2 February 2024

Un year has passed since the start of Russia’s invasion of Ukraine and there are no signs that the flames of war are going out. Why does the war continue? Why are military tensions rising globally? We reject the thesis of a “Clash of Civilizations”. On the contrary, we must recognize that the contradictions of the deregulated global economic system have made geopolitical tensions more acute.

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One of the worst flaws of the current system is the imbalance in international economic relations inherited from the era of globalization. We are referring here to the net financial situations of the States in relation to each other: deficits for various Western countries, including Great Britain with liabilities of nearly 1,000 billion dollars (945 billion euros), and especially the United States with a negative position towards the rest of the world which exceeded 18 trillion dollars; while various Eastern countries have accumulated foreign claims, including China with assets of over $4 trillion, according to International Monetary Fund statistics.

For a long time, China and other Eastern creditor countries have used their financial assets to provide low-interest loans to the United States and the West. Conversely, the United States, although in financial deficit abroad, acquired quite profitable Chinese and Eastern companies. The result was somewhat paradoxical: the large Chinese creditor recorded annual net outflows, while the large American debtor recorded annual net receipts from abroad. This anomaly no longer suits Eastern creditors, who now want to use their net assets to also make profitable acquisitions of Western companies: a new trend towards the “centralization of capital”, but this time in the hands of the East.

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To counter this trend, the United States and its main allies abandoned their previous enthusiasm for unregulated globalization several years ago and adopted a policy of “friend shoring”, that is, an increasingly pronounced protectionist closure against goods and capital from China, Russia and much of the non-aligned East. The European Union joined in this protectionist shift led by the United States.

This is a significant change, which contrasts with the opposite trend of China and others, who, although starting from strongly protectionist positions, gradually increased free trade until they were allowed to enter the World Trade Organization rules system.

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