The west’s focus on the war in Ukraine risks a geopolitically counterproductive neglect of the urgent problems of the global south.
The representatives of the United States, the European Union and its allies pulled long faces on February 23rd, when, in the vote on the resolution at the United Nations urging withdrawal of Russian troops from Ukraine one year on from the invasion, 32 of the 180 voting states abstained—including many African jurisdictions and influential emerging countries, such as India and South Africa. Despite the diplomatic efforts of the west over the year, there had been no significant change in voting behaviour.
This stance, which is largely incomprehensible in the EU and the US, reflects a new self-confidence among many governments in the global south. They have pursued an increasingly independent foreign policy focused on national interests, strengthened not least by the emergence of new players such as China in recent years. Against the backdrop of pressing problems such as climate change, migration and the food and energy crisis, these countries simply have other priorities.
The predominant focus of the US and its allies on the Ukraine conflict thus does not correspond with their interests. Although many countries across the hemisphere do condemn Russia’s violation of international law, there is no willingness to provide military support for the western alliance.
From the perspective of the global south, there are compelling reasons for this. First, China and, to some extent, Russia are important economic and political partners.
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Secondly, developing countries are disproportionately affected by the economic consequences of the war. These include not only inflated food and energy prices but also shortages in the supply of other important goods, such as fertilisers. And then there are the indirect effects, with the raising of interest rates by the US Federal Reserve and the European Central Bank among others.
The attempt to combat the sharp rise in inflation in the US and Europe through higher interest rates is not only macroeconomically questionable but is also leading to a drastic increase in the external debt burden of many countries in the global south. According to the United Nations Conference on Trade and Development, at the end of 2022 over 90 countries were on the brink of a debt crisis.
In addition, the US high-interest rate policy has led to an appreciation of the dollar against most currencies in the global south. This has resulted in high costs for essentials imports and an increase in the debt burden on national budgets. And when national central banks have to increase interest rates to counter capital outflows, internal financing conditions become more expensive, dampening growth and investment.
The World Bank’s 2023 growth forecast for developing and emerging economies (excluding China) has thus had to be reduced by 1.1 percentage points, from 3.8 to 2.7 per cent. According to the expert assessments, if the US policy continues and there are no preventative, multilateral, debt-restructuring initiatives, there will likely be a strong increase in state bankruptcies in the global south this year and next.
The geopolitical competition between the US and China is becoming increasingly aggressive. The US policy of technological decoupling from China, through export bans on high-technology goods and the onshore relocation of production capacity, is being pushed forward with large subsidy programmes, such as the CHIPS and Science Act and the Inflation Reduction Act. The EU is heading in a similar direction and is seeking to build up a domestic semiconductor industry with the European Chips Act.
Both the US and the EU are also trying to promote production relocation to third countries. The bargaining offer ‘you support our geopolitical positions against China and Russia and, in return, we support your economy through new production locations and jobs’ might sound attractive: many countries in the global south are certainly interested in direct investments. But most do not want to give up their economic relationships with China. It has become the most important trading partner for most states in Asia, Africa and south America and the costs of a break would simply be too high.
So it is not surprising that most governments in the global south tend towards restraint in the geopolitical confrontation between the US and China. One can hear echoes of the Non-Aligned Movement of the 1950s-70s.
The global consequences of the war in Ukraine are becoming increasingly visible. Ignoring them risks further alienating countries of the global south from the liberal international order. Since the US and the EU need their support in the geopolitical confrontation with China and Russia, this is politically short-sighted—they need to address the concerns of the global south proactively.
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Among other things, David Malpass’ premature departure from the top of the World Bank offers an opportunity to increase significantly the scope for global climate financing and macroeconomic stabilisation, in the face of rising debt burdens, through comprehensive reform of the institution. The Bridgetown Initiative led by Mia Mottley, prime minister of Barbados, has made sensible proposals which should be taken up now.