Inflection point

An inflection point is a point on a curved lined at which the direction of the curve changes. Ukraine feels like an inflection point in global affairs. All the pieces are in play in a way we haven’t see since … probably 9/11, and before that maybe the fall of the Berlin Wall. How it all impacts on the world is much too early to say, but that there will be an impact is certain.

When Kissinger and then Nixon visited Beijing in 1972, global geo-strategy was a three-way game—the US as number 1, the Soviet Union as number 2 and China a weak number 3. Interestingly, here we are 50 years later, and it is still a three-way game. Then, China and the US aligned to address the Soviet Union, now the perception is of Russia and China having interests that are aligned in many ways. Putin’s expectation, and that of the Center, was presumably that this situation could be wrapped up quickly and cleanly, and it was that expectation they signed up for. But, more than a week in, that is looking less and less likely. The West, and indeed most of the rest of the world, have responded with a solidarity that is unprecedented in the modern era, and in this part of the world, there is the possibility of an exacerbation of negative perceptions resulting from all this.

There is also a lot of talk about how much sanctions will impact in Russia, and the extent to which China can offset that impact. China has an alternative system to SWIFT, for instance, handling international currency transfers. But it remains to be seen how far the Chinese leadership would want to be drawn into sanctions-busting actions, given the potential repercussions. It’s all a nasty set of circumstances for Those in Command, with parallels and choices presenting themselves that they would surely prefer to avoid right now. This year, after all, was supposed to be nothing more than a smooth run up to the 20th Party Congress in October, and they surely hate having their fate to some extent being conjoined with, or influenced by, that of Mr Putin, especially if he is going to have trouble prevailing.

Still, the role of the honest broker is one that China could conceivably fill, if it put some distance in, but so far that does not look likely. On the other hand, the Asian Infrastructure Investment Bank (AIIB), of which China is the largest shareholder, announced it had decided to block all projects involving Russia. So who knows? Maybe some movement is possible. It depends to some extent on how nasty things get in Ukraine over the next few days.

Have a good weekend in the weak spring sunshine.