Eurasian Integration as an Anti-Hegemonic Economic System

Prof. Glenn Diesen at the Conference for Eurasian Security in Minsk

We are living in an era of economic disruptions as US-centric globalisation is replaced by a more decentralised format of globalisation spearheaded by the Greater Eurasian continent. The consequence of these disruptions during this transition period is instability in economics, politics, and international security, as economic coercion escalates into war.

The disruptions to the international economy were predictable—and indeed predicted—for decades. When immense economic power is concentrated in a hegemon, the hegemon has incentives to build trust in an economic architecture under its administration. This translates into an open international economic system with access to technologies, industries, energy, food, physical transportation corridors, banks, currencies, and payment systems. This is referred to as a benign hegemon, as building trust in an open system ensures that alternatives are not developed and the world becomes immensely dependent on the hegemon. Subsequently, globalisation meant Americanisation.

Hegemons are, however, inherently temporary. Over the years, the US economy became excessively rent-seeking, financialised, and debt-ridden as its competitive edge declined. A hegemon makes mistakes and fails to prioritise strategically, as it can absorb the costs—until it reaches a breaking point. Around the world, other countries climbed up global value chains and grew concerned about the fiscal irresponsibility and unsustainability of the hegemonic system.

A declining hegemon will predictably behave very differently. It will use its administrative control over the global economy to prevent the rise of rival centres of power. Economic coercion is the new normal—for example, restricting China’s access to key technologies, seizing Iranian tankers and preparing the establishment of maritime choke points, stealing Russia’s sovereign funds, etc. Trust collapses, and efforts to create a more decentralised international economic system only intensify.

The declining hegemon will also attempt to divide rival centres of power: Germany must be severed from Russia, Russia must be split from China, China should be kept at a distance from India, India should reduce its economic connectivity with Iran, Iran should not resolve its disputes with the Gulf States etc. Markets are captured as the declining hegemon, for example, pushes Europe to reduce cooperation with Chinese technology and Russian energy. As the Europeans and other allies develop excessive reliance on the US, economic and industrial power can be transferred to the US. Eventually, Japan, South Korea, Taiwan, and Europe will recognise that hitching their wagon to a declining hegemon to preserve a unipolar order that is already gone, is inherently destructive. The option is to either diversify their economic connectivity for prosperity and political autonomy, or become captured markets that can be cannibalised by the declining hegemon.

The declining hegemon has—much like its adversaries and allies—strong incentives to embrace multipolar realities. New political forces within the declining hegemon will recognise that pursuing hegemonic policies under a multipolar international distribution of power will be punished by the international system. Exhausting its remaining resources and incentivising the rest of the world to collectively balance against the declining hegemon is unsustainable. The ideal strategy for the declining hegemon is to accept a more modest role in the international system as one among many great powers, reducing collective balancing and enabling socio-economic recovery to rebuild former strength.

The rise of Eurasia marks the end of 500 years of Western leadership and dominance in the world, since European maritime powers began connecting the world in the early 16th century. While some panic in the West is therefore understandable, there are nonetheless great opportunities.

Adam Smith famously wrote: “The discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind... By uniting, in some measure, the most distant parts of the world, by enabling them to relieve one another’s wants, to increase one another’s enjoyments, and to encourage one another’s industry, their general tendency would seem to be beneficial”.

However, Adam Smith also recognised the problems of the skewed power distribution between the Europeans and the rest of the world. Adam Smith wrote: “To the natives however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned... At the particular time when these discoveries were made, the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries”.

Adam Smith argued that a more even distribution of power could create a more harmonious international economy: “Hereafter, perhaps, the natives of those countries may grow stronger, or those of Europe may grow weaker, and the inhabitants of all the different quarters of the world may arrive at that equality of courage and force which, by inspiring mutual fear, can alone overawe the injustice of independent nations into some sort of respect for the rights of one another. But nothing seems more likely to establish this equality of force than that mutual communication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries naturally, or rather necessarily, carries along with it”.

I conclude that the aspiration of Eurasian integration should be to make it anti-hegemonic but not anti-Western by descending into bloc politics.