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Wednesday, June 5, 2024

The Derailing Global World Order

The so-called rule-based world order is being undermined by U.S. self-interest and hypocrisy, while China and the BRICS nations challenge Western dominance, leading to a potential shift towards a multipolar global system.

The “Rule-based World Order” established the international rules, norms and agreements under UN’s Charter aimed at promoting peace, security and cooperation among nations.   However, with the dawn of the rule-based world order, the World witnessed how United States of America (USA) and Europe harnessed it for advancing their interests. As the 21st century began, the West dominated world order started rusting due to several reasons. The role of America in the international order and rising power of China and BRICS have created challenges for the international order.

Role of America: The Exploiter

America was at the forefront in establishing the global world order to create a stable, predictable and just international system where States can cooperate and resolve conflicts through diplomacy and legal means. However, with the passage of time, it was America who exploited the States by using the legal cover of international order and system. For advancing its own interest, USA adopted the policy of dual standards and hypocrisy. The selective usage of international norms, values and rules has been a major player in derailing the global world order.

There have been several instances where the USA derailed the rule based global world order. In 2003, for example, the USA led the invasion of Iraq—which the UN Security Council did not permitted—alleging Iraq of possessing Weapons of Mass Destruction which were never found. As a result of this war, around 300,000 people died in direct conflict and millions of them were displaced. The USA projected gross human rights violation at the people of Iraq, violating the very principles of rule-based world order. It was later found out that invasion of Iraq was motivated by economic gains i.e. oil. This violation of rule-based global world order gave incentive of dismal to other states—especially 3rd World States—of the USA dominant world order.

The Greenback has been centered to the economic global world order. The USA has frequently used economic sanctions as a foreign policy tool which restricted the access of certain countries or entities to US financial system e.g. Freezing assets held in US banks, Restricting US Dollar transaction, Cutting countries from global financial networks i.e. Society for World-wide Interbank Financial Telecommunications (SWIFT). This increased weaponization of dollar against the rivals of the USA have led the other countries to adopt alternative avenues. The countries are engaging in trade via local currency or barter system. Moreover, the role of irregular and decentralized Cryptocurrencies is also increasing especially in US sanctioned countries i.e. Iran and Russia. Although, there is no immediate threat to dollar dominancy; however, in the long run—if the US continued weaponization of dollar—this could result in fragmentation of world order.

China: A Rising Power

The President of People Republic of China (PRC) Xi Jinping, in 2017, coined slogan of “Changes unseen in a century” expressing the China’s ambitions about building a new world order. The China believes that post WW2 global world order is derailing so it is useless to save that order; in contrast, Chinese are preparing for its failure. The Chinese approach is supported by the Global South because global south had no say or contribution in the rule-based world order. Global South believes that rule-based world order was selectively used only for advancing west interests.

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The USA proliferated the “Western model of liberal Democracies” which suggested that specific set of values, institutions and practices as outlined in democracy could route countries to modernity and that all societies should strive to adopt this model to achieve progress and development. In this way, the USA has promoted and exported its own political and economic system i.e. Capitalism and liberal democracy. However, at the same time, USA also supported authoritarian regimes that were USA’s allies i.e. KSA, UAE

Contrary to the western model of liberal democracies, China has presented the model of “Multiple Modernities” in the international arena. The concept of multiple modernities outlines that there is not one single or linear path that leads to modernity, but states can take diverse forms based on unique historical, cultural, or societal contexts. Under the arena of multiple modernities, President Xi Jinping have introduced Global Development Initiative (GDI) in 2021, Global Security Initiative (GSI) in 2022 and Global Civilization Initiative (GCI) in 2023 respectively.  In the international relations, China employs the concept of multiple modernity by promoting a multipolar world order and advocating for respect for different cultures and development paths. The China emphasizes the principles of non-interference in internal affairs of other states and mutual respect for sovereignty.

While the debate remains about superiority and effectiveness of Western and Chinese approach; regardless of this, the Global South is more appealed by the Chinese approach due to number of reasons. The Chinese approach is based on engagement with other countries while recognizing the diverse cultural and political system of countries. This can be exemplified by the Belt and Road Initiative (BRI), GDI, GSI and GCI which seek to promote infrastructure development, connectivity, security, and mutual respect without interfering in internal affairs of other States.

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This has led to rise of the BRICS (Brazil, Russia, India, China and South Africa) which would be the potential threat to rule based world order. In this way, the World is moving away from centric periphery structure of global economy and security towards period of polycentric competition and cooperation, with the China at the driving seat.

The Age of BRICS and De-Dollarization

The BRIC was the term coined by the economist Jim O’Neill, originally referring to Brazil, Russia, India and China. In 2004, these four countries formally created the BRIC group and, in 2010, South Africa also joined making it BRICS. According to the report, the BRICS countries contribute more to global GDP in term of purchasing power than the G7 countries. Since 2014, Russia trade with G7 countries has fallen to 36% given the western sanctions while its trade with BRICS countries has risen to more than 121%. Almost 40 countries—among G20 countries also—have shown interest in joining BRICS while 22 have formally applied. Recently, KSA, UAE, IRAN, Egypt and Ethiopia have joined the BRICS giving it a great leverage in international system.

BRICS is said to be the bloc of Global South that can challenge the global world order of Global North. The BRICS has risen to great importance given the weaponization of dollar and USA sanctions. As the USA dollar has been at the center of economic world order after the Bretton Woods Conference of 1944, the BRICS group desire for establishment of global currency to counter dollar dominance could be potential threat to Dollar.

The US dollar enjoys dominance in international economics as US dollar holds around 59% of global reserves. The global transactions in dollar under USA’s Clearance House Interbank Payment System (CHIPS) are around 250,000 daily transactions equivalents to $1.5 Trillion. There is Chinese counter to the CHIPS, the China Cross-Border Interbank Payment System (CIPS) have around 15,000 daily transaction equivalents to $50 Billion.

There is no immediate threat to the dominance of the USA dollar. However, there could be a more fragmented and multipolar world order amid the speculations about the future of US dollar. The De-Dollarization is possible if the Chinese CIPS in integrated in the BRICS which would be cause of derailing incumbent world order. An enlarged BRICS will create geo-political coalitions to accelerate de-dollarization and consequently leading toward multipolar world order.

Saad Ul Hassan is a student of Defence and Strategic Studies at Quaid-i-Azam University, Islamabad.