On the brink of a new cold world

Future historians may well come to see 2014 as a bellwether year in world affairs, marking an epochal shift to a new, more turbulent world order no longer dominated by the values or power of the US and its Western allies.

Such shifts occur periodically in the international system. More often than not, they are accompanied by conflict and heightened geopolitical volatility. Sometimes they are preceded by dramatic events such as revolution or war, the dates of which become enshrined in human consciousness and shape national identities.

The years 1918 and 1945 spring to mind, as does 1989, when the mass flight of East Germans through the once formidable barrier of the Berlin Wall signalled the demise of the Soviet empire and the end of the Cold War.

But if 2014 lacks the end of era feel of earlier tipping-point years, in retrospect it will be seen as the year in which a fraying Pax Americana (literally, American peace) finally unravelled and was replaced by a new order, the contours of which are becoming more discernible, even though the final form is still unclear.

The consequences of this shift are likely to be profound, affecting the prosperity and security of every global citizen. And they pose daunting challenges in foreign policy, trade and national security for Australians, the like of which we have not confronted before.

Understanding the drivers and implications of the new order requires an appreciation of the distinguishing characteristics of the old order, as well as its genesis. Pax Americana rose from the ashes of World War II, when the victorious Western democracies, led by the US, established a set of global institutions and norms that privileged the free market, liberal democracies and the rule of law.

Underpinning these norms and institutions was the unrivalled military power of the US and a set of alliances that spanned the globe and included Australia.

Of course, the era of Pax Americana was never as peaceful as its name implies. During the long years of the Cold War, US strategic pre-eminence was vitiated by the illusion and reality of Soviet military power. A series of regional proxy wars between the US and Soviet Union frequently disturbed the peace, while the Cuban missile crisis in 1962 brought the world perilously close to a full-blown nuclear conflagration that would have dwarfed any previous war.

Nevertheless, the US-led order provided sufficient stability and predictability to allow Europe and Asia to recover quickly from the destruction of World War II. The unprecedented era of global economic growth and prosperity that followed seemed to validate not just the superiority of Western capitalism but the foundational values of Western democracies.

However, Pax Americana is now under threat on many fronts. Chief among them are the emergence of China as a genuine peer competitor to the US; the new military assertiveness of a dissatisfied, authoritarian Russia; the accelerating disintegration of the regional order in the Middle East; and the accompanying spread of a virulent brand of anti-Western fundamentalism.

Undoubtedly the greatest long-term challenge is China’s latest incarnation as a major Asian and, potentially, global power. China is a mega-state the likes of which has not been seen before. For millennia, the Middle Kingdom was the dominant polity and civilisation in Asia and President Xi Jinping dreams of reclaiming that status.

Xi’s dream is no longer illusory, for modern China has the strategic clout to realise it. But his dream could well turn into America’s nightmare, for China’s re-emergence poses strategic challenges of a complexity and order of magnitude not previously experienced by the US-led international order.

China’s population and economy dwarf that of fascist Germany, imperial Japan and the Soviet Union, the previous and ultimately vanquished pretenders to the US throne. Twenty years of double-digit increases in defence spending have bequeathed the Chinese leadership a highly capable military, albeit one that is, as yet, unproven in combat.

Although China’s rise has brought immense economic benefits to its people, the rest of the world and Australia in particular, China’s recent international behaviour strongly suggests an unwillingness to conform to international norms when its core interests are at stake. The problem is that these self-designated core interests are neither fixed nor apparently amenable to peaceful resolution, as illustrated by China’s uncompromising approach to the many disputed islands and maritime features it claims in the western Pacific.

The extent to which China is prepared to challenge the Asian regional order, particularly at sea, has become abundantly clear during the past year. In a series of actions designed to broadcast its power and intent, Beijing has unilaterally declared an air defence identification zone over the East China Sea and dramatically increased air and sea patrols around the disputed Senkaku-Diaoyu islands, which are administratively controlled by Japan.

Beijing also has dispatched naval ships south of Java for the first time; sent two nuclear submarines to the waters off Sri Lanka; provoked a confrontation with Vietnam by drilling for oil in contested territorial waters; and stepped up the militarisation of occupied coral reefs and islands in the South China Sea. China also is at odds with four other Asian states (India, Japan, Vietnam and The Philippines) over territorial disputes, while anxiety levels about China’s strategic intentions have been raised throughout the region.

More fundamentally, China’s view of what the new Asian order should look like is clearly at variance with that of the US. Beijing makes no secret of its desire to use its newly acquired power to change the rules of the game and replace the US as the pre-eminent state in Asia. Whether China’s ambitions extend to being the dominant global power will depend on how successfully it can compete with the US in Asia and to what extent the balance of economic and military power shifts in its favour during the coming decades.

From Beijing’s perspective the auguries are promising. While its own position continues to strengthen, the US remains distracted and stretched by a host of international crises, which has created new opportunities for the kind of creative Chinese trade and foreign policy diplomacy seen in recent months.

Examples are the successful advocacy of a Chinese-dominated Asian Infrastructure Investment Bank; the signing of a free trade agreement with Australia; a preliminary gas accord with Russia to go with the $400 billion natural gas deal signed earlier in the year; and a tenuous but important first step towards a limited rapprochement with Japan.

Beneficial though they may be to regional development and economic integration, such initiatives are also part of a calculated Chinese strategy to reduce US economic influence in Asia, decouple longstanding allies such as Australia and South Korea from the US alliance system, and supplant the US as the region’s indispensable nation.

A second major challenge to Pax Americana is from a familiar adversary also on the geopolitical comeback. Russia’s annexation of Crimea this year, ironically during the centenary of celebrations to mark the war that was once expected to end all wars, came as an unwelcome shock to a complacent and ill-prepared Europe.

Unfortunately, the European political class committed the cardinal sin of believing its own wishful thinking that predatory nationalism and military aggression had been effectively eliminated from the continent.

Russia’s muscular revanchism in Ukraine and its renewed international assertiveness are clear indications that Vladimir Putin does not share the European aversion to military force or Europe’s dream of a democratic Russia at peace with an enlarged EU.

It took the hard-nosed realism of Mikhail Gorbachev, the last leader of the Soviet Union, to spell out the full implications of Putinism for Europe and Pax Americana. Earlier this month, Gorbachev declared that the world was on the brink of a new Cold War, a prognosis that would have been almost universally derided had it been made before the Crimean annexation in March this year. There is no derisory laughter now.

Crimea and the Ukraine imbroglio may be only the beginning of the bad news for the West.

Putin has sent an unequivocal message to the world that Russia is dissatisfied with an international order that Putin sees as inequitable and unsustainable, denying Russia’s rightful status as a resurgent great power. Henceforth, Putin intends to assert this status, by leveraging his country’s massive energy reserves and a modernised, rejuvenated military.

From the Baltic to the Atlantic and the Gulf of Mexico to the Pacific, Moscow is flexing its new military might, reconstituting old alliances, seeking bases and facilities from which to project military power and using energy as a strategic tool to advance its national interests.

Russian strategic bombers and intelligence-gathering aircraft flying over the Atlantic, the Baltic and the Black Sea are regularly testing European and North American air defences, with 100 incursions reported by NATO this year alone, approaching Cold War levels.

Moscow also is establishing military and intelligence facilities in like-minded Latin American countries, notably Cuba, Nicaragua and Venezuela. Russia’s Defence Minister, Sergei Shoigu, has announced his intention to send long-range bomber patrols along the US east coast and over the Gulf of Mexico.

Putin also has embarked on his own pivot to Asia, moving closer to China, maintaining a dialogue with Japan, seeking defence-maintenance facilities in Vietnam and reminding the world that Russia is an Asian, as well as a European, power by dispatching a naval flotilla through the South China Sea to the Coral Sea during the G20 leaders’ meeting in Brisbane, much to the surprise of most Australians.

Underlining his capacity to act as an international spoiler in regional hot spots such as the Middle East, Putin has continued to support the pariah Assad regime in Syria and complicated Western attempts to prevent Iran from acquiring nuclear weapons by agreeing to sell Iran nuclear reactors and hinting that Moscow may assist Tehran to build its own nuclear fuel fabrication plant.

The third main strategic challenge to Pax Americana is the fragmenting regional order in the Middle East, as the promise of the Arab Spring turns into a winter of discontent, revealing in all their primal complexity the deep tribal, ethnic, religious and political cleavages that endanger the security and viability of virtually all the region’s states.

Iraq and Syria, two of the Middle East’s heartland states, having suffered through several years of internecine warfare, are facing their moment of truth. Whether they survive as unitary states is an open question. The consequences of their dismemberment would be deeply destabilising and have global repercussions, recasting national boundaries, changing the regional distribution of power in unpredictable ways, aggravating terrorism and adding to doubts about the wisdom of US strategy and Washington’s staying power.

Egypt, having endured its own internal revolution and emerging with a government eerily reminiscent of the military autocracies that preceded it, seemed to have the redeeming strategic virtue, from Washington’s point of view, of being an oasis of stability compared with the chaos elsewhere.

But this may turn out to be deceptive, as the government of Abdel-Fattah al-Sisi has been preoccupied internally with the residual threat from the banned Muslim Brotherhood and now confronts a second danger from militant group Ansar Beit al-Maqdis, which has killed hundreds of Egyptian soldiers and police during the past six months.

A further complication is the rapid deterioration in Israeli-Palestinian relations, following on the heels of the latest destructive war between Hamas and Israel in Gaza. A third “intifada” would only add to Washington’s many headaches, dissipating already stretched American diplomatic resources and contributing to the impression of US impotency when the US capacity for global leadership is already much diminished.

Amid this turmoil is the game-changing and largely unforeseen rise of Islamic State this year as the media-savvy, anti-Western prototype of a new kind of terrorist group, distinguished by the scope of its strategic ambition and ability to capture large swaths of territory with a level of autonomous military power previously the preserve of nation-states.

Islamic State is a transnational movement with the trappings of statehood, which makes it highly resistant to conventional deterrence and counter-strategies. Defeating or containing it is only going to get harder with the November announcement of a de facto alliance between Islamic State, al-Qa’ida and other hardline extremist groups such as Jund al-Aqsa, Khorasan and Ahrar al-Sham. This is the real “axis of evil”, and its aim is the destruction of Pax Americana and all that it represents.

Faced with three simultaneous challenges of such magnitude when the economic, institutional and military power of the West is in relative decline it is clear that, Pax Americana, as we have known it, cannot endure.

The US can no longer carry the burden of global leadership in partnership with its traditional allies while their share of world gross domestic product continues to shrink, indebtedness climbs and threats multiply. This is not to argue that the US won’t bounce back. But even if it does, Washington will not be able to exercise the same degree of authority and leadership to which we have become accustomed.

In the new, multipolar world of influential states and non-state actors, the ambitions, interests and values of the West will be resisted by increasingly powerful players with different and often diametrically opposed world views.

Rather than an aberration, the geopolitical tensions and volatility of the past year are likely to become the new normal and may worsen until the transition to a more stable order is complete, a process that is likely to be lengthy and characterised by simmering conflict punctuated by periodic spikes in violence.

This transition could be even more difficult, and consequential, if it were to be accompanied by other systemic shocks of a financial, economic or environmental nature such as global deflation, a return to recession or an acceleration of disruptive climate change impacts.

As a fully paid-up member of the US alliance system, and a strong supporter of Pax Americana, Australia has reaped the strategic and economic benefits of being part of the dominant Western club. We have much to lose if the familiar verities, power structures and values of the old order are replaced by those that are less liberal and constrain our independence of action.

But we cannot inoculate ourselves against adverse geopolitical change by retreating behind fortress Australia or by deluding ourselves that the unsettling events of 2014 are merely an inconvenient interlude before Pax Americana re-emerges stronger than before. We have to be proactive in shaping the emerging order and innovative in recalibrating our foreign, trade and defence policies.

The US alliance has served us well, but it is no longer a sufficient guarantee of our security in a rapidly changing world. Managing future strategic risk means diversifying our security and trade partners to include countries with dissimilar cultures, traditions and even values. These differences should not be a bar to doing business and co-operating on shared foreign policy and strategic goals.

As a coming energy superpower and a country that is increasingly seen as an influential player in world affairs, Australia is better placed than most to navigate the hazardous shoals ahead.

Ensuring the smoothest possible passage will require a thorough re-examination of Australia’s foreign policy, trade and defence settings and the articulation of an overarching national strategy for maintaining our prosperity and security in more difficult times.

In addition to the foreshadowed defence white paper, the government would be well advised to consider a complementary foreign and trade policy white paper and a major update of the 2013 National Security Strategy, which is already showing its age, having failed to anticipate the seminal shift in the international order that is now apparent and shows every sign of accelerating.

Alan Dupont is professor of international security at the University of NSW and a non-resident fellow at the Lowy Institute.