Asia Pacific

FO° Crucible: Money Matters in a Multipolar World, Part 7

We continue Fair Observer’s feature focused on the shifting landscape of international payments and one of the major dramas of this decade: dedollarization. This series began as a private dialogue between members of our team and experts in our circle who are keenly tuned into the mysteries of our monetary and banking systems. This week, our conversation continues with a new contribution from Alex Gloy.

flags of china and the united states on a map of the south china sea. Concept of the south china sea diplomatic conflict © Ivan Marc /

July 05, 2024 05:21 EDT

Our conversation about the evolving question of challenging the primacy of the dollar in the global economy has led us well beyond the mechanics of foreign exchange and even trade relations. It inevitably touches on some much bigger questions concerning the evolution of regional and global hegemony as the former unipolar world gives way to a multipolar order that is seeking to define itself. There is a widespread sense of a buildup to some kind of dramatic showdown aggravated by two puzzling, apparently unresolvable wars on the frontiers of the bloc that formerly dominated the world order.

In June, Alex Gloy drew our attention to events in what many project to be the next flashpoint: the South China Sea that may forebode things to come.

He came across remarks posted on Twitter by Frenchman Arnaud Bertrand, a prominently followed commentator on geopolitics and economics. He recently described at length the implications of an important speech given by the Chinese Defense Minister, Dong Jun, at the Shangri-La Dialogue Conference in Singapore. Alex shared Bertrand’s analysis with us. It serves as a prelude to looking at how pure geopolitics may presage deeper changes in economic relations. In this case, the gap highlighted exists between East and West, with the implicit understanding that the truly emerging divide is between the West and what, despite its geographical ambiguity, we call the Global South.

“Some interesting points made by China’s defense minister on the South China Sea at the Shangri-La Dialogue. On ‘freedom of navigation’ exercises by the U.S. he makes the point that in decades ‘there’s never been one incident where civilian ships had their freedom of navigation compromised’, despite the fact that ‘over 50% of global shipping and 1/3 of cargo ships go through this region.’

So he asks ‘why does freedom of navigation always become an issue? Why is it always brought up? Some big powers are increasing their military presence in this area, in particular strengthening and deploying more military assets. So what is their purpose? Are you coming here for peace or stirring up troubles?’

On the current tensions with the Philippines he says the issue started in 1999 when ‘the other side illegally grounded their desolate landing ship on [the Second Thomas Shoal]’. He says that ‘At first, they promised to tow this away, and then we reached some other agreements for humanitarian reasons. We agreed that they could send supplies to personnel on this ship, and we reached several agreements. All the previous administrations and the current administration also recognized this agreement, but recently they started not recognizing it at all. This is a unilateral reneging of their promise.’

He compares the Philippines’ current actions in the Second Thomas Shoal to ‘deliberate bumping’ where ‘passerby hit a vehicle by himself and then played the victim to blackmail the driver of the vehicle’. He says ‘it is a deliberate action and is trying to make an issue of this kind of incident. I think this is blackmail and hijacking rules… I think this is not even morally right.’

After reflecting on it, I think this speech by China’s Defense Minister at the Shangri-La Dialogue is probably much more important than how it’s been analyzed to date.

I wonder if it’s not China’s version of the era-defining speech that Putin gave at the Munich Security Conference in 2007, in which he warned the West that they couldn’t make a mockery of Russian security interests and renege on their promises forever. Putin’s speech was widely dismissed at the time, so much so that the year afterwards in 2008 Ukraine and Georgia were invited to become NATO member-states. We all know what happened afterwards…

The Chinese Defense Minister’s speech was eerily similar, warning several times that ‘our tolerance has limits’, describing in minute details how its security interests in Taiwan and the South China Sea are being challenged and how previous agreements are being violated. And sadly the response so far is also eerily similar, with China’s position being widely dismissed…

The US is of course going to dismiss it because they love nothing more than to divide and conquer: tensions in Asia against their primary geopolitical rival is exactly what they’re after. But if I were an actor in the region, just like if I had been a European leader back in 2007, I would pay a lot of attention to this and work extremely hard to set up and maintain a regional security architecture that accommodates everyone’s interests.”

Alex undoubtedly remembers that back in 2007 and again in 2008, the two most significant European leaders, Germany and France, sought to play a mitigating role in what was shaping up as a direct challenge between the US and Russia. Jacques Chirac, in his final months as President, continued to favor closer ties with Russia. He was faithful to the Gaullist tradition. In defiance of then-US President George W Bush, the man he resisted when the US insisted France join the “coalition of the willing” to invade Iraq, Chirac dared to sympathize with some of Putin’s concerns. He was especially sympathetic about NATO expansion.

Chirac’s successor, Nicolas Sarkozy, continued a cautious approach. He attempted to balance the importance of a cooperative European-Russian relationship and NATO’s role in European security. Significantly, in 2009, Sarkozy reversed De Gaulle’s bold decision in 1966 to withdraw France from NATO’s integrated military command.

After Bush’s intervention at the NATO summit at Bucharest in 2008, in which he promised to bring Ukraine and Georgia into NATO, German Chancellor Angela Merkel and other European leaders successfully argued for a more cautious approach. However, they failed to overturn or influence the intentions of the US. The summit decided on a policy of strategic ambiguity by postponing any immediate membership action while keeping the door open for future consideration. The world knows, thanks to a leaked memo from then-US ambassador to Moscow William Burns to Secretary of State Condoleezza Rice, that Bush’s gambit crossed “the brightest of redlines” and would likely lead to war. Subsequent history informs us that Burns’s memo had no effect on US policy in Ukraine.

With these historical events in mind, and those that followed with a coup d’état in 2014, the failed Minsk accords and Russia’s February 2022 invasion of Ukraine, there is room for concern about the spark that could ignite World War III. Betrand concludes his analysis of the situation in Asis with these remarks, which highlight the parallel between the ongoing conflict in Ukraine and what may await us in Southeast Asia.

“Asia should learn from Europe’s most consequential mistake in generations and not do the exact same thing, victim of the exact same playbook… For instance, with regards to the Philippines, I am astonished how alone China is left to deal with the issue. A cardinal concept of ASEAN, and the most important objective of the association, is that no member is to be used by an external big power for the purpose of great power politics.

And here you have the Philippines obviously being used by the US, with

a) the addition of 4 US bases on their territory and

b) the US giving unilateral support to the Philippines in their territorial disputes.

Yet other ASEAN countries are largely silent on this: what gives?

Also, specifically with regards to the Spratly islands, they’re claimed either as a whole or in part by not only the PRC and the Philippines but also by Vietnam, Malaysia and the ROC. Why are the others not saying anything when the Philippines unilaterally tries to annex islands in violation of previous agreements? Why is China left alone to push back against this and somehow presented as the aggressor?

It’s again quite similar to the situation in Europe a few years ago, where the region didn’t push back on the transformation of Ukraine into a Western bulwark against Russia, knowing full well how provocative and potentially dangerous it was. At the end of the day, if you don’t look after your own region’s security interests and leave a vacuum for this, the US will fill it in a way that fits their own interests… and given its overarching objective of containing China, this is akin to letting the fox guard the henhouse…”

Alex then offers his own warning in the guise of a conclusion.

“It seems we are moving towards an unavoidable confrontation over Taiwan, with both China and the US taking steps requiring countermeasures from the other side, triggering further escalation. Now, the US doesn’t like to confront its major adversaries directly, instead using proxies. After having listened to Glenn and Atul on Japan, I cannot shake the feeling that Japan will be drawn into this to do the “dirty” work for the US. Would be interested if anyone was willing to share their thoughts.”

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Money Matters…, is dedicated to developing this discussion and involving all interested parties.

We invite all of you who have something to contribute to send us your reflections at We will integrate your insights into the ongoing debate. We will publish them as articles or as part of the ongoing dialogue.

*[Fair Observers Crucible of Collaboration is meant to be a space in which multiple voices can be heard, comparing and contrasting their opinions and insights in the interest of deepening and broadening our understanding of complex topics.]

[Lee Thompson-Kolar edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.


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