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  • Writer's pictureThe Paladins

The West's advantage in the Second Cold War

Both Russia and China perceived it in their interests to create confrontation with the United States and Europe in 2022. Here are some of the reasons why they did that:

  1. The United States seemed to be economically weak in comparative terms, and hence embroiling them in a hot war would hobble their politics and economy.

  2. Europe appeared to be incapable of acting jointly; they could be divided and conquered. The best evidence of this was the United Kingdom's exit from the European Union; Brussels's criticisms of Poland and Hungary as slipping behind the standards of European democracy; and the EU:s self-imposed inability to expand her borders to cover the Western Balkans, a failure entirely the making of EU's internal principle. In other words the EU has proven incapable of thinking geoplitically.

  3. Russia and China have sought to exploit these weaknesses at every instance. China has developed a fleet of aircraft carriers designed to challenge and drive out the US carrier strike fleets from the South China Sea, and thereby establish dominance over the South China Sea region. Russia and China have been exercising economic and ergo political muscle in what they perceive as distraught parts of Europe such as Bosnia and Herzegovina, Serbia and Hungary.

  4. Russia has proceeded to devour, in her opinion, the West's and principally the United States' Eastern European toy nation, Ukraine, by annexing substantial chunks of her territory, particularly those with economic value, leaving the rump of 'Free Ukraine' (as Russia sees it) as ever more lifeless and in need of support by way of Western subsidies.

  5. Through engaging in war in circumstances of a supply-side price curve for global hydrocarbons, Russia has made herself ever wealthier through catalysing price increases. The greater the conflict and concomittant sanctions, the higher Russia's revenues that she can spend on fighting war.

  6. China has used her 'Belt and Road' initiative - massive strategic investments principally in primary commodities ventures across parts of the globe traditionally dominated by the West, together with infrastructure to support them - to wield what she inagines to be an extended network of geopolitical power that shoots across the bows of western interests, as well as (she hopes) provides healthy returns in the medium to long term.

  7. China's arrogance about her massive global economy grants her swagger to incur military spending intended to drive US influence out from the South China Sea, particularly in respect of the Korean peninsula and Taiwan; and in the mid-term the Philippines as well.

Now let us explain why this inchoate geopolitical logic on the part of the Russians and Chinese, imagining they are acting together to hobble the Western liberal democratic model of global hegemony, is so misconceived.

The very short answer is that both Russia and China are hopelessly sclerotic command economies managed using totalitarian methods. Running economies and military superstructures in this way is diabolically wasteful and generates what economists call a 'deadweight loss' - and a massive one at that. Hence for every joule of exertion, because their dead weight loss is so high they achieve less. Western economies are beset with regulation, it is conceded; these regulatory structures have their own deadweight losses. But the responsiveness of Russo-Chinese economic structures to the underlying supply-demand imperatives of their basic daily economic activity is so appallingly sluggish that they cannot change direction and align their institutions' goals in the same way as can America and Europe. As responsive democratic governmental structures premised upon capitalist incentives, America and Europe will always adapt more quickly to new threats. Russia and China are akin to two boorish arthritic monsters in the geopolitical challenges they purport to pose to the West.

Consider the following points.

  1. China's wealth is virtually exclusively premised upon selling consumer goods to the United States, something the US political system has the power to take away either through macroeconomic measures raising the value of the Chinese currency, the Yuan (all they need do is devalue their own currency) or by straight-out sanctions.

  2. If you think these things are not likely, then consider the measures the United States is likely going to take of an economic kind to punish China for her current aggression and military threats in respect of Taiwan, a US ally.

  3. China cannot understand why America might use her economic muscle to punish China for persecuting Taiwan - what interest does America have in Taiwan? The answer is that America will do it because she can; to hobble China in order to remain the pre-eminent global power, and using such economic means as please the US electorate by barring Chinese goods imports and thereby promoting the growth of the US labour force because the replacement goods will be made in the United States instead.

  4. The United States' interest in Taiwan and the Korean peninsula is therefore one of principle, to keep adversaries at bay and bogged down; and she is achieving this with her mammoth military capacity that, several times more than any other nation, she can project across the globe.

  5. Russia is prepared to go to lengths that her current allies China and Turkey do not approve of, in her pursuit of the war in Ukraine. Russia has declared an intention to undertake referenda within the occupied territories of Ukraine for their to become independent and/or join Russia. Neither China nor Turkey like the precedent this could set, as each has their own secessionist regions whose aspirations for independence they are seeking to suppress and in respect of which Russia's referenda could only fortify.

  6. While China is not genuinely willing to use her (even now expanded) military to engage in Superpower confrontation (Chinese war against the external world, history tells us, might result in implosion of the Chinese central state into regional warring units), Russia does want to use her military for the purposes of direct confrontation with the West, because Russia's long-standing foreign and defence policy is and always has been to push her borders west into central Europe to create a buffer zone against her perennial fear of invasion eastwards from Europe.

  7. To be clear, China has no real imperial goals; she just wishes to maintain the authority of central government over her landmass. The 'belt and Road' initiative is empty foreign policy that China will lose out on and that she would never defend using military means. By contrast Russia is pursuing a policy of endless engagement with what she perceives as her western adversaries. Hence Russian and Chinese foreign policy struggle to be aligned.

  8. In World War II, Russia found coalition with the British navy and the overwhelming US armed forces who, while always slow to involve themselves in European engagements, would eventually do so once they appreciated that the geopolitical consequences of a war were so fundamental that they might impact upon the United States' imagined paradise of isolationism. In World War II the enemy in Europe was the German army, a formidable adversary; and the Japanese Army, likewise. Now, in this second Cold War, both Germans and Japanese are on the side of the West. The Russians surely feel on the verge of flattened should the full western economic and political might be brought to engage them, as is now taking place.

  9. The war in Ukraine is being won by Ukrainian fighters willing to die, now (after several months of equivocation) armed with the best US / NATO equipment available. Although Russia has been making substantial technological advances in warfare since the end of the first Cold War (particularly in missile technology), so has the West. And the West is sending only technology and money; her young men are not dying. Russia is therefore at a strategic disadvantage in this confrontation.

  10. What is left to Russia? Only her massive arsenal of thermonuclear warheads (hydrogen bombs). She has been producing these since the end of the Cold War at far greater a rate than treaty caps; everyone knows so.

  11. While continuous war may be argued to benefit a Russia committed to autarchy (a common theme through Russian economic history), facilitated through higher global prices for hydrocarbons, there will come a point at which China will want to see the global price of both hydrocarbons and other commodities reduced, both of which will require an end to war. China imports hydrocarbons and even with Russian discount deals would prefer the peaceful conditions that permit her to realise her ambitions inherent in the Shanghai Exchange and evolve the sellers' global market in hydrocarbons to a buyer's market. This cannot take place while hydrocarbon global market prices remain artificially high due to Russian conflict with the West.

  12. Conversely, consumer goods inflation seen throughout the West as a result of conflict is not in China's interests, because the fungible nature of China's consumer goods means that at higher prices less will be sold.

  13. For these reasons, Chinese and Russian interests in the Second Cold War must eventually diverge, just as they did in the first Cold War and US President Richard Nixon took advantage of their divergence in his detente policies, to make detente with each of Russia and China but not between the two of Russia and China.

  14. The maintenance of that divergence of interests by the West eventually brought the Soviet Union to collapse and pressed the Chinese Communist Party towards ever greater totalitarianism as a tool of domestic political survival.

  15. In the meantime we have all forgotten America's massive military-industrial complex, which has proven itself in times of crisis to be capable of an overwhelming level of production, far greater as a proportion of GDP than any other country ever (and not just in absolute terms).

  16. What card is left for Russia to play? Only her thermonuclear warheads. But she will not play this card, precisely because it is mindless and ensures her own prompt destruction. Whatever else we may say about Russian foreign policy through history, it is not idealistic and it is premised upon rational self-interest.

In any Cold War scenario, the stronger China, the weaker Russia because an economically powerful China will have incentives to remain so whereas Russia has the will to engage in war that will cause economic losses to China on a geopolitical scale. Now, China is stronger than ever. The consequence is obvious: Russia's Cold War will harm China more than ever before, and hence any suggestions of a Sino-Russian alliance will promptly evaporate when true state interests come into play (as they always do in the end).

For all these reasons, we conclude that the West - the United States and Europe - will have an overwhelming advantage in the strategic battles that comprise the Second Cold War. History, once again, is leaning in the direction of the liberal democracies, for no more straightforward a reason than that for all their faults, delays and compromising bureaucracies, they are better methods of running a country or an alliance of countries.


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