From guest author. Author Glenn Diesen is from Norway. He studied in Australia and in St. Petersburg, earning a PhD in philosophy in Australia and in social sciences in the Netherlands. He first taught at universities in Australia and is currently a professor at the NRU Higher School of Economics in Moscow, considered one of the top three universities in Russia.
The term “geoeconomics”, which is central to the book, can be defined as “power politics using economic means with special consideration to geographical realities”. Geoeconomic policy aims to create a network of multipolar economic relations from which one’s own country should of course benefit to a particular extent, but which must nevertheless offer advantages to all parties in order to be sustainable. It is to be distinguished from Geopolitics, which relies on political power and often also on military power.
Diesen’s analysis takes its starting point in the influential Heartland Theory developed by the British geographer Halford John Mackinder and presented in 1904. It was then further developed by the influential American political scientist Nicolas John Spykman. The Heartland Theory has significantly influenced famous US foreign policy makers such as US presidential advisors Zbigniew Brzezinski and Henry Kissinger, as well as some presidents, including Ronald Reagan.
Divde and rule
According to this theory, Eurasia is the real power centre of the world (“heartland”) because of its enormous resources of population, energy and raw materials. Maritime great powers outside Eurasia, such as Great Britain and later the USA (“Rimland”), would therefore always have to strive to prevent a geo-economic integration of Eurasia by using a “divide and rule” approach in order to maintain their geostrategic supremacy.
It was the decline of the Silk Road as an economic network in Eurasia around 1500, which enabled the rise of the West in the form of the British Empire and later the USA. Since then, the Western superpowers have tried to nip any attempt at geo-economic integration of Eurasia in the bud and to dominate the continent from the periphery.
With the re-emergence of China as the economic powerhouse of Asia and the rapprochement of China and Russia, the geo-economic integration of the great continent so feared by the US government is now taking place. It comes with an accelerating loss of power for the USA, which it is desperately trying to reserve it by all means. According to Diesen, the USA “has strategic interests that are diametrically opposed to economic ties between major Eurasian land powers such as Russia, China, Germany and Iran”.
Ronald Reagan said in 1988*: “Basic US national security interests would be threatened if a hostile state or group of states dominated the Eurasian landmass – the area on the globe often referred to as the Heartland of the world.” And just recently, Wess Mitchell, the US State Department undersecretary currently in charge of Europe and Eurasia, emphasised*:
“Preventing hostile powers from dominating the Eurasian landmass remains one of the most important national security interests of the United States.”
Brzezinski defined the relationship of the USA to other nations in his book “The Great Chessboard”: The three main goals of hegemonic geopolitical strategy, he said, were to “prevent alliance agreements between vassals and maintain their dependence in security matters, to ensure the willingness of tributaries to pay, and to prevent barbarians from banding together”. And Paul Wolfowitz, US Deputy Secretary of Defence under President George W. Bush, defined the regions at stake as “Western Europe, East Asia, the territory of the former Soviet Union and Southwest Asia”.
During the time of the first Cold War, the focus was on containing the Soviet Union. The Soviet Union, as a communist country in a capitalist environment, had made the mistake of neglecting its geo-economic ties to its neighbours. Its strong geopolitical, but not geoeconomic, orientation as the largest military power in Eurasia had forced the USA to build up an enormous and costly land army in addition to its fleet, which was necessary to achieve and maintain its position as a world power. The Russian Federation, as the successor state of the Soviet Union, has switched from a geopolitical to a much more effective geoeconomic strategy. The USA, on the other hand, has stuck to its focus on military power, but has changed its approach: Instead of balancing the powers on the Eurasian continent from the outside, they now see Eurasia as a “big chessboard” on which they should get directly involved with their their military.
USA threatened with financial overstretch
The enormous costs of their military apparatus with its 1,000 bases worldwide are threatening to overburden the USA economically. Maintaining “global hegemony has become a financially unsustainable undertaking in view of the rising debt and social inequality” in the USA, writes Diesen*. A new situation has arisen in which the US, but also the EU and Japan, have accumulated debt at unsustainable levels, while China, Russia and other emerging economies are the main lenders. The USA has embarked on the road to bankruptcy.
Washington is nevertheless resisting any reorientation of its foreign policy towards geo-economic strategies and continues to see military power as the central instrument for preserving the “unipolar moment” in world history that began with the demise of the Soviet Union as the second superpower. The focus on military power, neglecting the preservation of domestic prosperity, has even become more entrenched after the end of the Cold War. The interim approach of marginalising Russia and China economically through free trade agreements such as TTIP and TPP has been abandoned, according to Diesen.
The United States is trying to prevent or at least slow down the rise of competing power centres – with the result that it is losing control over the emerging international infrastructure, which is now being developed without or against the West. Their aggressive policies have triggered the convergence of their main rivals in Asia. With the economic decline caused by the overemphasis on the military, the US has also lost the option of offering economic advantages to its allies.
Russia abandons goal of Western integration
Russia, on the other hand, has abandoned its almost 200-year policy of trying to integrate into Europe or “the West” at the latest since the American-European-initiated coup in Ukraine in 2014. It had been recognised that it had become too dependent on the West, which had been mercilessly exploited by the West in the period after the collapse of the Soviet Union under the first Russian president Boris Yeltsin. The Russian elite had realised that no political and economic advantages could be gained from a supplicant position. Russia wants to establish itself as a key power in Eurasia and is counting on its land mass to control the transport corridors and to be by far the most important energy supplier to the continent.
In doing so, Russia faces typical geoeconomic problems – for example, that despite the given asymmetry, the country must offer its smaller partners in Asia enough advantages that integration remains attractive for them. Russia is also trying to escape the trap in which many commodity-exporting countries find themselves: It exports oil and gas and has to import all higher-value and more complex goods. Moscow is countering this with an ambitious plan to revitalise its own industry. The USA and Europe are doing their best to sabotage this with the sanctions. Nevertheless, Russia is expected to benefit greatly from Eurasian integration and to develop positively in the future. Russia must, however, strive not to lose out in its relationship with its extremely important, but economically much stronger partner China.
China, on the other hand, has abandoned its policy of the past decades to modernise its economy internally and to keep a low profile externally so as not to jeopardise this modernisation. The country is now using its industrial overcapacity and enormous currency reserves in a neo-mercantilist policy. Under the slogan of the New Silk Road or “One Belt, One Road”, China’s sources of raw materials and sales markets are to be diversified. China’s leadership feels increasingly uncomfortable in its relationship with the USA and is aware that it is currently still losing out bilaterally. Both the huge current account surplus and the high debts that the US has in China make the Middle Kingdom vulnerable. This is already evident in the current US-China trade war, but could become much more acute if the US does not pay its external debt or devalues it through inflation, according to Diesen. Beijing is increasingly interested in breaking away from its unfavourable dependence on its main debtor.
Unilateralism of the EU
For German readers, Diesen’s comments on Europe’s position are particularly relevant and interesting. The EU is a “bureaucratic and regulatory superpower” that allows access to its enormous market only by accepting discriminatory conditions and has thus created a network of asymmetrical power relations from which its member countries and large corporations profit to a particular degree. Asymmetrical power relations also exist within the EU, where the large and economically strong member states – above all Germany with its neo-mercantilist economic policy – profit disproportionately.
According to Diesen, the EU is bound to a European unilateralism, just as the USA does on a global level. The EU sees itself as the only centre of gravity in Europe and strives for strongly asymmetrical dependency relations in the form of concentric rings of states with varying degrees of integration into the EU. Russia, on the other hand, as another centre of power with 180 million inhabitants, enormous energy reserves, extensive raw material deposits and its almost endless land mass, cannot be integrated into this system of concentric circles. Attempts in the 1990s and 2000s to dictate an agenda to Russia that would favour the EU and disadvantage Russia in bilateral relations had failed. Diesen criticised that the EU had proved incapable of granting Russia sufficient advantages that would have given stability to the European-Russian relationship. “The EU has thus failed to recognise that in the era of geo-economics there must be a completely new dynamic of external relations,” Diesen said. Like the USA, the EU is still stuck in the era of geopolitics, which is often implemented by military means. The EU has thus become a source of instability, for example by promoting extreme anti-Russian groups in the Baltic states, Georgia and Ukraine. This approach is also dangerous for the EU itself, as external actors such as Russia are pushed to exploit and deepen divisions and divergences within the EU in order to limit damage. However, the EU’s negotiating power is steadily diminishing, since Western Europe as an economic partner has long ceased to be the only option for Russia, which is now oriented towards Asia.
The new Cold War, as Diesen convincingly explains, is based on the rise of Asia and especially China, the greatest redistribution of geo-economic power since the middle of the 19th century. On the winning side are the Eurasian land powers China and Russia, on the losing side the USA as the most important maritime power, which is trying to resist its decline. Europe is also being marginalised: According to Diesen, the rise of China and Russia means that, economically speaking, the EU is no longer in the centre of the European continent as it is at present, but on the periphery of the large Eurasian continent.
The author advises the USA to use its dominant position to help shape a format of a multipolar economic and security architecture that is advantageous for it, instead of relying on unipolarity, which will inevitably be lost. They should also rely more on the carrot and less on the stick, which is more promising. For the EU, he recommends more rationality regarding its dwindling cohesion and negotiating power with external actors such as Russia. The latter, however, admits that there is little evidence of such changes so far. Thus, the new Cold War is likely to continue – until the West eventually comes to its senses.
*Quotes have been re-translated from German.
German version of the book review
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