Tectonic shifts in international relations

 The topic on which I have been asked to speak is interesting and important insofar as we are living in a situation today that, in terms of its magnitude – in terms of the shifts in the balance of power in the world – cannot even be compared with the change from the British Empire to the American Empire. This is a very, very serious situation today, but one that has obviously not yet been fully recognised in the West, especially not in Europe or the European Union.   
    In 1998, a book was published with the title “ReORIENT. Global Economy in the Asian Age”.¹ The author was André Gunder Frank, and the book was published by the University of California Press. André Gunder Frank, son of the writer Leonhard Frank, was an economist, but he also analysed the world system – similar to Immanuel Wallerstein². And in this book, he comes to precisely this conclusion, that the focus, the economic focus, goes back to where it has been for centuries, namely to China.

China – the centre of development

I can’t go into any more detail here, but I recommend the book because it has now also been published in German by Promedia Verlag. The core message of the book: China is virtually at the centre of development as the heart and brain – together with Russia. This development has progressed further: with BRICS and the Silk Road and the Shanghai Corporation Organisation. China is particularly at the centre as an economic focus.
    The USA was not entirely uninvolved in China’s rise. On the contrary, it was a catalyst for this rise, at least in terms of speed. Why? At the beginning of the end was Paul Volcker, head of the Federal Reserve. Because the US dollar (USD) was under pressure, he thought about how the US could save the USD as an investment currency. He came up with the glorious idea of raising the Federal Reserve’s interest rate to 20 percent, i. e., three times as much, within a short space of time, in just a few weeks. The result was that the dollar was once again accepted as an investment currency.

Deindustrialisation of the USA

But what was the consequence for the real economy? It could no longer cope with this interest rate. And so it reinforced the already existing tendency of American companies to produce in lower-cost countries and accelerated this process even further. So companies went to China and other countries around the world. And that, of course, massively fuelled the Chinese economic upswing. The idea was: Chimerika. In other words, China produces at a lower-cost for the market, for the American market, and we, the USA, basically no longer need our own industrial base. I’m exaggerating a little now.
    However, this proved to be a fatal mistake because they failed to consider that in this huge country of China, with its huge population, an enormous number of university graduates leave university every year and that the quality of products and the quality of companies has improved massively.
    Today we can see where China is competitive in every area. I would like to illustrate this with a figure showing how this originally dominant role in the global economy of the United States has changed. The American trade balance has been negatived for years. And the trade balance deals precisely with economic goods that are traded. The global deficit, i.e., including all countries in the world, amounts to a huge 900 billion USD. No other country in the world has such negative figures. And why can the Americans still afford this? I will explain this again later when we come to the role of the USD.
    The sheer number expresses the fact that, apart from a few highlights and towers, such as in Silicon Valley or in other areas, the United States no longer produces enough goods to export and that are accepted by the world. That is the situation. And that is why China will soon replace the United States as the world’s No. 1 economic power.

BRICS plus

China is the central factor in the BRICS organisation, which is now called BRICS plus because more and more countries are joining. The United States have basically been and still are a kind of fire accelerator for this BRICS organisation. Why is that? Because these countries are no longer prepared to submit to the sanctions, the extraterritorial sanctions of the United States. They are also no longer willing to accept the dominance of international bodies dominated by the West – the World Bank, IMF, WTO – or the USD as the leading investment and trading currency.
    In other words, to put it bluntly: What the West calls a rules-based order is nothing more than dominance in these bodies. The BRICS states and the developing Global South, on the other hand – as the documents adopted by the BRICS states at the assemblies and meetings show – are very much in favour of enforcing international law. And that is something quite different from a rules-based order that merely uses the instruments it has created itself to – more or less – exploit the rest of the world.

Questioning of the
US claim to hegemony

All of this is contrary to the United States’ claim to global hegemony, which still exists. The Americans also express this with the words “exceptional” and “indispensable state” or “indispensable nation” of the United States. That is a grandiose presumption. And the countries in the Global South, if you want to call them that, are less and less willing to bow to this claim.
    Some data: BRICS plus currently has nine members. Saudi Arabia is soon to be the next member state, at least it is on the list. They have not yet joined, but it seems that they want to. And a further thirty states are on the accession list. In other words, they have expressed their desire to join this confederation. Egypt, the United Arab Emirates, Iran and Ethiopia joined at the beginning of this year. So we now have nine members of the BRICS plus. They represent 45 percent of the world’s population, the G7, as a counter-example, 10 percent. BRICS plus currently accounts for 32 percent of the global economy. The G7, which still had 47 percent in 1990, now only has 30 percent. The nominal gross domestic product of the BRICS countries is 29 percent, compared to 44 percent for the G7. However, if GDP is measured according to purchasing power parity, the BRICS countries have 36 percent and the G7 only 30 percent.

Long-term goal: De-dollarisation

The long-term goal of the BRICS countries – which is being tackled very, very carefully and slowly – is de-dollarisation. This means replacing the dollar as the main global trading and investment currency with something else.
    The USD is the USA’s main pillar of power. We look at the military, but that is not the decisive pillar of power, that is the USD. At the Bretton Woods Conference in 1944, the Americans prevailed against British ideas and the dollar became the world’s reserve and trading currency. Richard Nixon cancelled this role in 1971. What did it consist of? The guarantee that every USD in the world would be exchanged for gold by the Americans on demand. In 1971, however, the Americans no longer had enough gold to replace their huge mountains of foreign debt with gold, or rather to replace their foreign assets with gold. At the time, France took the lead and set things in motion. As a result, this provision of the Bretton Woods agreement was unilaterally cancelled.

Petrodollar

The USD was now in a situation in which it no longer had the necessary background for its role to continue to be accepted worldwide. All the developments that we know as the petrodollar then set in. Other countries were obliged to invoice oil only in USD, so that all countries in the world had to acquire USD for their trade in order to pay for their energy flows. Other sectors were also affected. A very sophisticated strategy. Saudi Arabia was at the centre of it. As the largest oil producer at the time, Saudi Arabia was the first country with which this petrodollar cooperation was concluded. And in the past, we have seen a number of US wars against countries that no longer wanted to accept the idea of invoicing their raw materials, particularly oil and gas, in dollars. Which were then also overrun with war. 2003 Iraq, 2011 Libya. This shows how important this dollar function is for the US power projection. There is a nice term coined by Michael Hudson, a US economist, who wrote in a book that the Bretton Woods gold standard of the USD was replaced by the United States Treasury standard. What does that mean? The United States is massively in debt. Why can they be so indebted? It can be so indebted because the whole world, which earns USD in trade, invests these dollars in American Treasury securities in the United States and then lives off the interest. They are not allowed to invest in American companies or other things.

New payment systems

And BRICS is now attacking this dollar treasury standard. The first steps: They have decided to trade with each other in national currencies. They are creating new payment systems, new clearing institutions, which will then apply in these countries. But this is all being done very carefully and slowly, because they don’t want to throw the entire global economy into disarray with a sudden move. It will be a complicated process, but it is still being pursued.
    If you want to look into this topic in depth, I recommend a British financial specialist, Alastair McLeod, or the Russian financial scientist and economist Sergey Glazyev. As I said, I can only hint at this and cannot provide any further information.

What is wrong with Europe?

But perhaps I would like to conclude by saying something about what I stated at the beginning: The Europeans in particular do not yet want to take note of this development, which will be serious in the coming years as far as the development of the entire international system is concerned. The European Union, which should actually be defining its own role against this background, has now fully committed itself to backing the Titanic, the USA. This does not mean that the US will sink, but it will no longer be able to play the role it has played up to now, not for much longer. However, very few people in the West have realised this and, above all, too few have drawn the necessary conclusions.

Questionable media world

I would like to quote a short commentary from the “Frankfurter Allgemeine Zeitung” about Ralf Mützenich, the leader of the SPD parliamentary group in the German Bundestag, during his trip to China. The newspaper commented that it was quite an honour for a parliamentary group leader from Germany to be received personally by Wang Yi, the Chinese Foreign Minister. And then the commentary continues as follows: “Those who want to protect Russia from American missiles will find the doors of Putin’s most important allies open. Mützenich told China that Germany is acting sovereignly and not following a US narrative, and Wang Yi will have been pleased to hear this. It is precisely what he himself always advises the Europeans, because China’s position becomes stronger when the West is divided”.
    I can only say, anyone who writes a comment like that has not understood anything or is a merciless opportunist.

China has learnt a lot from
the formerly successful Europe

Finally, perhaps a small highlight on Chinese communism, which many people always completely misjudge and compare with what we had under communism from 1945 to 1990. The reformer Deng Xiaoping, to whom this whole development can be traced back, orientated himself on concepts that led to the economic rise of the German Reich in the 19th century. He founded hundreds of small banks in China, which financed the local economy and thus gradually created a framework for the economic development of large parts of the country. This is original Friedrich List.

Europe used to be more advanced

In conclusion, I would like to say that if you look at the miserable role played by the western peninsula of the Eurasian continent, namely the European Union, according to Glenn Diesen³, and compare it with what a certain Gottfried Wilhelm Leibniz⁴ envisioned centuries ago, namely using Russia as a bridge, a cultural bridge from Europe to China. Unfortunately, the text is only available in Latin, Novissima Sinica, but centuries ago these were ideas that we could also pursue today. But since 2014, we have thrown everything into the bin that was formulated after 1990 with the Charter of Paris and, incidentally, with the NATO summit in 1990, with the title of the final declaration “Transformation of NATO”. Since 2014, the willingness of German politicians in particular to understand Russia in any way, in the sense of audiatur et altera pars, the old Roman principle, has fallen to almost zero. Our Federal President, who himself was responsible for the fact that Minsk 2 was not implemented because he did not get Ukraine to do so, now stands up and says: we were so wrong about Russia. What more can you say?•

1   André Gunder Frank, ReORIENT: Global Economy in the Asian Age, University of California Press, ASIN: B0064BV218
2   Immanuel Wallerstein (* 28 September 1930 in New York City; † 31 August 2019 in Branford (Connecticut)) was an American sociologist and social historian. He was the founder of a world systems analysis that combines aspects of history, economics, political science and sociology.
3   Glenn Eric Andre Diesen (born 1979) is a Norwegian political scientist and professor at the University of South-East Norway.
4   Gottfried Wilhelm Leibniz (1646–1716) was a German philosopher, mathematician, jurist, historian and political advisor of the early Enlightenment. He is considered the universal genius of his time and was one of the most important philosophers of the late 17^th and early 18^th centuries, as well as one of the most important pioneers of the Enlightenment.

(Translation Current Concerns)    

*   Jochen Scholz was a lieutenant colonel in the German armed forces. In this capacity, he served for several years at NATO in Brussels and then – during the NATO war against Yugoslavia – in the German Federal Ministry of Defence. There he noticed that the official speeches of the responsible politicians about blatant human rights violations by Serbia did not match what he could see from the reports of experts on the ground. He left the SPD in 1999 because of these lies. He is a member of the Discussion Group on Peace and Security Policy of the Rosa Luxemburg Foundation in Berlin.