Utopia of a multipolar world order: How Asia could break the dominance of the dollar
Essay
The West's share of the world's social product is now only about
one-third. The time is ripe for Asia and the Global South to break the
dominance of the dollar and introduce their own currency unions à la the
eurozone
by Mohssen Massarrat
[This
article posted on 8/12/2024 is translated from the German on the
Internet,
https://www.freitag.de/autoren/der-freitag/multipolare-weltordnung-warum-asien-eine-waehrungsunion-wie-den-euro-braucht/8737043a-f147-44db-8297-5b8c990d898e.]
If India and China were to join forces, they would merge into a gigantic economic power
There
is no doubt that the vast majority of states in the Global South will
support the transition to a multipolar world order. The People's
Republic of China is indisputably the main protagonist on the road to
overcoming the unipolar world. China's Silk Road project, the emergence
of BRICS states and the Shanghai Cooperation Organization are important
initiatives in this direction. The
interest of numerous states in the Global South in these initiatives
reflects the desire of these states to break free from their dependence
on the United States and the West as a whole, thereby increasing their
own national scope for action.
These states are understandably
looking for alternative options for global cooperation in order to be
able to defend their national sovereignty more effectively. But what
would a multipolar world look like? And what would be the decisive steps
on the way to such a world order?
We are facing an "Asian century"
The founding of the Asian Union would be the first step in this direction. The
idea of growing together in Asia is as old as the modern history of the
anti-colonial dependence of the two large Asian nations of China and
India. Many commentaries in China today speak of China and India jointly
ushering in an Asian century. "If India's strategic independence
withstands any external pressure," writes Asia expert Stephan Ossenkopp,
"no wedge will be driven between the two Asian giants. A peacefully coexisting China-India tandem would thus guarantee stability throughout Asia."
In
fact, the former Chinese President Deng Xiaoping is said to have used
the term "Asian century" as early as 1988 during his meeting with his
Indian counterpart Rajiv Gandhi. Today, the Indian Foreign Minister,
Subramanian Jaishankar, is also using this term again. In
2014, Chinese President Xi Jinping visited India, and Indian Prime
Minister Narendra Modi reciprocated the visit the following year. Was
this a further step towards a harmonious coexistence?
The creation of
an Asian economic community, in the long term the Asian Union, would be
an attractive option, analogous to the European Union, for coping with
the enormous task of a multipolar world.
What speaks in favor of a pan-Asian currency
Asia
is not only rich in fossil resources, whose time is irrevocably coming
to an end in view of the climate crisis. Asia is also rich in all other
resources, especially resources such as rare earths, such as bauxite,
which are needed for a transformation to a carbon-free global economy.
From this point of view, Asia would therefore have a solid economic
reason to conduct global trade in all its resources on the basis of its
own currency. In
this respect, an Asian economic community with its own currency would
correspond to the efforts of the BRICS countries to roll back the dollar
monopoly and even give them a massive boost. Because, apart from the
powerful financial institutions, these BRICS efforts have so far lacked
the material basis for an alternative to the dollar.
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The
US currency also became established not only as a result of the Bretton
Woods Agreement of 1944, but ultimately also because the USA had
developed into the largest trading and financial power after the Second
World War. In 1971, US President Richard Nixon even had to terminate the
Bretton Woods Agreement in order to free the dollar from the
restrictions imposed by the gold standard. The
dollar only reached its functional peak as a world currency when global
oil trading was conducted in dollars and oil trading effectively
ensured the dollar's stability.
The history of the dollar's
development shows that it is not possible to conjure up a new world
currency overnight through mere political agreements. Although
the People's Republic of China is likely to become the world's dominant
trading power in the near future, the yuan would still be a long way
from becoming a world currency. Major oil and gas exporters, as well as
exporters of other commodities, would have to abandon the dollar as the
trading currency for their commodity exports and switch to a new world
currency – let's call it ASEAN.
Hope for a better future
The
new Asian currency cannot, of course, be a country's existing currency.
Imagine the resentment that would have arisen in Germany if a new
currency had been introduced for the EU and the German mark had been
proposed as the new currency, because Germany's share of European trade
volume was the highest. For this reason alone, the opponents of the EU
would probably have successfully prevented the euro.
The
People's Republic of China is developing numerous initiatives, all of
which are characterized by the spirit of overcoming division and
contributing to the structural networking of Asian countries and the
Global South. These include China's Silk Road project, which extends far
beyond Asia in terms of economic and political networking. These
also include the initiative to bring the hostile states of Iran and
Saudi Arabia closer together in 2023, which led to a renewed exchange of
ambassadors, and the initiative to form a Palestinian transitional
government with the participation of 14 political groups, including
Fatah and Hamas, in the summer of 2024.
There
is no question that such a policy of bringing peoples and states
together from the bottom up, in small steps, represents a peaceful
alternative to the neo-colonialist policies of the West, which
systematically tend to divide peoples and states and
sow discord between them (as has been successfully practiced in
Palestine for several decades, for example) or to fuel an arms race
between them (as occurred between Iran and Saudi Arabia in the first
decades of this century). Such
an externally fueled arms race also took place in the second half of
the 1970s, which in 1980 led to the eight-year war between Iran and Iraq
with dramatic consequences for both countries.
If Japan joins, the Asian Union would be unbeatable
Implementing the ASEAN currency would be a gigantic task. The
main barrier would be to win the approval of those Asian states that
are still economically quite strongly interwoven with the dollar zone.
These include, of all things, the Arab oil states on the Persian Gulf,
which currently represent the backbone of the oil trade in dollars. In
all likelihood, the USA would use all the means at its disposal
(including regime changes in the aforementioned states) to prevent these
states from joining the Asian monetary union.
Given
the current rather diverse economic characteristics of the member
states of the Asian Economic Community (productivity levels, inflation
rates, industrialization and debt levels), a multi-stage process seems
appropriate from today's perspective, the phases and steps of which
could be roughly as follows.
First: the establishment of the Asian
Economic Community by willing and strategically and geopolitically
important Asian states, which would have to form the backbone of the
union. These
states include the People's Republic of China, India, Russia,
Indonesia, Iran, Turkey and Saudi Arabia. The European Union was not
created overnight either. Its foundation in 1999 was preceded by
sectoral cooperation between six important European states and the
founding of the so-called "Coal and Steel Union" as early as 1951.
Secondly: the accession of the remaining Asian states.
Thirdly,
the immediate introduction of the "ASEAN", initially exclusively as a
currency for the member states' trade in raw materials.
Fourthly,
the introduction of a monetary union, which the member states join
provided they have fulfilled the agreed criteria for accession.
Even
without Japan, the Asian Union would be by far the largest economic,
energy and resource power in the world, with over half the world's
population. With Japan, its power would be unsurpassable. The
process of creating the Asian Union alone is likely to noticeably shake
the global balance of power and make the populations of all continents
aware that the time has come to prioritize cooperation in all regions
and continents, to create their own continental economic community with
its own currency and to emancipate themselves from the monopolistic
dictates of the dollar, the only global currency.
What Europe must do when the dominance of the dollar crumbles
The
EU states and the European Central Bank would then have the option of
gradually bringing their dollar reserves onto the currency markets,
reducing the dollar's value to a level that reflects the real strength
of the US economy, and establishing the euro as a new world currency. In
this perspective, the UK would have to shelve its role as the US's
assistant sheriff, finally abandon its colonial and neo-colonial
ambitions and reverse its spectacularly failed Brexit.
The
US would gradually lose its monopoly position in the world financial
system and its ability to finance its armaments and hegemonic wars at
the expense of the rest of the world through the unchecked influx of
capital from around the world into the dollar zone. It would have to
significantly reduce its four percent defense budget and start financing
it primarily through taxes.
In
the event of such a development, which is presented here in a very
optimistic light, it can be assumed that African states would not sit
back and do nothing, but would proactively push ahead with the creation
of the African Union with its own currency, in parallel with the rest of
the world.
A
world made up of the European Union, the Asian Union, the African Union
and the American Union, each with its own currency, would be more
peaceful, democratic and sustainable than the current US-dominated
world. However, such a world order would not solve all of humanity's
problems by a long shot. However,
it would provide a more effective framework for dealing with the
consequences of climate change and hunger, as well as for the fairer use
of unequally distributed natural resources.
also see: Eric Maskin: China has achieved great success in the last 40 years
The
2nd International Conference on Basic Sciences was held in Beijing.
During the conference, a CMG journalist interviewed Nobel Prize winner
in Economics Eric Maskin, who attended the conference.
In
the interview, Maskin said that the gap between politics and economics
is growing worldwide. Science unites everyone because it is by nature
something that needs to be united. This conference brings together
scientists from different countries, which is particularly important.
Eric Maskin added that the Chinese development experience is worth studying by other countries.
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