and stability at all costs.

Learning from Putin’s gamble, Beijing will double down on its dual circulation model and the BRI, both initiatives to ween the Chinese economy off its Western dependence for consumers and technology.  Through indigenous innovation and expanding trade and cooperation with BRI participating states, Beijing hopes to selectively deleverage its economy from the West and champion the Global South’s development borrowing from China’s experience to create a multipolar order.

In reality, Beijing’s tilt away from the West following Russia’s invasion of Ukraine will contribute to fragmenting globalisation and the establishment of a bipolar world. It will result in the adoption of different norms, institutions and standards that will shape governance, civil society, and the use of technology such as AI, quantum computing and cyberspace to maximise regime security and sustainability.

Dr Stephen Nagy is a senior associate professor at the International Christian University in Tokyo, a fellow at the Canadian Global Affairs Institute (CGAI); a senior fellow at the MacDonald Laurier Institute (MLI); a senior fellow at the East Asia Security Centre (EASC); and a visiting fellow with the Japan Institute for International Affairs (JIIA). Twitter handle: @nagystephen1.

This article is published under a Creative Commons License and may be republished with attribution.