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Time for the West to cooperate with the rest?

Bryan Wu
Bryan Wu7/14/2022 02:15 PM GMT+08  • 9 min read
Time for the West to cooperate with the rest?
Mahbubani: Paradoxically, what initially seemed to be a sense of a united global response against the Russian invasion of Ukraine now seems to be a very much Western response, with very little support from the majority of countries / Photo: Albert Chua
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The United Nations (UN) General Assembly resolution in March saw an overwhelming 141 countries vote to condemn Russia’s invasion of Ukraine. Only five countries, including Russia, voted against the resolution, while 35 abstained from the vote.

The historic vote aimed to isolate Russia politically, but also raised questions over the position of countries who abstained from voting for or against the resolution, whose text deplored Russia’s “aggression against Ukraine”. With a vast majority of countries condemning Russia’s offensive, countries who abstained — including China — risked the trickle down effects of Russia’s political isolation.

And yet, just over four months later, the harsh reality of Western sanctions against Russia for the global population with food and oil prices rising could see the geopolitical tables turning in China’s favour.

Kishore Mahbubani, Distinguished Fellow at the Asia Research Institute (ARI), National University of Singapore (NUS), says that China’s position on Russia’s invasion of Ukraine — which he reckons is far more nuanced than Western media would have the world believe — could be more “in harmony” with the rest of the world than the West realises.

Mahbubani, who previously served as Singapore’s Ambassador to the UN and President of the UN Security Council, points out that a “black and white” depiction of China’s position on Russia is “completely wrong”.

He was speaking at a webinar hosted by The Edge Singapore in partnership with Aggregate Asset Management (AAM) on July 9, titled “Managing Global Uncertainties; Seizing Global Opportunities”.

See also: Singapore warns of 'escalatory spiral' as US-China trust erodes

From his perspective, it was “very clear” that China has not supported Russia’s invasion of Ukraine in any way. “Of course, China has not condemned Russia, but China is not alone there. One of the best friends of the West and the largest democracy in the world, India has also not condemned Russia,” says Mahbubani, whose association with AAM started when he was first a client before joining the firm as chairman in 2017. He was drawn to the fund's zero annual management fee model where their interests are aligned with their clients.

“In geopolitics, everything is very complicated. Countries like China, India, South Africa or Brazil have to weigh a lot of considerations. Before they work out what their positions are, they have their own national interests,” he reasons. “China has been very careful about the position it’s taken on the Ukraine war — it has not condemned Russia, but at the same time has kept up ties with Ukraine, and indeed the Ukrainian government still maintains good relations with China,” he adds.

Mahbubani says that Ukraine has historically been a major trading partner of China and that China is doing its best to maintain trade with the war-torn state, despite issuing a statement in February that there are “no limits” to the partnership between China and Russia. He believes that this refers to the “broader relationship” between the two countries, a “natural” occurrence due the common challenge of Western pressure, albeit for different reasons.

See also: A 'much safer world' if China integrates with the US economy: Tharman

Russia is not seen as a long-term challenge or threat to Western dominance, but China is “certainly” a threat to American dominance. To him, that explains the “major geopolitical contest” that has broken out between the US and China, forcing the latter to keep up its partnership with Russia.

In the long run however, he believes that this relationship of necessity could end, as China and Russia have “divergent goals”, and that it is “conceivable” that Russia, too, will worry about China’s growing dominance, with which it shares a significant land border.

According to Mahbubani, Russia’s invasion of Ukraine has led to the “tremendous revitalisation of Western solidarity” between the US and Europe. To some, that has been construed as one of the ways how China has “lost” in the immediate fallout of the war. In anticipating American containment policy, China had hoped to deal with the US and Europe as “separate entities with separate interests”, and had managed to achieve this for some time — until the war in Ukraine. But renewed Western solidarity has made China’s geopolitical position “more uncomfortable”.

The efficiency of unified Western sanctions on Russian assets, with US$340 billion of its US$680 billion seized and frozen by Western banks, has proven to be a significant strategic setback for China, which now needs to consider how to safeguard its foreign reserves of some US$3 trillion, seen as assets to protect itself, from Western sanctions.

China has also suffered from the instability of 2022, a significant point in its political transition with a critical Party Congress to be held in November. For a year in which President Xi Jinping hoped for “calm and stability”, China has had to contend with its exit from a zero-Covid policy and the ramifications of the Ukraine war.

“On all these counts, the stability that President Xi wanted this year, the partnership with Russia, the unification of the West and the vulnerability of foreign assets, China has lost out from the Ukraine war,” says Mahbubani.

Diplomatic pressure

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Yet, the prolonged conclusion to the war could turn the tide in China’s favour. For one, rising oil and energy prices in the US and Europe could see the West facing domestic backlash against continuous support for Ukraine in the form of arms and materials. Mahbubani says that if inflation continues to rise, there could be political fallout against President Joe Biden and the Democratic Party in the US, who are focused on the midterm elections in November.

“There could be some pressure to find a diplomatic solution in Ukraine, instead of taking the very hardline position that the US has taken on the Ukraine war,” he says. “In the same way, it's also possible that you might get a summer of unrest in many European countries, if inflation rises and if energy prices remain high.”

And although the West has applied strong sanctions on Russia — sanctions that have been brutal and, in some ways, effective — Mahbubani stresses the statistic that only around 14% to 16% of the world’s population belong to countries that have imposed sanctions on Russia and that this figure should not be understated.

“The remaining over 80% of the world’s population have not imposed sanctions on Russia, and are now saying very clearly to the West that this war in Ukraine is not just damaging the people of Ukraine,” says Mahbubani. “The people of Ukraine are clearly suffering and we should support them — but the rest of the world is also suffering.”

The war in Ukraine has increased global inflation and global energy and food prices, which will result in hundreds of millions of people in developing countries going hungry, says Mahbubani. The “sheer indifference” of the West to the “pain and suffering” of poorer countries is becoming palpable, leading to a backlash against the West for their staunch position on the war, he says.

“Paradoxically, what initially seemed to be a sense of a united global response against the Russian invasion of Ukraine now seems to be a very much Western response with very little support from the majority of the countries with over 80% of the world’s population who live outside the West,” he says.

“CIA”

In a Q&A segment of the webinar, Mahbubani shares his belief that the past year has been especially tumultuous because of the multiple “fundamental turning points” in history the world is experiencing simultaneously.

Besides the war in Ukraine, one of the most fundamental of these turning points is what he has coined “the return of Asia”. Up until the year 1820, the two largest economies of the world were that of China and India; it has only been in the last 200 years that the West has asserted economic dominance — a period in human history that Mahbubani believes to be an “aberration”.

“I can confidently make a prediction that over the next 10 to 20 years, the major engines of global growth will be China, India and Asean,” says Mahbubani, who sees this “CIA” replacing the abbreviation for the Central Intelligence Agency in our lexicon. He believes that Asia’s return was inevitable and would have happened with or without the war in Ukraine.

He explains his point with the “statistical shock” that Asean has contributed more to global economic growth over the last 10 years than the European Union (EU), despite its economy being worth only US$3 trillion, one-fifth of that of the EU’s US$15 trillion economy.

China’s burgeoning middle class has also created a “tipping point” where domestic income is no longer spent not only on basic goods but also higher-priced items, helping its retail market grow from US$1.8 trillion to US$6 trillion over the past decade, surpassing the US retail goods market which now stands at US$5.5 trillion.

Mahbubani believes China is now on an “upward swing” which normally lasts for 100 to 200 years, of which it has only been through 40 years as yet. This persistent internal growth supports China’s dual circulation strategy, through which it aims to continue to grow by exports but also to encourage internal consumption. These long-term trends in China will also be growth drivers for its regional counterparts India and Asean, says Mahbubani.

As the West “unfortunately” continues to place geopolitics over the state of the global economy, with the conventional wisdom that a recession is imminent, Mahbubani asks whether it is time for the West, who represent only a fraction of the global population, to “learn to cooperate” with the rest of the world, and especially with China, the world’s second largest economy.

How is Aggregate Asset Management able to chalk up this track record? Keen to better understand how this firm ticks? Visit www.aggregate.com.sg for more details.

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