America vs. Russia and China: Welcome to Cold War II

America vs. Russia and China: Welcome to Cold War II

The Second Cold War is a rematch among the same teams.

The notion that the United States, Europe and Japan, in the early twenty-first century and without Chinese participation, could “lock in” trade and investment rules that China would be forced to obey for decades or generations to come is a fantasy. Measured by purchasing power parity (PPP), China is already the world’s largest economy; at some point in the next decade or so, it is likely to surpass the United States by the other measure, market exchange rates. While its growth rate will slow as it transitions from a developing country to a middle-income nation, China will continue to grow more rapidly than the United States or its allies among developed nations in Europe and Asia.

By 2050, the consulting firm PwC estimates, in PPP terms the GDP of China will be $58.5 trillion—as compared to the United States’ $34.1 trillion and Japan’s mere $6.8 trillion. To be sure, per capita GDP in the United States and Japan probably will still be much higher, and so will the shares of their populations comprising middle-class consumers and workers. But only the most provocative and frightening behavior on the part of China can overcome the steady growth of its economic gravitational pull.

In 2015, when the China-dominated Asian Infrastructure Investment Bank was founded as a rival to the World Bank and Asian Development Bank, both deferential to the United States, the Obama administration pressured America’s allies not to take part. The “special relationship” notwithstanding, Britain led a stampede of European countries into partnership with the AIIB. As Singapore’s Kishore Mahbubani wrote at the time, in an essay entitled “Why Britain Joining China-Led Bank is a Sign of American Decline,”

“The U.S. can no longer dominate world history. A new power has also arrived. The British, like most other middle powers, have decided to hedge their bets and work with China as well as the U.S. But this is also a matter of survival. If London does not serve the financial and economic interests of a rising China, it could become sidelined in the 21st century. Hence, the British have no choice but to work with China.”

What is true for perfidious Albion is also true for most of America’s military allies. America’s European allies in particular cannot be expected to sacrifice their interests in commercial relationships with China, whose growing military power does not immediately threaten them as the presence of the Red Army in half of Europe did during Cold War I. China’s “New Silk Road” initiative seeks to integrate countries as far away as those of western Europe into a new pan-Eurasian economic system. The idea of a Euro-American economic alliance against China is doomed in advance, thanks to the economic self-interest of European nations, looking outside their shrinking or slowly growing economies for foreign markets and offshore labor.

Russia’s acquiescence in a permanent U.S./NATO military presence on its borders and the return of Crimea to Ukraine. On the other side of Eurasia, the United States may also be forced into humiliating retreat from objectives in Cold War II that it cannot realistically achieve.

As part of its bid for global hegemony following the fall of the Berlin Wall, the United States claimed that the very idea of spheres of influence was obsolete. In 2013 Obama’s secretary of state, John Kerry, announced, “The era of the Monroe Doctrine is over.”

Really? Is turnabout fair play? If the extension of the U.S.-led NATO alliance to the borders of Russia is legitimate, would new Russian bases in Cuba be acceptable as well? Would the United States really have no objection to a Sino-Mexican military alliance, complete with Chinese military installations on the U.S.-Mexican border and provocative freedom-of-navigation operations by Chinese warships in the Gulf of Mexico? All of America’s neighbors, including Mexico and Canada, have been invaded in the past by the United States, so China could claim that its North American alliances were purely defensive in nature.

In the future, as in the past, Americans may find spheres of influence to be useful tools of statecraft. Advocates of U.S. global hegemony often equate demilitarized regions between great powers with stepping-stones to imperial conquest. But demilitarized zones and neutral nations like Belgium and Switzerland have always been important in international diplomacy, as one of a number of techniques to avert conflict. In the nineteenth century the United States and Britain, then military rivals, shared the Oregon Territory for several decades, demilitarized the Great Lakes and cooperated with respect to a possible Central American canal.


During World War II, Winston Churchill suggested to Stalin that after the war the USSR should get 90 percent influence in Romania and 75 percent in Bulgaria, while the UK would share influence over Yugoslavia and Hungary with Moscow fifty-fifty and have a 90 percent share of influence over Greece. What caused the Cold War was not the Soviets’ insistence on a lack of offensive forces near their post-1945 borders, but their installation of communist puppet regimes throughout eastern Europe, combined with their high level of militarism and anti-Western foreign policy.

The United States helped keep the first Cold War cold by respecting the Soviet sphere of influence in eastern Europe, refusing to intervene when the Red Army crushed rebellions in Germany, Hungary and Czechoslovakia. During the Cuban Missile Crisis, the Kennedy administration insisted that the Soviets remove nuclear missiles from Cuba—and resolved the standoff by agreeing to remove NATO missiles from Turkey near the Soviet border.


Without admitting that they have done so, the United States and its European allies in practice have already recognized a Russian sphere of influence in Georgia and Ukraine, by shelving plans to incorporate both in NATO and the EU following Russia’s hostile reaction. Russia is no more likely to give Crimea back to Ukraine than the United States is to return Texas and California to Mexico. Any stable settlement of the proxy war in Ukraine will be based on negotiated partial autonomy for pro-Russian regions and the neutralization of Ukraine as a whole. Here, as in East Asia, the only options are negotiated neutrality, power sharing or continuing conflict. Neither Russia nor China, under any conceivable political regime, is likely to accept the legitimacy of U.S. military installations and operations near its borders.

BEFORE FAILURE forces it to do so, the United States should abandon the doomed bid for global hegemony that followed Cold War I and has provoked Cold War II. The alternative should be a geopolitical version of what the philosopher John Gray, in the context of societies divided by incommensurable values, calls a “modus vivendi.”

A global modus vivendi might have a number of features familiar from great-power concerts and diplomatic settlements in the past. There would be attempts at arms control—but not total disarmament, because each great power would retain the right to maintain basic armed forces essential for its defense.

In the new global modus vivendi, spheres of influence and demilitarized zones would be legitimate objects of diplomatic negotiation, in order to reduce tensions among great powers. Small and weak nations might chafe at the constraints on their independence such agreements impose, but their discomfort is unavoidable in a world that, regardless of models of domestic government, will always be organized largely on the basis of hierarchies of military and industrial power.

In economic policy there is also a case for a pragmatic modus vivendi in the place of unachievable grand designs. A global economy governed by a single set of rules, liberal or otherwise, is not possible, and would be undesirable if it were. There has never been a single economic model adopted by all countries, at all levels of development and in all circumstances. During the Cold War, anti-statist America, social democratic Sweden, dirigiste France, economic nationalist Japan, protectionist Latin American countries practicing import substitution and feudal petromonarchies in the Middle East managed to be geopolitical allies. In the generation since Cold War I ended, the so-called Washington Consensus in favor of liberal capitalism was always ignored by successful nations in East Asia. The Washington Consensus will not be replaced by a Beijing Consensus, but by economic pluralism. If countries including the United States find that their national economic interests are better served by bilateralism and “minilateralism,” then there is no reason to lament the abandonment of the project of a single set of rules and regulations for the global economy, a utopian goal that never had any appeal beyond narrow circles of technocrats, lobbyists and academics.