A new multipolar world is heralding, and Bangladesh cannot ignore its emergence. The war in Ukraine has only accelerated its emergence. But, coping up with the new reality will be daunting task for Dhaka, as its major export destinations are in the Western world, led by the US.
The US has been utilizing every available measure to uphold the current system that is dominated by the US and the West since the end of the Cold War. The system that the US seeks is one based on ideology, wherein the US rules supremely and non-Western nations are viewed as inferior and have to submit to the US.
Since the start of the Russia-Ukraine crisis, the US has actively undermined the UN-centered international system and the international order based on international law in an effort to further its own interests by enlisting allies and other nations to impose sanctions on Russia. The calls for sanctions, was not entertained by all.
While voting with the UN to censure Russia, African and Asian nations did not support sanctions. Due to its partial reliance on Russian resources, India has refrained from taking sides and has benefited from Russian oil shipments at a discount. Most of the Gulf States have worked hard to maintain their neutrality, refusing to up their oil output or even to refer to the conflict as a war. Beijing has continued to assist Moscow cautiously while avoiding any further political or economic intervention. Only handful of Western countries are adhering to the sanctions, and are now facing rippling effects in their economies.
The narrative of a polarized world order
According to conventional opinion, the world was bipolar during a large portion of the Cold War (1945–89), with the US–led Western bloc and the Soviet Union–led communist camp. The Non-Aligned Movement represented “the third way,” France, in its Gaullist garb, frequently followed an independent course, and, following the Sino-Soviet rift, Mao’s China served as the USSR’s partner to rival, particularly after the Nixon-Kissinger team skillfully carried out a great US opening towards Beijing in 1971.
The US experienced its “unipolar moment” in the 1990s, ruling the world without a challenger in sight as the Cold War came to an end with the fall of the Soviet Union. However, this didn’t last long. As the twenty-first century began, the rise of China, the alignment of Eurasian powers under the Russia-India-China (RIC) forum, and the platform of rising economies under BRICS ushered in the bold, new multipolar era.
China-Russia: An Ironclad partnership
Russia urgently required assistance on the global stage in 2014, shortly after taking control of Crimea and in the face of a series of sanctions. In China, it located a ready collaborator. The two nations agreed to a strategic partnership that included high-profile agreements including a 40-year gas supply contract between Gazprom and China National Petroleum Corporation.
Since then, the Sino-Russian economic relationship has expanded. The change has given Russia the opportunity to separate from its Western allies and get ready for new sanctions. Since 2010, China has been Russia’s top commercial partner. Foreign trade between the two nations increased from 66 billion to 147 billion dollars between 2016 and 2021, more than doubling.
Russia and China announced a “no limits” relationship on February 4, 2022, extending their cooperation into the fields of space, climate change, internet regulation, and artificial intelligence. Early in February, the two nations also unveiled a new oil and gas agreement worth over 117 billion dollars.
The multipolar international system now rests on the interaction between China, Russia and India. Even though the unipolar era following the Cold War was merely an illusion for around ten years, the US continues to work to uphold it. However, the existence of China and Russia as two global strongholds that the US cannot penetrate is a fundamental guarantee of a multipolar world.
Dollar hegemony: A tool of US supremacy that is being challenged
Following the imposition of global sanctions on Russia by the US and EU, the developing multipolar world is now attempting to minimize the usage of the dollar in their commerce. In March, the US and the EU disconnected Russian banks from SWIFT, the international financial network that enables quick international money transfers.
Russia asked various nations to conduct trade using their own currencies instead of the SWIFT in response to this viewpoint. As the two nations attempt to preserve their trade in the face of the Ukraine crisis, Russian coal and oil purchased in yuan is likely to begin pouring into China. India is looking into trading using a third currency, while Saudi Arabia intends to sell oil for yuan. These initiatives will significantly lessen international trade in dollars, thus posing challenge to US hegemony, which globalized the greenback for trade on the back of petrodollar mechanism, in short oil for dollar trading system.
How Bangladesh can fit in a multipolar world
In its interactions with more powerful and adversarial nations thus far, Bangladesh has demonstrated diplomatic maturity and poise. A troubled polarization of the region between China and India has resulted from the Bay of Bengal’s recent reemergence of its strategic significance. The US involvement in the Indo-Pacific area has also increased, and Washington is working harder than ever to restrict China by establishing an axis with India in the Bay of Bengal. Bangladesh, an Indian Ocean littoral nation, has assumed a more significant role in these circumstances. In the midst of this escalating geopolitical conflict, it has had to play smart.
Bangladesh is positioned in the center of great power rivalries due to its location on the Bay of Bengal and at the intersection of South Asia and Southeast Asia. Bangladesh must decide how to interact with its major development partners, China, Russia, India, the US, Japan, and Australia, who are organized in competing strategic orbits like the Belt and Road Initiative, the Quad, and AUKUS due to its growing economy and geopolitical significance.
But, after the beginning of Ukrainian crisis, pressure on Dhaka is mounting to join either of the power blocs. The scenario is daunting, since the bulk portion of Dhaka’s export earnings come from the Western markets (more than 60% of 41.2 billion dollars of exports in 2020), and the raw material imports and defense hardware are sourced from China (accounted for 31% of total Bangladeshi imports in 2020), India and Russia. China is engaged in massive infrastructure construction, and Russia is building Bangladesh’s only Nuclear Reactors.
Bangladesh secures assistances from all these blocs for developmental projects. While US led World Bank and IMF gives funding with multiple conditions, Chinese assistances mostly come with zero strings attached. These assistances are used to offset Dhaka’s budget deficits, which are mostly funded by export earnings and remittances sent by migrant workers.
India’s approach towards handling the complexities arising from Ukraine crisis offers lessons to Bangladesh. New Delhi has been sourcing oil, coal, industrial raw materials from Russia at discount rate and in Asian currencies. It is also pledging to join forces with China to lead Asian Century. Bangladesh, an Asian country of 165 million people, will have numerous prospects for economic growth once the Asian Century concept is implement. However, Bangladesh should put in place a few diplomatic measures to ensure a smoother transition from a unipolar to a multipolar world. Dhaka should intensify its economic and security diplomacy in this situation with countries that are close to the US in terms of trade and security, particularly with Japan, European countries, and Turkey. Besides, the nation ought to look for drawing opportunities in Central and South-Eastern Asia.
In order to reap full benefits of this change in financial order, diversification of currency basket is a must. However, Dhaka has to change diplomatic and financial gears in pushing trade in widely acceptable currencies like Dollar, Yuan, Taka, Riyal, Rupee, Ruble etc. to be at par with the situation. This will encourage external trading in alternative currencies to secure dollars from outflowing.
Dhaka has to apply deft touch in diplomacy in order to sustain in this emerging multipolar world, without endangering its economic aspirations. Years of economic growth had enabled Dhaka to step away from the red eyes of Western donors. Heeding to them for safeguarding export markets in the West will be a trap for the country, when new powers are rising on the abyss of unipolar world. Clinging to only western pole for earning will only complicate the country’s very survival.