Declining powers vs. rising powers

Great powers rise and fall over time, but the transition is not always peaceful and linear, says Ramesh Thakur.
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October 31, 2014
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Director of the Centre for Nuclear Non-Proliferation and Disarmament, Crawford School of Public Policy, The Australian National University

Great powers rise and fall on the tide of history. The transition is not always peaceful and linear, but often jagged with points of friction. As the new and old powers cross each other on the way up and down, they create potential zones of tension that may lead to armed conflict through different pathways. A declining power may fail to recognize or refuse to accept its fading economic dominance, military might and diplomatic clout, persist in demanding respect due to its former status and trying to make the rising power pay for the perceived lack of respect. Conversely, the rising but not yet fully risen power may provoke a premature confrontation too early in the transition.

Russia may no longer be a great power but believes and acts like one. Or perhaps it still is but the West fails to treat it so. Either way, Europe is in trouble. Both the US and the UN have highlighted how the transfer of global wealth and power from the North to the South is historically unprecedented in speed and scale. How should the institutions of global economic governance reflect the changed balance of economic power? Given toxic Washington politics, can any US administration recalibrate policies to the new geopolitical realities? And what does all this mean for the liberal economic and political global orders, not to mention the many regional security orders including Asia–Pacific, underwritten for many decades by the US?

Consider the China–US equation in the contested maritime environment of the Asia–Pacific. In recent years Beijing has adopted a markedly more aggressive posture vis-à-vis territorial and maritime disputes with Japan, Vietnam and the Philippines. It’s not in the US interest to provoke full-fledged confrontation over relatively minor incidents like a small boat sunk, a submerged reef captured or an uninhabited rocky island contested. But each probe tests the patience and resolve of the regional country and gradually increases scepticism about the reliability of the US’ security guarantees.

Washington cannot challenge Beijing on every provocation, yet each provocation that goes unchallenged improves China’s leverage over its neighbours and weakens America’s standing. Along the misperceptions and miscalculations resulting from such equations do the bloody rivers of human history flow into the ocean of oblivion for once-great powers. Short of armed conflict, the struggle for power can also occur over the capacity to write and enforce the rules, norms and laws that govern international relations, including access to markets and resources.

In an earlier article, I had noted how the major deliverable from the sixth BRICS summit in Brazil in July was economic in form and content – the creation of the New Development Bank based in Shanghai with an initial capital subscription of $50bn that will be progressively doubled – but its primary motivation, significance and limitations are geopolitical. They also created a $100bn Contingency Reserve Arrangement to help developing countries avoid short-term liquidity pressure, strengthen the global financial safety net, complement existing international arrangements, and foster more intra-BRICS cooperation.

On 24 October, 21 Asian countries, including India and all ASEAN countries except Indonesia – but not Australia, Japan and South Korea – signed a memorandum of understanding in Beijing for a new Asian Infrastructure Investment Bank. The AIIB will have its HQ in Beijing and an initial capitalization of $50bn. The US has expressed concerns about the bank’s governance, environmental standards and debt sustainability. Secretary of State John Kerry reportedly lobbied PM Tony Abbott directly against joining the AIIB as a founding member with the opportunity to shape its evolution from the beginning.

The new banks are a direct challenge to the World Bank and the Asian Development Bank – dominated by the Euro–Atlantic and Japanese allies – in the world’s most dynamic economic region. The World Bank’s numerous critics charge that it has failed to lift countries out of poverty and instead has generally deepened poverty and created dependency, although foreign creditors have done well from its projects. The operations and governance structures of the IMF and World Bank are seen as rigged against the voice, vote and interests of developing countries and skewed towards the industrialized bloc.

Speaking at the Valdai Club of Russia experts in Sochi, also on 24 October, President Vladimir Putin delivered a tough diatribe against Washington, insisting that US policies – not Russia – had torn apart the existing rules of global order and brought chaos and instability in Afghanistan, Iraq, Libya, Syria and Ukraine. In his view Americans are so short-sighted that "they are constantly fighting the consequences of their own policies, throw all their effort into addressing the risks they themselves have created, and pay an ever-greater price." He added that the "period of unipolar domination has convincingly demonstrated that having only one power centre does not make global processes more manageable."

All five BRICS have a list of irritants in relations with Washington and a strong vested interest in protecting strategic autonomy vis-à-vis the US in global affairs. According to India’s former foreign secretary Kanwal Sibal, "the West’s bullying instincts" based on "unbridled self-righteousness and arrogance" must be countered by the rising countries by building their own political, economic and security networks. The West’s addiction to sanctions provides a powerful incentive to the BRICS to develop long-term alternative financial institutions for parking their money and moving them internationally.

The growth of BRICS-created parallel global financial architecture is evidence of intent and ability to rewire the global governance system so that it no longer runs through the west. The larger geopolitical import of Putin’s speech is it signals the end of a search for a mutually beneficial Russia–US partnership in which Moscow cedes a global leadership role to the US in return for a privileged Russian role in Eurasia. Russia will look to forming coalitions with others so that collectively they can circumscribe and ring-fence the exercise of US economic and geopolitical power and the BRICS countries can sustain their preferred policies against concerted Western pressure.

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A version of this piece was originally published by the Australian Institute for International Affairs.