Even in these early intense days of the Ukraine crisis, the US elites have not forgotten who their most important enemy is. Before the military conflict in Ukraine broke out completely on 24th February, US national security advisor Jake Sullivan made it clear that the White House would not send US troops to Ukraine. Almost at the same time, an article titled “Washington Must Prepare for War With Both Russia and China” was published by the Atlantic Council, which declared in “The Longer Telegram,” its last year’s report on the strategy toward China, that “the single most important challenge facing the United States and the democratic world in the 21st century is the rise of… China). The use of Ukraine as a battleground against Russia is part of the US’s full-out siege and containment of China.
A full-out containment of China
Amid the Russia-Ukraine conflict, Frank Kendall, US Secretary of the Air Force, highlighted the US foreign policy behind its military deployment, at the Air Force Association’s Annual Air Warfare Symposium, “Russia and other threats will not be discounted. But China, with both regional and global ambitions, the resources to pursue them, will be our greatest national security challenge”. He pointed to seven “operational imperatives” that he believes are necessary for the forces to address possible conflicts, including an “invasion” of Taiwan.
The chorus continued with the US Congress. On 2 March, Senators John Kennedy, Rick Scott, and Kevin Cramer, introduced the “Deterring Communist Chinese Aggression Against Taiwan Through Financial Sanctions Act”. Kennedy said, “Moscow is banding together with Beijing to bully the world. Now more than ever, we must make it clear to the Chinese Communist Party that armed aggression towards Taiwan would deal a devasting blow to China’s economy. We can’t let China seize the moment to attack one of America’s key partners in the Pacific”.
NATO has so far refused to be directly involved in the Ukraine war and is opposed to the establishment of a no-fly zone in Ukraine to avoid escalation of the conflict. This is because US foreign policy has always had a clear target, namely, all its forces must be directed toward the economic, political, and possibly military subjugation of China. The US has been trying to create conflict in the Western Pacific. On 11 March, President Joe Biden signed a spending bill into law, stipulating that none of the funds made available should be used to create, procure, or display any map that “inaccurately depicts” the territory of Taiwan, which is a violation of the Joint Communiqués of the two countries. The US has made China its target. This is the real context for the Ukraine crisis.
While the China containment strategy is not new, having been articulated during the Cold War, and finely tuned in the 1990s, since 2000, the intensity and speed with which the US is planning its implementation have greatly accelerated. The reason is obvious: China is becoming an economic powerhouse.
Up until 2001, 80% of the world traded more with the US than China. However, today 128 out of 190 countries (two-thirds) trade more with China than the US; with 90 countries trading twice as much with China as the US: the majority of the South American continent, nearly the entire African continent, with few exceptions all of the Indo-Pacific, and “Eurasia” have stronger economic ties with China than with the US. China is the only major economy able to maintain strong growth since the outbreak of the pandemic.
Despite the wildly expansive growth of US stock markets, and the obscene profits made by financial and technology companies, the real economy, has been shrinking for decades in the western world. International trade is based on creating real products of value: clothes, food, paper towels, diapers, furniture, cars, computers, smart phones, televisions, as well as the machines that make these things. The US has dramatically reduced investment in infrastructure, factories, or machinery for more than 50 years. In the last two decades, the US’s GDP growth has been declining to around 2%, with monopolization, stagnation, and financialization operating as simultaneous and mutually reinforcing trends. Germany recently closed its last steel plant in the state of Bavaria. Without producing steel, how can you manufacture the machines that make machines? And without machines, how can you revitalize the real economy?
Having made the one-way strategic decision to use China and the other developing countries to manufacture real economy products, the US and its western allies have decimated their ability to return to the days of heavy or advanced industrial production. The U.S. attempts to decouple from China and reshore manufacturing, has made little progress. It is now trying a previous favorite “near-shoring” by trying to move some factories to Mexico, but the trade deficit with China continues to grow year after year. Their financialization of capitalism has not created lasting value upon which societies’ can grow and prosper. While they have turned data into the highest-priced commodity on the international market, data doesn’t feed, clothe, or house the billions of people around the world. Thus, is the development of imperialism. It has created its own grave. That, however, doesn’t mean it is any less aggressive.
Unlike the US, China upholds a foreign policy based on mutual respect, mutual non-aggression, equality and mutual benefit, and peaceful coexistence with countries. This orientation is reflected in China’s approach to investing in the Global South. Refinitiv, the financial data firm, is tracking $4 trillion worth of Belt and Road Initiative (BRI) and Chinese involvement project of which $3.3 trillion are active projects. Global South economies are being supported to develop an independent economic system instead of relying on western loans, the very tool that the US uses to control them. Under the decades-long guise of international development, the West has squeezed life and limb from the Global South by imposing debts multiple times their GDP. However, these strategies have been challenged by China through its BRI investment in infrastructure and the development of productive forces, bringing technology, education, and training for new industrial and agricultural methodologies. Despite Western propaganda about China’s new debt trap for the Global South, the fact is that these countries are receiving fair and reasonable development loans and trade prices from China, while the US is the parasite feasting on the South’s “debt”.
The ferocious hostility against China among the US and its allies is ultimately because China represents an opposite and contradictory pole to imperialism. China has developed socialism with its own characteristics: it has lifted 800 million people out of absolute poverty, provided economic and political equality for ethnic minorities, offered health care and education nationwide, and established a fair and just society; it is promoting common prosperity for all Chinese people in an ecologically and environmentally safe manner. After centuries of oppression by imperialism and neoliberalism, the Global South finds a feasible alternative from China, and this is not tolerable for the US.
Taming Europe while pointing the sword at China
To fulfill its strategy of China’s containment, the US needs Europe to disengage from Russia and take on the job of being the US’s watchdog to contain Russia. NATO is aggressively edging closer and closer to Russia’s borders while forcing Europe to bear the cost of “protecting” it from Russia. As Jeromy Shapiro, an American who used to work at the RAND Corporation and the US Department of Defense, wrote on the Politico Website, NATO should deter Russia, and despite the war in Ukraine, China is still America’s – and thus NATO’s – most pressing problem; the European allies will now need to accept that Russia and China have become part of the same problem.
Despite what appeared to be a “blip of reconciliation” with Russia during the Trump years, the US was really strangling its European “partners” to be ready to strike when the time came. Europe has everything to lose economically with the sanctions levied against Russia, but they buckled to US bullying and simultaneously reinvigorated their insipid anti-Slavic chauvinism. Cutting off Europe from Russia will impact the Eurozone dramatically. Even during the pandemic in 2021, total trade in goods between the EU and Russia amounted to $280 billion. Because of current sanctions on Russia, prices are already spiraling out of control for energy and earth minerals. If it becomes impossible for Russia to settle bills through the SWIFT international payment system, the impact on Europe would escalate.
How difficult was it for the US to squeeze the EU into submission? As the economist Michael Hudson stated in his article titled “America Defeats Germany for the Third Time in a Century,” NATO’s confrontation with Russia has led to soaring oil and gas prices, creating profits and stock-market gains for US oil companies while taking much of the steam out of the German economy. That looms as “the third time in a century that the United States has defeated Germany – each time increasing its control over a German economy increasingly dependent on the United States”.
At the same time, Germany will now spend 2% of its GDP on military readiness, i.e., its support of NATO, since German Chancellor Scholz refers to the Russia-Ukraine conflict as a historic “Zeitenwende” – a turn in the times. Never before has NATO realized its requirement that its member states raise their defense budgets to 2% of their GDP.
The US is gathering an alliance of the old Axis fascist powers as well as the neofascists throughout Europe to crush Russia and support the US incursions into Eurasia. Last September, Japan conducted its largest military exercise in 28 years, with the intention of preparing for a war with China when “something happens in the Taiwan Strait”. On March 3 this year, former Japanese Prime Minister Shinzo Abe openly advocated Japan’s participation in NATO’s “nuclear sharing” policy, ignoring the Three Non-nuclear Principles established in 1967. The world should never forget that Russia and China suffered the great loss of tens of millions of lives in WWII at the hands of the German and Japanese fascist butchers. Condoning and encouraging the resurgence of militarism in these countries is an unforgivable crime being undertaken by the US.
A protracted war between soft power and the real economy
Every day brings more sanctions from the Biden administration on how to better strangle Russia. Every day, US television networks and social network platforms decry “the atrocities of war,” and gloat over the sanctions against Russia. The hybrid war that the US wages against Russia and China can be overwhelming. Their reach into and control of social media is unparalleled. Their “soft power” has convinced the world that a nuclear disaster is at hand and that they are invincible.
This Western propaganda warfare is, however, defensive. Despite their ability to falsify and distort the facts, to mold public opinion into morbid despair, they cannot dispute the cornerstone of real power: the US is no longer the strongest economic power in the world. Despite their well-funded media machinations and their high-flying financial institutions, the real economy of China is powerful. The US political elite have a new doomsday clock for themselves, with 2028 being the estimated moment when China’s GDP surpasses US GDP in dollar terms.
What are the knock-on effects of the sanctions imposed on Russia? Yves Smith, a financial analyst, believes that sanctions could have disastrous consequences and that excluding a major resource-producing country from the global supply chain would wreak havoc on the already Covid-stressed supply chains. Furthermore, the Western business press’s fixation on the hollowed-out financial system, which ignores the real economy, may lead to overlooking the long-term consequences of economic sanctions:
+ The US has prevented Russia’s central bank from using $300 billion of its foreign exchange reserves. There are many countries that have significant foreign exchange reserves. Can they trust that the US will not do the same with them if they disagree with US policies? Non-Western economies, which make up the vast majority of the world, may view these moves as an alarm bell and begin a process of moving away from the US dollar.
+ Buyers of Russian oil have been unable to open letters of credit from Western banks to cover purchases. Letters of credit from the bank of the buyer are the standard practice in commodities trading as they guarantee the seller’s bank that payment will be made in full and on time. There will be a major fall-out affecting the international trade process if letters of credit are unacceptable.
+ Russia and Ukraine provide about 40% of the global supply of fertilizer. As Russia cannot use the Black Sea for logistics purposes and others cannot use letters of credit to pay for fertilizer, the impact can be devastating, especially for poorer nations. A lack of fertilizer means a huge reduction in grains output, and that spells famine. Couple that with a reduced output of wheat from Russia and Ukraine for the international market, and the human toll will be devastating.
+ Russia may block raw-materials exports in response to the currency and SWIFT sanctions. This threatens to rattle key materials’ supply chains, including cobalt, palladium, nickel, and aluminum. If China decides to see itself as the next nation being threatened and joins Russia in a common protest against U.S. trade and financial warfare, the Western economies are in for a serious shock.
- Lastly, Russia is a major producer of sapphire substrates – the thin plates made of artificial stone, which are used in every chip-making process in the world, including those made by AMD and Intel. Russia also accounts for 100% of the world’s supply of various rare earth elements used in special chip etching chemistry, as well as 70% of the world’s supply of neon gas, an inert gas that is also used in the semiconductor lithography chain. Should Russia retaliate, what impact could that have on the global hi-tech industry? China could definitely benefit from their relationship with Russia vis-à-vis these minerals to support their hi-tech industry.
Russia, contrary to the propaganda of Western media, is an economy rich in natural resources, and it ranks among the world’s top six economies in terms of purchasing power parity. China’s real economy is the most developed in the world, accounting for 28% of world manufacturing and high demand for energy and agricultural imports. As a result of the wave of sanctions imposed by the West, the complementarity and engagement of the Chinese and Russian economies will only deepen, and there are huge opportunities for cooperation between China and Russia in areas like the digital economy and defense. Russia will not be easily crushed by economic and financial sanctions if this pattern continues. The intensified US sanctions will be a long and protracted war that will not achieve its goals, and Russia will not be the only country to suffer. The US sanctions are a pyrrhic victory but will accelerate and deepen the Russian and Chinese economies’ independent development in hi-tech, finance, and trade de-dollarization.
According to a Credit Suisse analysis report released on 7 March, the current crisis is unprecedented since President Nixon decoupled the dollar from gold in 1971, and that once the crisis (war included) is over, the hegemony of the dollar will be weakened, while the Renminbi will strengthen significantly, supported by a basket of real commodities. . This analysis could be interpreted as a prognosis of the situation by the Western financial community.
The fragility of the empire
Once again, contrary to the Western media propaganda, the draft resolution entitled “Aggression in Ukraine” did not receive overwhelming support at the Eleventh Emergency Special Session of the UN General Assembly on 2 March. Governments representing more than half of the world’s population either voted “no” or abstained, a choice which obviously does not mean “yes.” Both India and China, together representing more than 25% of the world’s 7.9 billion people, abstained from the vote.
“It is almost black humor to look at US attempts to convince China that it should join the United States in denouncing Russia’s moves into Ukraine. The most enormous unintended consequence of US foreign policy has been to drive Russia and China together, along with Iran, Central Asia, and other countries along the Belt and Road initiative,” stated Michael Hudson.
+ Leaders of countries, all over the world, opined about the US political and economic blackmail as they prepared to vote. The leaders of the Global South know only too well how the US can strangle an economy, perpetuate terror against a people, and destroy the very fabric of a society. This time, the US may have gone too far in trying to realign the world order so that it can try to knell the death toll of China. America’s allies and sidekicks have started to wonder if the imperial authority is beginning to loosen. Evidence of this can be seen with India’s attempts to buy more Russian oil, and Saudi Arabia’s discussion with Beijing about the possibility of paying for oil in Renminbi.
+ For many decades now, the US Federal Reserve and Treasury have fought against gold recovering its role in international reserves. But how will India and Saudi Arabia view their dollar holdings as Biden and Blinken try to strong-arm them into following the US “rules-based order” instead of their own national self-interests? The recent US dictates have left little alternative but to start protecting their own political autonomy by converting dollar and euro holdings into gold, in resistance to the increasingly costly and disruptive US demands.
Sanctions are and will continue to hurt Russia, that is true. Other countries have also been the victims of US sanctions. The US has had sanctions for more than 60 years against Cuba, where the people have not only survived, but continue to support revolutionary movements across the globe, especially in the area of medical assistance and education for poor countries. Venezuela has been sanctioned, and her people have suffered. But they continue to work towards regaining some sense of economic normalcy. Iran has been sanctioned. But today Iran looks to a partnership with China and Russia to develop their economy and provide an alternative for other politically independent nations. North Korea has also been sanctioned. They have had a very difficult time, but they are still standing. People around the world realize that the US stick of sanctions is not as invincible as they claim, and that the fight against US hegemony is, despite the hardship, not hopeless.
Countries with sixty five percent of the world’s population have not endorsed the US-led sanctions. Perhaps this time the US has overstepped its bounds. This time its single-minded focus on maintaining its unipolar hegemony and destabilizing China is being questioned by more countries, by more people. China’s economic, political, and military strength represents a real threat to US hegemony. But it also represents a beacon of light for the Global South and all progressive peoples. China is the alternative to the policies of US expansionism and hegemony. This is a showdown between two distinct and irreconcilable economic and political systems. The world is probably witnessing the defeat of the US’s quest for unipolar hegemony. Not today, not tomorrow, but the time is coming. We should not underestimate the economic and military power of the United States and its control over Europe and Japan, just as Mao did not underestimate the Japanese invaders in the War of Resistance Against Japan. But again, as Mao said, this is a protracted war, and the righteous people, though they cannot win quickly, shall prevail in the end.
When cracks appear in the walls of the empire, can the peace-loving developing countries around the world take this opportunity to recover the legacy of the Non-Aligned Movement and the Bandung Conference, to establish a united front to tear down the US political, military, and dollar hegemony, and to establish a new international political and economic system that meets the common wishes and interests of peoples around the globe? Perhaps the imperialists have already seen this possibility, otherwise their rapaciousness would not be so desperate.