The entire world — or at least that portion free from state-directed censorship — has been mesmerized by the 24/7 reporting on the events unfolding in Ukraine over the last two weeks. A brutal Russian invasion and the valiant Ukrainian resistance in response make for must-see TV; I actually tuned into CNN for the first time in many years. A world that has talked itself into believing we are on the far side of history now finds itself experiencing a surplus of it.
Hot takes from the punditry class abound. In sharpest focus are commentary on the conduct of the war, the factors that gave rise to it, the impact on (and causality of) American and global energy policies and commodity prices, and the humanitarian toll on innocent civilians. Receiving far less attention is a critical question from an American foreign policy perspective: what happens when it’s over?
In the wake of any major world event, the talking heads will solemnly declare that “everything has changed”; in truth, while sometimes things actually do change, more frequently the geopolitical terrain remains consistent with the status quo ante. It seems increasingly apparent that with any result along a conceivable continuum of outcomes, ranging from a complete Russian withdrawal from Ukrainian territory (which may itself entail regime change in Russia) to an outright occupation and annexation of the entirety of Ukraine, the world emerging thereafter will look utterly different from that which came before. Long-held assumptions about a durable and stable world order conducive to commerce and comity among nations will have proven ill-founded.
Before considering how the world will have been changed, it’s important to understand why — and what’s different about the Ukrainian conflict. Major powers haven’t engaged in significant wars of territorial conquest against one another since the end of World War II. While the Iraq/Iran war of the 1980s, the Balkan disintegration in the 1990s, the rise of Islamic State in 2010, and the more recent dispute over Nagorno-Karabakh (to name only a few) were all brutal, full-scale conflicts, even at their worst, they had at most only glancing larger geopolitical implications. The reaction of the world community to the Russian invasion of Ukraine — condemnation by most nations, arrayed against (primarily) Chinese support for the aggressor — confirms this conflict is of a different character.
By contrast, many of the conflicts of the post-World War II era were waged through proxies; the Soviet Union, while rivaling the United States for global influence, was essentially a status quo power following its initial post-war moves to create an “Iron Curtain” or sphere of influence along its western border. U.S./Soviet flashpoints during the Cold War transpired through client states and surrogates, and even after the fall of the Soviet Union, vestiges of the Cold War era have continued to define the nature of great power competition, with engagement and rivalry taking place along commercial, diplomatic, and ideological lines. NATO has survived despite the disappearance of its raison d’etre; the bloc of nations constituting what was previously referred to as the “First World” peacefully integrated Russia and the former Warsaw Pact nations, Vietnam, and (most significantly) China into global commerce; and multilateral institutions including the UN, WTO, and IMF maintained their remit on an expanded stage. The world of 2000 looked much like that of 1950, only larger.
Post-Ukraine 2022 is vastly different. A major power has invaded a significant neighbor without provocation. Economic and other sanctions against the aggressor state are rapidly evolving toward de facto expulsion from the community of nations. The world’s democracies have huddled together rather than maintain strategic equipoise or exploit free-rider advantages; nations including Finland, Sweden, and Switzerland have drawn closer to bodies reflective of their values rather than maintain studied neutrality. The greatest threats to American interests — China, Russia, Iran, and North Korea — are not merely a collection of peripheral pariah states, but bellicose revisionist powers acting along multiple planes (including tech-enabled fifth columns) in pursuit of regional or global primacy. The world is now far less safe than it seemed only two years ago.
In light of a transfigured world, what might one expect from the future? The following are several developments distinct from recent conditions:
The return of nationalism. While the vogue for multilateral action and pursuit of transnational interests (addressing climate change, managing refugee flows, and the like) will remain, a greater appreciation of what constitutes our national interest — and those of our allies — will emerge, as more readily defined in contrast with the interests of revisionist powers.
An overdue reordering of defense priorities. The modern American military is an amalgam of Cold War readiness and the ability to project power regionally (as in the Middle East and Afghanistan), combined with a more recent focus on misplaced national security priorities including climate change and rooting out extremism in the ranks. Look for greater emphasis on shoring up capabilities to counter great power kinetic actions in respect of anticipated hot spots including Taiwan, the Indian subcontinent, and elsewhere.
The reconsideration of what constitutes strategic industries and a secure supply chain. The acceleration of globalization during the post-Cold War unipolar moment lulled the West into believing disaggregated value chains and offshore sourcing of essential resources and products could be enjoyed on the cheap and without strategic consequence. The advent of COVID and the realization that essential pharmaceuticals and PPE might only be available at scale from indifferent or hostile nations was only the beginning of a greater appreciation of the distinction between controlling and contracting for essential goods and services.
Views on foreign ownership of commercial enterprises. Similarly, the advance of free trade and capital flows in an increasingly integrated world established the notion of a corporate world without borders inhabited by multinational corporations of rootless provenance. Americans can expect foreign investment — whether inbound or outbound — to receive considerably greater scrutiny.
A greater value placed on alliances and free trade groupings. A world playing by a single set of agreed rules enables frictionless investment and commerce. Transgressive behavior of a certain magnitude, be it military or economic, can expect to be answered with exclusion from the international equivalent of polite society. Voluntary trade and national security groupings will create “walled gardens” of nations sharing values and interests.
A smaller world than the one to which we’ve become accustomed. Technology and commercial engagement have decreased the perceived distance among nations while widening cultural vistas; what was once exotic or unfamiliar is now accessible at a swipe or keystroke. While nations and cultures will not retreat in full to their respective corners, national interests (as already seen in China) will supersede the leveling impact of global engagement and culture in unpredictable ways.
No one can predict with confidence precisely how the conflict in Ukraine will end. But it seems certain that the world on the other side will look markedly different from the one that preceded it.
Richard J. Shinder is the founder and managing partner of Theatine Partners, a financial consultancy.
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