Farewell Globalization?

“Today, there is no alternative to a system based on the dollar and the euro. But we saw that this system has flaws. It’s not something that will happen quickly, but de-dollarization is a process that is already underway and destined to happen in the future.” The words of the head of the Kremlin. These days? No, it was July 2009, and the Russian president said he was convinced that a renegotiation of the 1944 Bretton Woods agreements was inevitable.

Faced with the international economic crisis, which has manifested itself in all its toxicity in this annus horribilis, the head of the Kremlin has asserted equal dignity in reforming the global economic structure. “We need a new global financial architecture, we need to reform the system, starting with structures like the Monetary Fund and the World Bank.” At that point, Russia, such is the implication, would be on the side of the developing countries.

The head of the Kremlin at that stage was Dmitry Medvedev, and his statement on the eve of the G8 meeting in Italy in the coming days was met with respect and attention. Moreover, Medvedev also enjoyed recognition and attention from the U.S. establishment, beginning with President Obama, with whom he signed important agreements the following year, such as the New START treaty to reduce nuclear arsenals.

Fifteen years later, in the context of deteriorating bilateral relations between the USA and Russia and generally strained international relations, de-dollarization is returning to the forefront. Often cited as a tool of hybrid warfare used by Moscow in response to Western sanctions, it is in fact a phenomenon not only of distant origin, but of broader scope.

In 2009, in the midst of globalization, the idea of alternative currencies in commercial transactions between countries and powers in good diplomatic relations was the result on the part of China of a predominantly economic intention: to complement where possible the yuan or the ruble, or other regional-level currencies, to the use of the dollar to limit the disadvantages of other economies compared to the U.S. economy. Which, according to a staunch liberalist such as former French President Giscard d’Estaing, who was finance minister under de Gaulle, could use what he called “exorbitant privilege.” In practice, because the dollar was the base currency and essentially the hegemon, the United States was not subject to the fiscal austerity that affected the rest of the world.

Some sixty years after this observation, “the rest of the world” decided to act. The polarization that followed the war in Ukraine, which the West perceived as an opportunity to settle scores with Russia, and Russia viewed as a pretext to bring it to its knees, became an accelerator of a process already underway. For example, five years before the conflict, Beijing and Moscow had already set up an interbank system alternative to Swift.

But now, along with China and Russia, dozens of countries are poised to take part in what is being branded across the Atlantic as “a challenge to the international financial system dominated by the United States.” The Washington Post last week published documents confirming the observed dynamic. “Russia projects confidence as it pursues alliances to undermine West,” read the headline. Catherine Belton’s article builds upon two major ongoing conflicts. Russia, by fighting back against the Western-backed Ukrainian counteroffensive, has raised its profile in countries not involved in the conflict. The United States, by supporting Israel’s invasion of the Gaza Strip, has damaged its position in many parts of the world. “The convergence of events has led to a wave of optimism about Russia’s global standing.”

A paradoxical result, given the preconditions on which Washington and Brussels have focused. A result that has a good chance of moving the world into a new and unexpected dimension: globalization has split in two. That is, two semi-globalizations that are destined to revolve around geopolitical sets that are more homogeneous – or less incoherent – in terms of priorities and values. A step forward for new players and half a playing field less for us westerners.