Is the War in Ukraine a Tipping Point in World Diplomacy?

Since the end of the Cold War, the world thrived under the protection of America as the lone superpower. Despite the conflicts in the Middle East, a certain calm entered the global psyche. Europe was finally at peace. European men only learned about war from history books. And Russia embraced capitalism.

Russia shattered European peace on February 24th by invading Ukraine. Sadly, Ukraine was already involved in a proxy war with Russia since 2014. However, the full-scale invasion changed everything: thousands were killed, millions of refugees fled, massive sanctions, and a unified EU rallied around the Zelenskyy regime¹.

There can be no doubt that the war has permanently changed the dynamics in Europe. Germany began militarization², military spending across EU has skyrocketed³, and NATO deployed thousands of troops to its Eastern front⁴. But is this war a global turning point? Is the post Cold War era over?

Historical Tipping Points

Nobody could have predicted the tipping point triggered by the 1914 assassination of Archduke Franz Ferdinand of Austria⁵. Not only did it trigger WWI, it forever changed global politics. In less than four years, the Russian, Turkish, and Austro-Hungarian empires crumbled. Even the victors suffered devastating losses, which France never mentally recovered from⁶. Germany showed its military might but was humiliated by American intervention and the Treaty of Versailles⁷.

Obviously, that one gunshot wasn’t the cause of WWI, but it was the spark that tipped the balance of power forever. It may be centuries before a tipping point of that magnitude occurs again. However, many claim that the war in Ukraine represents the end of the Petrodollar, and some claim the end of America’s unipolar moment⁸.

Military Strength

Before looking into the currency issue, I believe the more important question concerns military might. Here the Russians have failed miserably. If anything, the war illustrates the total lack of preparedness of the Russian military. Kiev is roughly 100 miles from Belarus and only 150 from Russia, yet the Russian military struggled with basic logistics, like supplying food, fuel and ammunition⁹.

If Russia can’t even conduct a successful war a couple of hundred miles from its border, then clearly it doesn’t pose any real threat to America’s dominance. I was firmly against America’s wars in the Middle East since the 2003 invasion of Iraq. However, regardless of the politics surrounding these invasions, it should be clear that the US military can project power anywhere in the world and easily conquer opposition armies.

If anything, I believe this war only strengthens America’s international standing. Whatever the result of the war, Ukraine will be armed to the teeth with American and allied weapons. Prior to the war, many questioned whether NATO was obsolete. Donald Trump famously criticized NATO, especially Article 5¹⁰. Now it seems NATO’s mission is stronger than ever. Even neutral countries like Sweden and Finland are considering joining the alliance¹¹.

Petrodollar

The dollar’s dominance, however, is another story. “Petrodollar” is a term, usually used as a pejorative, to describe the usage of US dollars to settle international purchases of oil¹². Some claim using the US dollar for oil purchases artificially props up the dollar, and the US economy in general. There is plenty of evidence for this claim, like massive holdings of US stocks and bonds by oil exporting nations¹³.

The real question, however, is the degree to which oil props up the dollar. Some think the effects are so large that American foreign policy is driven by maintaining the status of the dollar. These people site America’s invasion of Iraq shortly after it dumped the dollar for the euro¹⁴. I have no doubt that control over Middle Eastern oil fields is a vital national interest for the US, but highly doubt the Petrodollar is the primary driver of foreign policy. Whatever your thoughts on Iraq or the Middle East, oil settlements surely lifts the value of the dollar.

Down But Not Out

Since the invasion of Ukraine, America sanctioned Russia with the clear goal of destroying its economy and its currency, the ruble. Global sanctions initially tanked the ruble and shocked supply chains. However, since then, the ruble rebounded to its pre-war value versus the dollar¹⁵. Despite European threats, Russia continues to supply the continent with nature gas¹⁶. Russia also shifted grain export towards China, who clearly doesn’t want to get in the middle of the conflict in Ukraine¹⁷.

Russia’s resilience is both surprising and revealing. It is surprising because America usually has no problem destroying the economies of opposition regimes. US sanctions injured Iran’s economy so much that until very recently they had to import gasoline¹⁸. Other countries like Cuba, Venezuela, and North Korea have all suffered tremendous hardships because of US sanctions. So what makes Russia so resilience?

China on the Rise

China is the difference. Russia’s survival despite “crippling” sanctions reveals the diminishing impact of America and Europe on the global economy. Simply put, China’s economy is more important, especially with regard to manufacturing and imports of raw materials. As long as China trades with Russia, Putin doesn’t need the West. If anything, this war exposed that Europe needs Russia’s gas and oil much more than Russia needs them.

But does this war represent a tipping point? Will everything go back to normal once the war wraps up? Or has something fundamentally changed? My best guess is NO, not yet. America is losing control, especially in economic terms, but America is still the top dog, by far. When the war concludes, nothing significant will have changed. Ukraine will be a mess for decades to come. Russia will continue to be nothing more than a gangster government with a middling economy and a large, but low-tech military. And China will remain on the sidelines of global diplomacy.

Trigger

So what will trigger the next major tipping point? If not Russia, then who? Of course, nobody can predict the future. However, history has patterns, and eventually the US hegemon will collapse. The most likely culprit will be China. When China is ready to step off the sidelines and get involved in global diplomacy, it will surely trigger a new age. This new age will pit the East against the West for control over raw materials, especially oil.

Many believe China’s first target will be Taiwan¹⁹. But that fundamentally misunderstands the purpose of war. China will not risk a confrontation with the West over Taiwan. Why? Because there is nothing strategic about Taiwan. Instead, I believe China will continue to build its deep-water navy and strengthen its technology. Until it is life or death for their economy, I believe China is happy maintaining neutrality, just like the US did prior to WWI.

Conclusion

Until China’s WWI moment, the American world order will persist. Russia will continue to be an aggressive regional power at odds with the West. Ties between Russia and China will deepen. Ukraine will forge deeper alliances with the West, especially NATO. It is unlikely NATO will ever officially accept Ukraine as a member state. However, NATO countries will arm Ukraine with all of their latest hardware. Ukraine will be a member in all but name. And when the dust finally settles, the world will look much as it did before the invasion.