The end of ‘laissez-faire’: Russia’s attempt to reshape the world economy

Starting on 31 May, Russian Foreign Minister Sergei Lavrov embarked on a tour of Gulf Cooperation Council (GCC) countries, where he visited Bahrain, Saudi Arabia and the United Arab Emirates (UAE), among others. Lavrov’s main objective of these visits is to strengthen ties between Russia and GCC nations amid a global race for geopolitical dominance.

The Middle East, especially the Gulf region, is vital for the current global economic order and is equally critical for any future reshaping of that order. If Moscow succeeds in redefining the role of Arab economies vis-à-vis the global economy, it would most likely succeed in ensuring that a multipolar economic world takes form.

The geopolitical reordering of the world cannot simply be achieved through war or challenging the West’s political influence in its various global domains. The economic component is possibly the most significant of the ongoing tug of war between Russia and its Western detractors.

Prior to the Russia-Ukraine war, any conversation on the need to challenge or redefine globalisation was largely confined to academic circles. The war made that theoretical conversation a tangible, urgent one. The US, European and Western support for Kyiv has little to do with Ukraine’s sovereignty and independence and everything to do with the real anxiety that a Russian success will demolish or, at least, seriously damage the current version of economic globalisation as envisaged by the US and its allies.

READ: Gulf countries will not impose sanctions on Russia, says Russian FM

Following the collapse of the Soviet Union in the early 1990s, the world was no longer a contested space between two military superpowers – NATO vs Warsaw Pact – and two massive economic camps – US vs USSR. We often speak about the US invasion of Panama (1989) and the war in Iraq (1990) to demarcate the uncontested US ascendency in global affairs. What we often omit is that the military and geopolitical component of this war was accompanied by an economic one.

As Panama and Iraq were meant to demonstrate US military dominance, the establishment of the World Trade Organisation (WTO) in 1994-5 was meant to illustrate Washington’s economic outlook in this new world order.

Though unprecedented in their scale and ferocity, the anti-WTO protests in Seattle in 1999 seemed like a desperate attempt to reverse the alarming trend in the world’s economic affairs. Though successful in demonstrating the power of civil society at work, the protests failed to produce any real, lasting outcomes. In the US/Western-centred definition of globalisation, smaller countries had little bargaining power.

While rich countries successfully negotiated many privileges for their own industries, much of the Global South was left with no option but to play by the West’s rules. The US spoke of free trade and open markets while maintaining a protectionist agenda over what it perceived to be key industries. Globalisation was branded a success story for freedom and democracy, while, in essence, it was a cheap reproduction of France’s 18th century “laissez-faire” economic doctrine.

It is easy to criticise poor countries for failing to challenge US/Western dominance. In fact, they tried, and the result was economic sanctions, regime change and war. The only silver lining is that this predatory form of capitalism encouraged small countries in the Global South to formulate their own economic blocks so that they may negotiate with greater leverage. However, even that was not enough to influence, let alone dismantle, the skewed global paradigm.

Large economies, like China, were allowed to benefit from globalisation as long as their massive growth served the interests of the global economy, namely the West. Things began changing, however, when China’s political and geopolitical outreach started to match its economic influence. Former US Republican President Donald Trump dedicated much rhetoric and eventually declared economic war on the so-called “China threat”. The current Democratic administration of Joe Biden is hardly different. Though busy countering Russia’s military operations in Ukraine, Washington remains dedicated to its anti-Chinese rhetoric.

The Marrakesh Agreement in 1994, the treaty upon which the WTO was established, was reached to replace the geopolitically defunct General Agreement on Tariffs and Trades of 1948. Note how each of these global economic treaties resulted from their unique global geopolitical orders, the latter following World War II and the former following the collapse of the Socialist camp. Though Russia and its allies are now mostly focused on claiming some kind of victory in Ukraine, their ultimate goal is to sow the seeds for a different economic balance, with the hope that it will ultimately force a renegotiation of today’s globalisation, therefore the West’s economic hegemony.

READ: Western countries rallying countries to protect status quo, Russia FM says

Russia is clearly invested in a new global economic system, but without isolating itself in the process. On the other hand, the West is torn. It wants to drop on Russia the Iron Curtain of the past, but without hurting its own economies in the process. This equation is simply unsolvable, at least for the next few years.

In a speech at the Eurasian Economic Forum, Russian President Vladimir Putin said that trying to isolate Russia is: “Impossible, utterly unrealistic in the modern world.” His words accentuate Russia’s full awareness of the West’s objectives and Lavrov’s busy itinerary, especially in the Global South, and is Moscow’s own way of animating an alternative global economic system in which Russia is not isolated. The outcome of all these efforts will not only redefine the world from a geopolitical perspective, but will redefine the very concept of globalisation for generations to come.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.