President Biden concluded a speech to businessmen on Monday with the following statement:
And now is a time when things are shifting. We’re going to — there’s going to be a new world order out there, and we’ve got to lead it. And we’ve got to unite the rest of the free world in doing it.
Last month Sergey Glazyev, charged with restructuring the post-sanctions Russian economy, concluded his treatise Sanctions and Sovereignty with a different call for a new world order:
In general, much remains to be done to strengthen national sovereignty in the economy. US sanctions are the agony of the outgoing imperial world order based on the use of force. To minimise the associated dangers, it is necessary to accelerate the formation of a new, integrated world economic order that restores international law, national sovereignty, equality of countries, diversity of national economic models, and the principles of mutually beneficial and voluntary international economic cooperation.
A major geo-strategic, geo-economic and geo-monetary realignment is in progress. The US thinks it can 'lead' a new world order with more unilateralism and financialisation backed by military bases in 70 nations. Russia wants an emergent world order of mercantilist multilateralism, non-intervention in domestic affairs, and security guarantees. These are only two nations. It is the other 193 nations that will decide if a new order emerges and what shape it takes.
In the Russian 'order' those at risk of US displeasure will no longer subsidise US consumption, protectionism, or military adventurism. Russia itself divested of most USD assets after 2014 sanctions. USD-denominated official reserves globally are at an all-time low under 50 percent, so others must be reducing exposures as well. Recent expropriations and freezes will force a wider re-evaluation of central bank and sovereign wealth fund asset management policies and objectives (the principal point of official reserves is liquid crisis stabilisers).
One way of viewing the charts below is a rapid devaluation of USD as capital flows out of sovereign and corporate bonds into things that can be used, consumed, or stored securely within national borders. Demand for US debt securities is falling. Demand for tangible real world goods is rising. Inflation, duration and expropriation risks are higher than for the past 30 years.
This dynamic fuels sharply elevated inflation in food, energy, minerals, metals, and other commodities. Reciprocal sanctions between Russia and the West over Ukraine make the situation much, much worse, creating a crisis in food security for many vulnerable nations and a further supply chain crisis for all industrialised economies. Energy, food and supply chain inflation is guaranteed to accelerate and remain high until the Ukraine conflict is resolved.
Inflation is dangerous to economic, financial and political stability, regardless of whether a government leans democratic or authoritarian. Expect some of the world to prioritise long-term stable supply contracts when shaping a 'new world order'. Expect some to prioritise energy security and food security as elements of national security.
A new world order doesn't happen because a speech is made or a paper published. A new world order requires diplomacy and a critical mass of nations that see their own self-interest respected and protected by the rules of order. As Kissinger said in his book World Order (2014), "Order in this sense must be cultivated; it cannot be imposed." He concludes his introduction, "The mystery to be overcome is one all peoples share - how divergent historical experiences and values can be shaped into a common order."
The US is too prone to imposing its 'values' at the point of an arsenal of weaponry, financial and economic sanctions. Military failures in Yugoslavia, Afghanistan, Iraq, Syria, Yemen, and Libya (collectively 900,000 dead and 30 million refugees) do not inspire global confidence in a US-led 'order'. Sanctions have hardened policies in Cuba, Venezuela, North Korea, Iran, Afghanistan, Syria, and now Russia, escalating division rather than mitigating harm. As one foreign diplomat put it, "I know the Americans haven't read the briefing when they start talking 'values'."
Kissinger also defined diplomacy as 'the art of restraining power.' 193 nations have an interest in curbing the power of both nuclear-armed US and Russia in crafting the scope and method of a new world order that respects and protects us all. Let's hope they have some diplomats who are up to the job.
And just for fun, from YouTube, the Monty Python Kissinger Song!