Astana Club Highlights China-US Trade War As A Top Security Risk

Although a temporary truce was declared in the China-US trade war on the sidelines of the G20 summit in Argentina last week, the language used by the two world powers to announce the deal hints at uncertainty regarding the outcome of their trade negotiations, the failure of which could trigger a global trade war.

An international study assessing the global risks threatening the security of Eurasia macro-region in the framework of the fourth annual meeting of the Astana Club ranked the escalation of tensions between China and the US, and full-scale trade wars as top geopolitical risks in 2019.

Leading experts, Nobel prize laureates, acting and former heads of states, politicians and diplomats from 33 countries across continents, who contributed to the deliberations of the Astana Club, warned against increasing protectionism that risks bringing the globalisation era, marked by a 7-decade-long international liberal order, to an end. This would mean a decline in the growth of the world economy, deepening poverty and increasing unemployment, which in turn could lay the ground for terrorism, migration and separatism. Moreover, the economic interdependence achieved during the globalisation era could be eroded by trade wars and sanctions, the repercussions of which would be dire for the entire world.

The largest platform for dialogue in Central Asia, which took place in Astana, Kazakhstan on 12-13 November 2018, highlighted the world’s rising vulnerability due to tensions in the Middle East, crises in Ukraine, turbulence in the South China Sea, and sanctions against Russia, which may be extended to freeze dollar assets of Russian banks and to ban operations with the Russian state debt.

The consequences of the US withdrawal from a nuclear deal with Iran coupled with sanctions against the country (including on oil trade) could further exacerbate the conflicts in the Middle East, bringing it to the brink of a new round of violence between Sunni and Shiite groups. Instability in the wider Eurasian space could be further provoked by ethnic and religion divisions, which are likely to be fuelled by humanitarian crises in Syria, Yemen and Myanmar. The pessimism caused by these factors could intensify the trade conflicts between the US and its key trading partners, such as China, the EU, Canada and Mexico, while the expansion of protective measures worldwide could potentially render the situation difficult to deal with in the World Trade Organisation (WTO).

As the French philosopher Frederic Bastiat once put it, ‘if goods do not cross borders, armies will’. Hence these trends, reminiscent of the inter-war era in the 1930s, are extremely worrying in the wake of the 100th anniversary of the Armistice ending the World War I and its 4 devastating years of bloody conflict. The forerunner of the United Nations (UN), the League of Nations, which was created in the wake of the World War I to achieve international peace and to stop its members from declaring war, had unfortunately failed to avoid another global bloodshed 20 years later.

Echoing these concerns, the Astana Club stressed the need to update international organisations, such as the UN and the WTO, in accordance with the global shift of the balance of powers and the emergence of a multipolar world. Astana, which will host the ministerial meeting of the WTO in 2020, sees the solution to global trade tensions in the creation of uniform and fair rules for trade and investment cooperation under the auspices of the WTO.

The agreements on elimination of intermediate-range and shorter-range missiles and the Strategic Arms Reduction Treaty due to expire in 2021 were also flagged by the Club as two critical issues, which could result in an arms race if they remain unresolved. Moreover, need for a new security architecture, based on the Conference on Interaction and Confidence Building Measures in Asia, to eliminate the mistrust between regional powers and to decrease the geopolitical uncertainty in the Eurasian region (in cooperation with OSCE and ASEAN) was stressed, in addition to calls for a nuclear-free-world.

Albert Einstein had predicted that a world armed with nuclear weapons cannot allow a new blood-stained outcome to begin building a new world order for the third time from the fragments of the old world, as there will be nothing to build and no one to build. Today there are 15,000 nuclear weapons and 2,000 are on high alert according to the International Atomic Energy Agency. Cyber security could pose a major risk for global stability, with power plants, strategic enterprises and e-governments increasingly becoming the targets of cyber-attacks. Losses from the actions of cyber-criminals are growing dramatically and are expected to exceed 1 trillion dollars.

Global stability is threatened by rising populist rhetoric, which uses the practice of scapegoating aimed at migrants, military enemies and, ethnic and religious minorities. Such nationalist and Eurosceptic discourse can already be witnessed in the EU, following the migration crisis, the Brexit referendum and the contradictions between the old and new members of the Union. With the weakening of globalisation, the threat of separatism (i.e. Flanders, Western Catalonia, Scotland) could also become more imminent.

The wider Eurasian space is home to frozen conflicts, such as Eastern Ukraine, Nagorno-Karabakh and Afghanistan. These conflicts could exacerbate relations between major powers, whose interests in the region already diverge over the spiral of sanctions, the escalation of tensions in the Middle East (Syrian crisis, political tensions in Iraq, civil war in Libya), and the renewal of an arms race. The economically fragmented ‘Greater Eurasia’, a term pinpointed by the President of Kazakhstan, Nursultan Nazarbayev, is divided into different political and economic blocs, such as the European Union, Russian-led Eurasian Economic Union, China’s Belt and Road Initiative, Japan-led Trans-Pacific Partnership, and a neutral India with an increased focus on connectedness.

The Astana Club emphasised unifying initiatives, such as open borders for the free movement of goods and people in a Central Asian Schengen, which could contribute to the integration, growth and wealth of the region. The update of the Helsinki Final Act of 1975 (once a turning point in the Cold War) to continue the dialogue on the non-proliferation of nuclear weapons, was another solution proposed by the Club.

Strategically located on the ancient Silk Road, Kazakhstan is an energy hub at the crossroads of Europe and Asia. It is not surprising that the country, bordering both China and Russia and known for its multi-vector policy as well as its international mediation capacity (i.e. Astana process on Syrian peace), is willing to play an active role to avoid trade wars and other global risks by strengthening political stability, economic cooperation and sustainable development in Eurasia and beyond.