World Affairs by Kanthan

There has been a “pandemic of peace” in the news lately, starting with the historic peace deal between Saudi Arabia and Iran. More surprisingly, it was brokered by China! Then there has been an exponential increase in trade deals that embrace dedollarization — not only Russia and China but also India, ASEAN, Brazil, and African countries. What do all these mean to the US and the global financial system?

To paraphrase Shakespeare, we are living through the best of times and worst of times. We have the potential to create an incredible world, thanks to great advancements in science, technology, trade, global connectivity etc. But we are also on the verge of WW3, thanks to the current war against Russia and the potential war against China. This is terrible news for developing nations, which have a long way to go despite the immense progress made in the last forty years. To achieve its developmental goals, India must avoid the imperialist trap of divide-and-rule. India should embrace strategic autonomy and avoid getting caught in the great power conflict. There’s an Indian saying “vasudeva kudumbakam” which translates to “the world is one family.” That’s a wise concept not only for India but every country.

The geo-economic center of the earth is moving eastward, thanks to Asia, which is now the #1 continent in terms of GDP. China’s miraculous growth in the last four decades has made it the world’s #1 in manufacturing, trade, wealthy middle class population, Fortune 500 firms, patents, scientific publications etc. Countries around the world are looking for ways to adapt to the new multipolar order. BRICS countries are exploring a brand new trade currency to circumvent US dollar. Arab countries are ready to buy oil for Chinese Yuan. Meanwhile, the old imperialists are dreaming of “defeating Russia” or “containing China.” This is futile and dangerous. We need a new ideas for cooperation, trade, development, infrastructure, connectivity and development.

The USA has enjoyed the “exorbitant privilege” of dollar for many decades. As the currency of choice for global trade and foreign exchange reserves, the USD bestowed Americans with wealth and power. Let’s discuss what those powers are, how the US elites abuse them, and how the world is now revolting against this unfair monopoly. A multipolar world is emerging and the death of dollar hegemony will be a key feature of this new world order.

While Indian politicians protect the dairy industry from foreign competition, they have allowed the US to take over India’s e-commerce, 5G, mobile payments, social media etc.

Most people have their favorite talking point regarding China’s success — cheap labor, communist dictatorship, stealing IP, protectionism etc. While the stereotypes have some truth, the true reasons underpinning China’s success are more holistic and sophisticated. Here are 50 reasons, in no particular order of importance. Other developing countries like India must carefully study these reasons.

Bretton Woods I led to gold-backed dollar that reigned as the global trade/reserve currency till 1971. Then it collapsed. The US dollar was revived with Petrodollar — we can call it Bretton Woods II. Now, the primacy of dollar is under threat again, thanks to exploding debt and rise of a multipolar world. The US needs Bretton Woods III to cancel all its debt and start with a clean slate. But Russia and China are in the way

While the conflicts with Russia and China create some decoupling, the overall trend is globalization and some selective “re-globalization.”

The next 20 years are the most crucial for India. With a booming workforce and a young population, India can grow rapidly and become a developed nation. However, the challenges are numerous! India needs meticulous planning and flawless execution.

India-China relations have been terribly strained over the last two years. Anti-China sentiments are high in China. However, in an emerging multipolar world, India needs a pragmatic and strategic foreign policy.