Turmoil, Disorder and Reconstruction: Features of the World Situation

By Ding Yuanhong*

The current world situation is complicated and fluid, with turmoil taking place in different parts of the globe. The international landscape has been experiencing the most profound transformation since the disintegration of the Soviet Union and the changes in Eastern Europe in early 1990s. This is attributable to a combination of political, economic and social factors. The international order dominated by a handful of Western powers can no longer be sustained. The United States has also encountered major setbacks in its attempts to build a unipolar world. The continuous tension and turmoil has become the new normal of the world. 

The following are several major factors explaining why the world has become what it is like today.

1. The world economy is persistently weak, with a risk of getting stuck into a long-term standstill. 

Eight years into the global financial and economic crisis which broke out in 2008, the world economy is yet to walk out of the shadow of the crisis. The recovery, if any, is fragile. To revive the world economy is a tall order that rivets global attention. The reason for the economic challenges is the deficiency of the monopolistic capitalism itself, which is dominant in this world.  

According to official statistics, the US economy will grow by 2.1% annually in the coming decade starting from 2014, much lower than the average of 3.4% between 1948 and 2007. In April 2016, the International Monetary Fund (IMF) forecast an annual growth rate of 1.6% for developed countries from 2015 to 2020, an indicator of extended economic standstill. This will have considerable negative impact on the world economy. 

The United States plays a significant role in the world economy, given its supreme economic strengths and the dominance of the US dollar in the world financial system, as evidenced by the close attention countries have paid over the past year to the US Federal Reserve for possible interest hike. Under the US influence, the world economy is confronted with two major challenges. First, the debt burden is extremely heavy. Second, the financialization of the economy has deprived the real economy of due financial support. 

According to data released by the IMF in October 2016, global debts, including those incurred by governments, households and non-financial companies, totaled US$152 trillion in 2015, much higher than the pre-crisis figure of US$112 trillion and the 2002 figure of US$67 trillion. Now, the world economy is valued at US$75 trillion. 1 percentage point increase in the economic output means an additional annual spending of US$750 billion. This is almost impossible given the already heavy debt burden, which undermines the ability of the world economy to fend off new financial risks and hinders economic sustainability. 

On top of that, the economies of the US and Europe are increasingly financialized. In other words, most of the money in their financial systems is used for pure lending and borrowing on existing assets, instead of financing projects that can create jobs and increase people’s income. Take the US for example. The share of the financial sector in its economy has increased from 4% in 1980 to the current 7%. It accounts for 25% of total corporate profits, but only 4% of job creation. This points to the dislocation of the virtual and real economy. The real economy does not get the financial support it needs. This explains why the economy has slowed down and unemployment rate is persistently high. 

These two challenges all derive from the monopolistic capitalism, dominant in the current world. They will continue to plague the world economy for a long time to come and will not be resolved through so-called global governance. 

2. Deep social divides have occurred in major Western capitalist countries, with significant global implications. 

The Brexit and the US presidential election all have revealed the sharp divide between the general public and the elites. The rise of nationalistic parties in some European countries also lays bare the crisis in the capitalist system. 

Since the end of the Cold War, Western powers led by the US have pressed ahead with globalization, which, unfortunately, has only worked in favor of the rich. As a result, the wealth gap, inherent in the capitalist system, is becoming more prominent. Statistics show that the richest 1 % in the US population hold 43% of the country’s wealth, and the figure is 23% in the UK. In 2015, the executives of the six banks on the Wall Street received US$130 million for dividents, while half of the US families couldn’t even find US$400 in cash and have to borrow or cash in what they have in hand. Alan Greenspan, former Chairman of the US Federal Reserve, said that the 2008 financial crisis ripped the US society into two parts: the super rich who benefited enormously from the economic recovery and the middle class and owners of small and medium-sized enterprises, who were still struggling. Under such a system of glaring inequality, it is no surprise to see Donald Trump, who represents those from outside the establishment, and Bernard Sanders, a self-proclaimed socialist, emerging on the political landscape. The grassroots voters supported Trump and Sanders in an expression of their frustration and anger at the existing political system the elites have made every effort to help maintain. 

Brexit and the rise of nationalism in Europe is, to some extent, the result of the general public being misled by the elites, who have, since the 1990s, pushed for a “closer alliance” or European integration, the European version of globalization. It was the interests of the business class that drove the establishment of the European Union. People at the grassroots level, however, derive few benefits from it, and are therefore full of anger. The anger compelled the British to vote for leaving the EU their country had acceded to 45 years ago. It also explains why populist parties have risen everywhere in Europe with anti-globalization and anti-immigrant as their major policy appeal. 

The UK’s decision to leave the EU will not bridge the divide between the public and the elites. On the contrary, it will only give more prominence to the gap. The US government cracked down on the Occupy Wall Street movement staged by people at the grassroots level who were dissatisfied about the existing system, accusing them of disrupting social order. The democrats, through backroom deals, forced Sanders to exit the campaign race. There were also signs to show that some Democratic and Republican elites joined hands to vilify and demonize Trump to prevent him from winning the election. To the disbelief of most people, Trump defeated Hillary with a landslide victory and emerged as the next US president. Once again, this underscores the grievances of the US public towards the existing system and their aspiration for change. 

The deep social divide caused by the inherent problems of major Western capitalist countries will have significant impact on their political stability and domestic and foreign policies as well as the world situation. 

3. The global strategic security environment is beset with severe threats. 

In June 2016, Chinese and Russian leaders issued a joint statement on strengthening global strategic stability. In the statement, they expressed the concern about the increasing negative factors that undermine global strategic stability, and expressed the determination of China and Russia to work together to prevent the repeat of the tragedy of a world war. A closer look at the security situation in Asia, Europe and the Middle East shows that this China-Russia statement is highly relevant and hits the nail on the head. 

The major factor that threatens the current global strategic stability is the US hegemony, or to be exact, the US strategy to consolidate the US status as the world hegemony. In its new military strategy to be released soon, the US views Russia, China, DPRK, Iran and extremist terrorist organizations as its security threats. US Defense Secretary Ash Carter even proclaimed that the US military well prepared for a war that would break out tomorrow. 

China has made clear its willingness on many occasions to build a new model of major-country relationship with the US featuring no conflict, no confrontation, equality and win-win cooperation. Russia has also made clear its intention to develop relations with the US based on cooperation and accommodation of each other’s interests. The US, however, still chooses to view the two countries as its main adversaries. As a matter of fact, China and Russia are the real targets behind the US sanctions and military threats against DPRK and Iran, as proved by the missile defense systems that the US wants to establish in the periphery of China and Russia under the pretext of countering the nuclear capabilities of DPRK and Iran. 

To contain the rise of Russia, the US created the Ukrainian crisis, and worked with the EU to impose economic sanctions on Russia on the issue of Crimea in an attempt to destroy the Russian economy. Under the pretext of protecting the security of Central and Eastern European countries, it expanded NATO’s military presence in Russia’s neighborhood in disregard of a common understanding reached with Russia. The US is also moving faster to deploy anti-missile systems against Russia. It uses the war in Syria, the US presidential election and all other opportunities to smear Putin and Russia. In his talk on the new US military strategy, Joseph Dunford, Chairman of the Joint Chiefs of Staff, said in a blunt way that Russia is the most severe and significant threat to US national interests. There have also been sensational rhetorics in the US media that a second Cold War between the US and Russia may lead to a world war. 

The Obama administration has developed and implemented the so-called strategy of rebalancing to the Asia-Pacific. Under this strategy, the US has played up the South China Sea dispute and sowed discord between China and its neighbors. Economically, it has pushed for TPP to exclude China to maintain the US economic dominance in the Asia-Pacific. On the military front, the US has created tensions and tried to put together a NATO in the Asia-Pacific region as a way to practice power politics in the region. Using the Korean nuclear issue, the US has worked to build a US-Japan-ROK military alliance, in which with the US sitting behind the wheel while Japan acting as its pawn, to contain China. The US is now moving 60% of its navy and air forces into the Asia-Pacific region where it has conducted frequent military exercises involving nuclear-powered aircraft carriers, submarines, bombers and other sophisticated weaponry. It has also pushed for establishing anti-missile systems in the ROK and Japan, which endangers China’s strategic security. With no regard to China’s opposition, the US has sent aircraft and vessels on close-range reconnaissance missions. Under the pretext of freedom of navigation, US military vessels have entered waters close to China’s territory in an attempt to challenge China’s territorial sovereignty. 

To control the Eurasian continent and contain China and Russia, the US has, for many years, worked hard to exercise control on the entire Middle East. It has made invasions into Afghanistan, Iraq, Libya and Syria to cash in from the chaos in the region. Its selfish Middle East policy has given rise to the emerging terrorist organizations such as Al-Qaeda and ISIS, which threatens world peace, leads to perpetual chaos in the region and creates numerous humanitarian disasters. 

Globally, the strategic security situation is severe and risks getting out of control. 

4. With the specter of a break-up haunting Europe, the EU is facing a survival crisis.

Early this year, experts on Europe predicted that the troubles in Europe may undermine the foundation for Europe’s economic and political integration. They prove to be right. On June 23, the British voted to leave the EU, of which the UK has been a member for 45 years. It became the last straw that breaks the back of the EU which has been plagued by, among others, a persistently weak economy, outstanding debt crisis and refugee issues. The Brexit referendum bears on the political direction of the UK. More importantly, it is a vote of no confidence on the EU. In his annual address to the European Parliament on September 14, Jean-Claud Junker, President of the European Commission, said that the EU was gridlocked in a “survival crisis” following the Brexit referendum. 

How does the EU, which has been vibrant and referred to as a model of regional integration, slide into where it is now? Believe it or not, the fundamental reasons for both its success and its failure are all rooted in its integration. 

European integration started after the end of the Second World War and has since gained momentum. It has contributed to economic recovery and peace in Europe. However, with the disintegration of the Soviet Union and the changes in Eastern Europe, the political elites in Western Europe, overwhelmed by their victory and with no regard to the feelings of the public, rushed for fundamental integration of Europe. As such, the Treaty of Maastricht was signed and the European Union was established on the basis of the European Community. The single currency, the euro, was adopted when conditions were not quite ready yet, followed by the Schengen Agreement, which eliminated border management among member countries. The EU has been hastly expanded to include large numbers of Central and Eastern European countries with very different national conditions. The membership has thus been quickly increased from 12 to 28. This, unfortunately, has fueled the internal imbalances among countries and is one of the reasons for the split. 

Due to conflicting interests, the EU has been forced to split into the euro zone and non-euro zone, with the introduction of the Euro. After the European debt crisis, the euro zone is split into creditor countries in the north and indebted countries in the south. To overcome the economic crisis, the political elites tried hard to find a way out by building a “closer alliance”. This has prompted the Brexit and threatens to further divide the EU into core states and periphery states. Donald Tusk, President of the European Council, warned before the UK referendum that “The specter of a break-up is haunting Europe.”In the aftermath of the Brexit, he openly criticized that the Utopian attempt to build a federated Europe is accelerating the disintegration of the EU. 

At the very beginning of the European integration, the principle of “shared sovereignty” and “consensus” was established. Yet the evolving international situation and expanding membership has made it hard to implement this principle in an increasingly competitive world, which also weighs on the European economy. The abuse of shared sovereignty has caused bureaucracy in the European Commission and other institutions, with EU laws placed above the laws of sovereign states. This has put the EU institutions at loggerheads with sovereign states and even caused conflicts. A case in point is the allocation of refugees, which has been a contentious issue within the EU.

It’s its own mistakes that have put the euro zone at great perils due to the economic and debt crises. Then, the influx of refugees has made the Schengen Agreement more unsustainable. What has happened shows that the institutions and operation model of the EU must be overhauled to ensure its sustainability. Yet reform is never an easy task especially in Europe at a time when whoever undertakes reform risks being rejected by the voters. It is all the more difficult to adopt a reform plan acceptable to 27 member states. While the EU won’t disintegrate right after the exit of the UK, it is, inevitably, on the decline. And this will have no small implications for the world. 

5. With growing turmoil in the Middle East, terrorist disasters and refugee problems become even more difficult to solve. 

The Middle East has been coveted by big powers due to its strategic location and abundant oil and gas resources. The religious, sectarian and ethnic conflicts in the region have provided opportunities for intervention by outside forces and perpetuated wars and chaos. It has been the most volatile region in the world since the end of the Second World War. 

Since the beginning of this century, the United States, which has been dominant in the Middle East, has launched wars in Afghanistan, Iraq, Libya and Syria under the pretext of anti-terrorism and democracy without UN authorization. With their countries deep in the quagmire of wars, millions of people were displaced and lived in sufferings. The erroneous Middle East policy of western countries led by the US has created the gravest humanitarian disaster and dire consequences since the Second World War. 

What is worse, the chaos in the Middle East has given rise to extremist terrorist organizations, causing widespread damage. The US claims to be fighting terrorism, but has adopted double standards. It only combats terrorist organizations that threaten its security, while taking advantage of those that pose a threat to other countries. For example, the US has been reluctant to put the Eastern Turkistan forces on its anti-terrorist list, and refuses to hand to China those Eastern Turkistan terrorists released from the prison at Guantanamo. 

It is no secret that Al-Qaeda led by Bin Laden was supported by CIA. The US is not clean on its connections with the raging ISIS either. According to the article entitled “Pentagon Secret Papers: It’s the US government that has created the ISIS” published by Germany’s Focus magazine in May 2016, a document of the intelligence unit of the US Department of Defense predicted in August 2012 that there would emerge in the Middle East an “Islamic State”, an network of Iraqi and Syrian terrorist organizations, which the US believed serves the will of Western countries as it would isolate and weaken Bashar. This prediction materialized three years later in June 2014 with the establishment of the Islamic State. Up to now, the US is still reluctant to go all out to fight IS and even turns a blind eye as financing activities for IS continue unimpeded. As such, although IS has been weakened thanks to joint efforts of various parties, it is still a far cry from the goal of annihilating IS within two years, as pledged by President Obama. In fact, IS has even spread beyond the region, as evidenced by the terrorist attacks that frequently took place in Europe this year. 

With these kind of selfish policy by the U.S., it is impossible to solve the terrorist threats to world peace and tranquility within a short time, and they will continue to be a major factor of the persistent turmoil in this world. 

* Ding Yuanhong is Former Chinese Ambassador to Belgium and Former Head of the Chinese Mission to the European Union.