Reacting to Putin's war in Ukraine is arguably the most urgent priority facing our senior officials. Reuben Steff warns that we must prepare for the long-haul.
Comment: The Russian invasion of Ukraine in February this year marks the dawn of a new era. The world faces emergencies on an array of fronts - and given our interdependency with that world, so do we.
The broad contours of this new epoch - or even what we should call it - are not fully clear but I want to identify some of its nascent features. I believe that reacting to it is arguably the most urgent priority facing our senior officials and we must prepare the state and nation for the long-haul.
The first is that an economic ‘world war’ of sorts has been launched by the US and its allies that seeks to carve Russia out of the global economy. While the IMF predicts that Russia’s economy will decline by 6 percent in 2022 as a result of Western sanctions, this is much less than original estimates.
The reason for this is that a truly global front has not been assembled. While the unity of the broader West’s response has been impressive, major countries and economies like China, India, Brazil, and much of the developing world, have not fully bought into the sanctions campaign against Russia.
Vladimir Putin's Russia is not isolated. Putin has recently been welcomed at the BRICs meeting; has worked with Turkey and Ukraine to free up Ukraine wheat supplies and just finished a major diplomatic trip to the Middle East while Russian Foreign Minister, Sergey Lavrov, is presently on an African tour.
There is a deeper point here - while in the shadow of US global dominance most nations may have followed the Western sanctions campaign not long ago, in an era where an increasing number of alternative centres of power and economic heft to Washington exist, many nations no longer feel they have to abide by Western demands. As such, it could prove difficult to fully isolate and decisively economically cripple nations, even aggressors, in coming years so long as they have resources non-Western nations covet.
A second feature of the epoch is that Russia and China are allies in all but name as the former’s invasion occurred only weeks after Xi Jinping and Putin announced a “no limits” partnership characterised by multiple deepening levels of co-operation and joint opposition to the expansion of US alliances.
The signals are loud and clear that a new, more uncertain, dangerous and unpredictable phase of world history upon us. We must react with urgency and analyse the world based upon the realities - not against the shibboleths of the past.
Since the invasion, China has not been willing to provide military assistance to Russia (here the threat of US sanctions may have featured) but imports from Russia to China have hit records highs and Beijing has reaffirmed its diplomatic support for Moscow’s security concerns.
The third is that Germany and Japan will be ‘back’ as major geopolitical actors in the coming years. Consider Germany, in response to Russia’s invasion, has renounced its post-World War II pledge against sending offensive military equipment overseas and set up a ‘special’ €100 billion fund to rebuild its military forces. Its defence spending will now permanently be above 2 percent of GDP. Japan, emphasising its concerns over Russian-Chinese cooperation last week, will now forgo setting an annual ceiling on defence spending and seeks to break free from its pacifist constitution.
The fourth, detailed in Peter Zeihan’s new book, The End of the World is just the Beginning: Mapping the Collapse of Globalization, is that globalisation is slowing down and primed for ‘collapse’. He asserts the past 30 years are the best we’ll ever have seen for globalised trade as the US loses the naval capacity (and political willingness) to retain dominance across the high seas. As its ability to protect the critical shipping routes that ensure the free-flow of global trade declines, alternative spheres of influence will emerge as major nations fill the vacuum.
This will mark heightening levels of interstate competition and compel major states to reorient global supply chains towards home regions. A more fractious world order will result - and a more expensive one - as states seek greater levels of self-reliance. Security concerns will trump economic expediency.
If Zeihan’s scenario ends up being even halfway correct, then globalised trade as we’ve known it will not survive.
The above contours and prospects of de-globalisation overlap onto a range of already-existing and disruptive global trends and crises rocking the global system and undermining New Zealand’s security and prosperity.
What does all this mean for New Zealand? In short, we should expect more surprises and global shocks more often in the years to come.
What can we do? At the rhetorical level we must encourage diplomatic efforts to resolve geopolitical disputes between Russia and China and the US and its Western allies. Ardern did this at her recent speech at the Nato summit and she shouldn’t hesitate to find as many instances as possible to make this case. In fact, she should be more ambitious with her proposals (a discussion I’ll save for another time).
Some will critique us for being naive, but if New Zealand stops promoting the cause of peace and diplomacy, then the world will truly have entered a bleak period.
Perhaps most difficult for us psychologically, fiscally and bureaucratically, New Zealand must also engage a major effort to consider our level of resilience to recover from future global shocks. At the end of the day, we are the only ones that truly care about this nation.
Some researchers, such as Matt Boyd and Nick Wilson, have already begun considering major risks to New Zealand. This can offer insights for how we should start preparing now for catastrophic or less-than-catastrophic but immensely disruptive events and trends.
The Ministry of Business Industry and Employment (MBIE) is proposing to release a public consultation document on whether New Zealand should increase the minimum level of onshore fuel stockpiling (a no brainer) and if we should take up the call of Sir Peter Gluckman, former Chief Science Advisor to the PM, to release a public version of the Government’s classified risk register.
This, we are told, contains “the most significant threats and hazards New Zealand faces, and are regularly reviewed by the agencies responsible for the risk, to reflect the changing risk landscape”. Surely it makes sense for the public to have this information so they aren’t caught completely flat-footed in the years to come.
But we need more - and we need it urgently. It is one thing for a small scattering of researchers and ministries to be just starting to think about these issues now. We need a thorough, deep and broad platform of research to be launched by the government (call it ‘The Aotearoa New Zealand National Resilience Initiative’?) in conjunction with academia and industry into how the cross-cutting trends, crises and conflicts in this new epoch - and which are all-but-certain to deepen in this decade - mean for New Zealand and the immediate actions we should be taking now to prepare for them.
As I’ve previously suggested, while complete self-sufficiency for New Zealand is not realistic, investment in select domestic manufacturing capabilities would appear prudent, and increasing our storage capability in a wide number of critical areas (strategic fuel reserves as indicated by MBIE, pharmaceuticals, fertilisers, basic food gains, etc) would appear essential.
The signals are loud and clear that a new, more uncertain, dangerous and unpredictable phase of world history upon us. We must react with urgency and analyse the world based upon the realities - not against the shibboleths of the past.
Ultimately, we will need to answer difficult questions and pay more to ensure the resilience and security of the nation in the years to come.
