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Has that moment finally arrived — a New World Order… or Disorder?


Dr Michael Power recently retired from Ninety One where he was the Global Strategist for most of the past two decades. He remains a Consultant to Ninety One. Prior to Ninety One, he had worked in London, South Africa and Kenya for Anglo-American, Rothschild, HSBC Equator and Barings. He has a PhD from UCT, a master’s from the Fletcher School at Tufts and a bachelor’s from Oxford. His primary focus today is doing research into the emerging field of geo-economics focussing in particular on the global implications of the return of the economic centre of gravity to a China-centred Asia.

Let’s not be overly distracted by the hoopla surrounding Vladimir Putin’s possible attendance at the BRICS Summit. Rather we must reserve some of our focus for the much bigger issue — the future of the global economic order in the wake of the incipient demise of the West’s rules-based order.

Almost everyone with a grasp of modern history knows that “9/11” refers to the day in September 2001 when al-Qaeda terrorists attacked the United States. But few probably remember that, on 9/12, the first foreign leader to call president George W Bush with his condolences and pledges of support was Russia’s president Vladimir Putin. And on the evening of 9/12, China’s president, Jiang Zemin, did likewise.

Like the planets of our solar system being momentarily aligned, the Great Powers of the world were, albeit briefly, ad idem.

In an address to a Joint Session of the US Congress a week later, Bush remarked: “Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists.”

Though hairline cracks have started to appear in this blunt bi-polarism, over 20 years later the US still reflexively returns to this “us versus them” doctrine wherever its foreign policy is concerned.

After the February 2022 invasion of Ukraine by Russia, that principle was updated to say “every nation, in every region, now has a decision to make. Either you are with Ukraine, or you are with the Russians.”

A majority of the UN General Assembly — 141 out of 181 votes cast — decided they were “with Ukraine”. This included fellow African nations Nigeria, Egypt, Kenya and Cote d’Ivoire. But some demurred: 35 nations abstained, South Africa included, as did fellow BRICS club members India and China. Only six nations sided with Russia. Bolsonaro’s Brazil was the only BRICS nation that voted to condemn the Russian invasion: after president Lula’s recent remarks in Beijing, might today’s Brazil also have abstained?

In passing, it is worth noting that the most widely praised speech of that UN session was made by a non-Westerner: Kenya’s Ambassador, Martin Kimani. Voting “with Ukraine”, he likened Russia’s actions to stoking the “embers of dead empires”.

Arguably, however, it is in those 35 abstentions that the revival began of a movement whose roots go back 75 years: in 1955, what became the non-aligned movement met in Bandung, Indonesia. By definition, non-alignment has no place in an “either us/US or them” world.

The world has moved on since that dark day in September 2001. Large-scale wars have happened. Afghanistan was invaded by the US and its allies in 2001, Iraq was invaded by broadly the same US-led Western coalition in 2003. Neither action was sanctioned by the United Nations and neither action found what the invaders were looking for: no Osama bin Laden and no Weapons of Mass Destruction respectively.

Noting again that the 2022 invasion of Ukraine was also opposed by the UN General Assembly, it appears the latter tends not to approve of invasions whichever “side” might initiate them.

The above votes by the General Assembly underline the growing dissatisfaction of the world order by much of what is now called the Global South: one of their central charges is hypocrisy.

Rules-based order

The US and its Western allies preach upholding a “rules-based order” (RBO). Critics say the RBO has morphed into a mish-mash of contradictory ambiguities. They note that the winners of World War 2 made those rules, those rules were based upon their own principles, and, with this double lock, the West now feels it has licence to order the rest around as they see fit.

Worst of all, when they see fit, key nations in the West go on to violate these very same rules.

Critics of the British Empire quipped over a century ago: “Britain may rule the waves, but when it suits its purposes, it waives the rules.” The same charge is being levelled today at the leading advocates of a rules-based order.

As summarised by China’s Minister of Defence, Li Shangfu, at the end of last week’s Shangri-La Dialogue in Singapore, “the so-called rules-based international order never tells you what the rules are and who made these rules. It practices exceptionalism and double standards and only serves the interests of a small number of countries.”

The double standards of the US, especially, grate. By all means, accuse president Putin of being a war criminal, but can you do this if you are not a member of the International Criminal Court and so have no locus standi to make that charge?

Assuredly, criticise China for violating the precepts of the International Law of the Sea in its behaviour in the South China Sea, but should you not be a signatory of that charter if you want to make those claims?

Defend human rights worldwide, of course, but then do not suspend them when torturing prisoners at Guantanamo Bay in Cuba or Abu Ghraib in Iraq. At the time, it did not help when, in a flagrant contradiction of the rules of the Geneva Convention, a US vice president insisted “waterboarding isn’t torture”.

And it is not only the US that waives the rules: Britain’s continued illegal occupation of the Chagos Islands in the Indian Ocean — and, by extension, the US airbase on Diego Garcia — is but another example of Western double standards. This inconsistency has not stopped the UK and the US from criticising China for building an airbase on the uninhabited Mischief Reef in the Spratly Islands in the South China Sea.

These are but a few of the aggravations that illustrate why a growing number of countries outside the West are opting for non-alignment. The examples cited above are mostly political in nature. But to them are now being added a list of economic differences of opinion as well. This has been prompted in particular by the decision of many countries to opt for non-alignment in the wake of the growing tensions between the US and China.

Quite simply, many countries do not want to pick sides as doing so would likely harm their economic interests. As the Prime Minister of Singapore, Lee Hsien Loong, recently noted: “right now we are friends with both — it’s not that we don’t have issues with either, but we are generally friends with both, and the relationships are in good working order.”

Economic divides

Political differences have existed between the West and the Rest for decades; what has recently come to the fore are the stark economic differences. The most striking visualisation of how the Global South increasingly resents the way in which the global economy is ordered and operates occurred on 14 December 2022.

In a General Assembly vote in the United Nations under the motion titled “Towards a New International Order”, 123 nations voted for it; 1 – Nato member Turkey – abstained; 50 voted against it. The pattern was self-evident: it really was the West versus the Rest.

Here in South Africa, not everyone seems aware of this turning tide. Many of us — with sound historic justification — continue to hold the US economic model in high esteem. But that model is not as robust as it once was; increasingly, it is broken. And not just economically broken but politically and socially as well.

For many non-aligned observers, it is the underlying economic reality of America that rankles the most. In 2022, the US’s share of all current account deficits run worldwide was over 60% while its share of all government budget deficits run worldwide was over 40%.

These two deficits — one external, the other internal — were generated by a mere 4.3% of the world’s population. These excesses — a current account deficit of 3.5% of GDP, a budget deficit of 5.5% of GDP — hardly embody the principle of prudent economic management that is the hallmark of the original Washington Consensus.

One ever-growing fallout? US national debt has quadrupled from $8-trillion to $32-trillion in the last 15 years. The latest budget deal in Washington DC will do little to curb this trajectory: the Congressional Budget Office forecast federal debt to exceed $54-trillion within a decade, an average annual growth of $2-trillion.

To sustain the US’s now $1-trillion current account deficit, it must run a broadly equivalent capital account surplus. And broadly it has, attracting foreign capital into America.

But do not believe foreign flows of capital into the US have, on a net basis, gone into the seemingly vibrant US Inc and the capital markets that represent it. Since 2014 and on a net basis as the US Treasury’s Tics data confirms, the overwhelming majority of those inflows have gone into US Government debt instruments, thereby underwriting that massive increase in federal debt that has taken place, rather than backing the US private sector.

No wonder there are those in the Global South who now ask whether — beneath that brash surface and despite the US’s repeated championing of the title — “deep down, is America still a capitalist heaven?”

After all, it is not domestic but foreign capital inflows that are required to finance the US’s now annual $1-trillion current account deficit and so balance the US’s external imbalance. Those same foreign inflows are then applied mostly towards financing the majority of the US’s ever-growing internal imbalance, its budget deficit.

Ostensibly “capitalist” America increasingly relies on the kindness of foreign strangers — the subsidisation of US over-spending by savings from overseas — to make ends meet.

For the past 40 years, many in the Global South have been subjected to the ministrations of the World Bank and the IMF, the shock troops for US global capitalism, complete with their “structural adjustment programmes” and “conditionalities” aimed at promoting sound macroeconomic management. Physician heal thyself?

The US might get the DC multilaterals to enforce their disciplines: Ghana and Zambia are in their care as of 2023… but reality smacks of being an economic version of “do as I say, not as I do.”

Exercising the “exorbitant privilege” that comes from owning the world’s reserve currency, the US dollar, the US covers its own excesses by printing money that is securitised into bonds and sold partly to foreigners. Try printing cedi and kwacha in Accra and Lusaka and see how the enforcers from Washington DC respond!

The above discussion is important for us in South Africa to grasp ahead of the BRICS Summit in (for now) Johannesburg on 22-24 August… if indeed that is where the summit will take place. If it is in Johannesburg, expect fireworks — and not just those surrounding president Putin’s possible attendance.

But wherever the event happens, also expect the BRICS club to admit new members. Twenty nations — Kazakhstan appears to be the latest — have applied to join. And while this list might include Venezuela and Iran, it is not primarily made up of economic minnows: Mexico, Turkey, Saudi Arabia, the UAE, Pakistan, Bangladesh, Thailand, Indonesia… it is a roll of consequence.

Here in Africa, Algeria, Egypt, Nigeria, Senegal and maybe even Kenya (a surprise invitee to the Summit) may join. Individually, an extra nation joining the club will not tip the balance on the global geo-economic scales: collectively, the group cited just might.

So let us not be overly distracted by the hoopla surrounding president Putin’s possible attendance of the event, as important as the principles involved might be. Rather we must reserve some of our focus for the much bigger issue that is in the balance: the future of the global economic order in the wake of the incipient demise of the West’s rules-based order.

It is little wonder that Jake Sullivan, the US National Security Adviser, has recently jettisoned the free-market vision of the original Washington Consensus and replaced it with a new state-sponsored economic model, one he himself dubbed the Washington Consensus II.

The net effect of this will be to put America unequivocally first with the rest of the world being treated as little more than an afterthought. In a post-Afghanistan world where the US clearly no longer “rules the waves”, is it now circling the wagons and withdrawing into a quasi-protectionist laager?

A New World Order is indeed arising. The ultimate evidence of this is that the Old World Order is abandoning its long-held economic modus operandi. DM


Comments - Please in order to comment.

  • Steve Davidson says:

    Absolute power corrupts absolutely. Go back to the British Empire, and along with that, the colonial Scramble for Africa (and elsewhere). Look at the ANC thieves here for a current version. I certainly don’t condone what the US has done since WW2, before which they were pretty isolationist. And they’re definitely not perfect, but I’d much rather be in a reasonably free world with them leading it – with the proviso that a narcissistic crook like Trump doesn’t get back into power – than dictators like Putin or Xi, or both. It’s because of the Free World, and particularly the States, that we have the technical progress we see every day. What new discoveries has China made since gunpowder?! The so-called Marxism/communism they and Russia purport to practice is a total lie, just a useful means to hold power and subjugate their people and anyone else they choose. In Putin’s case, also a way to become a billionaire oligarch.

    • A Green says:

      Steve, perhaps Michael is suggesting that our prejudice to the West leads to your comment. I don’t think that either nation should be calling the shots, but the collective majority.

      • Steve Davidson says:

        Unfortunately, in both cases, Putin and Xi have proven themselves to be completely and utterly untrustworthy and not worth dealing with. The former is a disgrace as a human being, the latter a believer in a useless doctrine (and a racist, particularly in regard to the Uighurs). Finish and klaar. America and the Free World win.

    • Libby De Villiers says:

      There is nothing America does without an agenda. They are as bad as all the rest. It is only because of their self acclaimed superiority, money and a huge propaganda machine that we are made to think they are the heroes.
      Their human rights stink, they have over the years destabilised the entire South America, they only get involved and take sides when there is money and power to be gained, they too have killed millions of innocent women, children and young boys. They killed off all the indigenous peoples on that continent, they are the only country in the world to have used the bomb.
      Putin, Trump, Ramaphosa, Xi Ping and all the rest – all the same, all rotten to the core. It is not about the political structure or philosophy, it is about the evil scoundrels that exploit it.
      Our government has turned democracy into a monster, they exploit every vulnerable aspect of capitalism. Neither of these are inherently bad structures, but when exploited they are terrible.

      The fact that poor old Cyril is Putin’s latest little lapdog and unbeknownst to him going to be eaten alive, is only because he is getting something from him – money, protection against people of his own party, more money and power. That is all it is about.

  • Kat Hessler says:

    Really interesting article, good to read a well researched and well written thought provoking article, thank you

  • Dennis Bailey says:

    Useful. Thanks. I hadn’t ever thought of Brics as, well, anything much! (Other than Cyril’s plaything). Given the likely weight of the BRICS club in waiting, we should have greater expectations.

  • Andre Parker says:

    Brilliant article – food for thought indeed!

  • Frank Fox says:

    A very similar take on the change in the world order to that expressed by Paddy Ashdown in a TED talk titled “The Global Power Shift” in 2012.

  • philip guttentag says:

    Excellent article!

  • Cobus vdM says:

    Insightful article. Thx!

  • Vas K says:

    Thanks to DM for providing a platform for alternative inteligent views. I am getting bored to death by most of the other media spouting the same safe and innocuous lines, the same cliches, the same mantras. These amount to an intellectual stagnation, and the actual truth is often a casualty.

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