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News & Analysis

Global Trade Continues To Shift Towards Asia

Tahir Mahmoud

There is a lot more going on than meets the eye in the recent news report of Russia-Iran inauguration of construction of the 162-kilometer railway between the Iranian cities of Rasht on the Caspian Sea and the city of Astara on the border with Azerbaijan. The project would cost $1.6 billion to complete.

In economic, social, and educational policies, it is often the absence of political will which stalls the implementation of sound policies.

Prior to the full-scale invasion of Ukraine, Russia did not have the economic or geopolitical incentives to implement policies which would pull it out of the western orbit. Moscow did not aim to detach itself from the west, whether in economic or geopolitical spheres. It simply wanted to be treated with respect at the table of global decision-making. Putin’s miscalculated invasion of Ukraine ushered a series of economic related events which now compel Russia to permanently detach itself from the western economic orbit.

Occupying a significant chunk of the global landmass, Russia’s dedicated participation in alternative trade and logistics programs countering western economic hegemony would be a prerequisite for the establishment of functioning economic and trade projects outside of western domination. If Russia chooses to remain within the western logistical and economic bloc, via the stick and carrot approach, western regimes could stall most of the alternate trade and logistics programs.

At the moment, and for the foreseeable future, there are no sticks or carrots which the west can offer to pull Russia back into its economic orbit and thus sabotage the formation of an alternative bloc.

Over the past several decades, economic-related events in Africa, Lebanon, Iran, South America, Iraq and Syria show that western regimes do not hesitate to use economics as a tool of collateral damage. Thus, sooner or later there was going to be political push to establish trade routes and economic mechanisms outside of western control. It seems that time has come.

It should be noted that this does not mean that countries which participate in trade and economic blocs led by non-western countries will arbitrarily cut ties with western countries and their economic mechanisms. It simply means that in the new multipolar global order, countries which pursue their own national and geopolitical interests will have an economic outlet to turn to when western regimes decide to use economics as a blackmailing tool.

Logistics and trade treaties over the past two years between Islamic Iran and Russia, in combination with the recent restoration of state-to-state relations between Islamic Iran and the Saudi regime and between Syria and the Saudis add a previously absent incentive into making an alternative economic global bloc functional. This incentive has to do with the Saudi regime’s realization that with its hefty coffers, it can now play the US and make money without Washington’s political patronage.

Riyadh understands that as long as they do not fully back Russia and China’s drive to expel the US from the Arabian Peninsula completely, Washington is unlikely to take drastic steps against the Saudis. This is also partly due to the fact the US no longer has such capabilities.

Over several decades, under American patronage, autocratic regimes in the Arabian Peninsula amassed significant wealth. This is their primary geopolitical leverage in regional and global politics. They only have money to offer which is the key political engine of the US-installed regimes. Ironically, it is this crude aspect that these regimes are utilizing to play against the west-centric global order.

The Washington-propped autocratic regimes in the Arabian Peninsula understand that they are too integrated into the western financial and economic system. The west cannot oust them without causing significant damage to their own economies. This might have been possible five or ten years ago, but not today.

This aspect, along with the Saudis, Chinese, Russians and Iranians launching trade and logistics projects outside the established western networks will further regionalize global trade and reduce the economic sanctions leverage of NATO regimes.

The geographic aspect of the recent Iran-Russia deal combined with Saudi money and Chinese economic and political influence makes the grand aims of the railroad agreement between Russia and Iran a lot less susceptible to economic and political sabotage.

Also, the Saudi regime’s accessibility to western financial systems and the west’s need for Saudi cash for the smooth functioning of its overall system, the new emerging blocs will be able to capitalize on current financial and economic systems in place. This will not allow western regimes to choke the newly formed economic blocs in their infancy.

The formation of alternative logistics and trade systems outside of western dominance to fully mature will take time. They will not be able to deliver huge economic benefits immediately. Their results, however, will be long lasting, as their primary economic drivers are infrastructure projects combined with trade among markets that are similar in purchasing power and interests. Infrastructure is key here, as it boosts productivity and eases the daily lives of ordinary people in very tangible ways.

Two of the key beneficiaries of the alternative trade and logistics mechanisms will be Syria and Turkiye.

Examining the Syria-Russia economic alliance in March of this year, Crescent International noted that post-war countries are often attractive places for infrastructure investment. This was witnessed in Germany and Japan after the Second World War. This narrative is pushed by even NATO regimes about the war in Ukraine. Most western countries, led by the US, are salivating at the prospects of “rebuilding” Ukraine when the war ends.

The war in Ukraine is also creating an economic leverage for Ankara. It is turning itself into a logistical and transactional bridge between western economies and Asia. By playing both sides economically and politically, Turkiye is making itself indispensable to both blocs. Russia and the west need Turkiye to continue trading in a face-saving way and Ankara only stands to benefit from this set-up politically and economically.

This mechanism, however, will deliver only limited results if Islamic Iran is not incorporated into it. Both Moscow and Ankara understand this. Without Iran, Turkiye’s reach into Asia will be limited. Also, without Iran, Russia will lack the political and economic insurance from Recep Tayyip Erdogan’s duplicitous conduct in politics.

In addition to signing a transportation deal with Russia, Islamic Iran signed a preferential trade agreement with Indonesia as well on May 23. The key aspect of this agreement as reported by Reuters being the “countertrade mechanism which eliminates the scarcity of the currency aspect.” In layman’s jargon, this means that Islamic Iran and Indonesia are putting together a mechanism which will bypass the US dollar in bilateral trade. This is another important economic step in creating mechanisms of global trade outside of western control.

These facts once again point to the emergence of a new era in global trade and economics where developing countries will have far greater say. Unfortunately, old hegemons do not easily accept new realities to try and accommodate the interests of others. Instead, they are scheming to preserve their dominance. This approach will undermine the already troubled western economies.

Article from

Crescent International Vol. 53, No. 4

Dhu al-Qa'dah 12, 14442023-06-01

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