Peace talks and the changing global order

It would be welcome news for all at risk in the war zones of Ukraine and Gaza if peace could be agreed. It would also be good news for markets, removing the threat of further disruption to output and trade from attacks on factories, farms and shipping. It might also lead to some reduction in bans and sanctions on trade between the US led bloc of countries and the authoritarian states.

Progress with peace for Ukraine

After a difficult disruption to US/Ukraine relations an improvement has now been seen. They have agreed to ask Russia for a one-month ceasefire in preparation for a wider peace. Ukraine has accepted the revised US Agreement to a joint venture in the development of Ukrainian minerals, oil and gas. The US has restored intelligence and other support to Ukrainian forces.

US President Donald Trump felt he needed to show Russian President Vladimir Putin that he could get Ukraine to offer compromises over territory that Russia has occupied and to rule out Nato membership for Ukraine, which Mr Putin regards as a provocation. Now Ukraine has agreed to this Mr Trump has to pressurise Russia, which he will doubtless do. There are statements that the US will intensify sanctions and economic warfare against Russia if Moscow does not co-operate.

The Western allies of Ukraine

The European friends of Ukraine led by France and the UK tried to persuade the US not to withhold arms and other support and started to make promises to increase their support. They see Russia as the aggressor and want to avoid a Russian win, with the danger of Moscow trying again to take more territory very real. Their actions clashed with Mr Trump’s negotiating strategy.

They have now pledged support to the Trump peace attempt. They are still talking of assembling a force to police the peace given the absence of the US and Nato from any such task. Russia has made it clear that any forces from Nato countries are not welcome, as he sees them as allies of Ukraine and therefore not impartial. A United Nations (UN) force would be more likely to help.

European Nato countries anyway would need to up their budgets to be able to put a substantial force into policing the long Russia/Ukraine border. European Nato countries have relied on US air cover, intelligence and other specialist support for their own defence, which would not be available to a European peace keeping force as the US does not want to end up in a hot war with Russia.

The Russian view

Now the West is in dialogue with Russia and seeking a possible diplomatic outcome, it is necessary to consider how President Putin sees the world.

He has read, spoken and written a lot about Russian history and Russia’s destiny. He sees the break-up of the USSR as a tragedy. He thinks the West has failed to keep its promises at the time of the break-up when he thought they agreed not to extend Nato eastwards.

Mr Putin does not accept that Nato is a defence alliance that only expands by consent when a country wishes to join. He is concerned that Nato advancing eastwards can station nuclear weapons on lands close to the Russian border. His illegal invasion of Ukraine led directly to the expansion of Nato into Scandinavia, increasing his concerns.

There is still a chance of peace in Ukraine after Russia showed some muscle to try to improve terms from its point of view.

A multipolar world?

In 2007, President Putin gave an important speech in Munich. He condemned the unipolar world, a world with one superpower, the US, reaching widely into the affairs of others. He opposed “the uncontained hyopertrophied use of force in international relations” by the US.

He saw the expansion of Nato in Europe as “a serious provocation that reduces the level of mutual trust”. He asked: “Against whom is this expansion intended? And what happened to the assurances our Western partners made after the dissolution of the Warsaw Pact” (The Warsaw Pact was the USSR mutual military alliance between the eastern European countries and Russia). He does not accept the Nato view that the organisation has no territorial ambitions, and only expands by agreement, not by force of arms.

More recently, US Secretary of State Marco Rubio has been shifting US foreign policy away from a unipolar approach, with the US as the world’s policeman, to a multipolar approach. He recognises China as a countervailing major power and could accommodate Russia in this evolving world view.

Instead of seeing the US as the leading force to defend the rules based international world order, he sees some parts of this order as a weapon used by the China bloc against the US. He tells us he needs to negotiate with world leaders he would not choose as dinner companions, in a world of more than one power centre. It is to be a world of deals where the US, China, Russia and others pursue their national interest rather than reaching for global government.

A world of national sovereignties

Republican thinking in the US sees international bodies and international law as systems which seek to limit US sovereignty and put the US under some controls from global institutions. As the US is often the largest funder of these bodies it can lead to resentment when they are seen to be anti-American. The China-and-Russia-led bloc has many votes and support from emerging market countries and increasing influence in these international bodies. This is part of the reason the US is withdrawing from the Paris climate treaty, ending its membership of the World Health Organisation and continues to reject the authority of international courts.

A trade policy with more tariffs and frictions means a less integrated world. It is not just the US that is embarking on putting in more domestic industrial capacity to reduce dependence on China and other leading manufacturers. Other parts of the world, including the European Union (EU), have substantial tariff barriers which the US is now calling out and demanding reciprocity or levelling out of tariffs.

There is a price to this, as impediments to free trade mean more expensive and less efficient production satisfying some of the demand. There are arguments over how much of the extra cost will be paid by those exporting and how much by consumers in the tariff-imposing importing countries. In practice, it will vary by product and circumstance depending on the availability of alternatives. The current conflicts have led the US to get tougher with Europe over its own defence, forcing them to re-arm to make a bigger contribution to Nato.

Some of President Trump’s tariffs will be removed or cut when he thinks other policy aims have been achieved. The overall impact on international trade and inflation will be unhelpful but will not of itself be enough to push economies into recession. The EU will have to decide how far it wishes to go in an international trade spat with the US. Its own position, with tariffs on 73% of all product lines into the EU and with the planned launch of the carbon border tariff scheme with higher tariffs on energy intensive products, will complicate and prolong the clash.