The balance of international influence just shifted – hard


Many readers may not have paid much attention to the meeting last week of the Shanghai Cooperation Organization (SCO).  That would be very short-sighted, because a number of developments there demonstrate a significant, possibly permanent shift in the international perspective and alignment of the nations of the world.

One of the most interesting aspects to come out of the meeting was the visibly changed relationship between Russia and China.  Thanks to international sanctions against Russia for its invasion of Ukraine, Russia has basically had to kowtow to China, acknowledging its economic and political leadership.  Peter Zeihan summarizes the situation in a less-than-two-minute-long nutshell.  I highly recommend watching it.

That puts China in a very strong position vis-a-vis Russian client states and its sphere of influence.  In so many words, that is moving rapidly to become a Chinese-dominated sphere of influence, with Russia just one more among the nations involved.  The situation also holds long-term implications for China’s interest in the vast, largely untapped natural resources of Siberia and the Russian Far East.  In return for its ongoing geopolitical and economic support, China can will demand (and get) significant concessions in those areas.  If I lived in Siberia or Russian territory east and south of it, I’d start learning Chinese right now, because I’d know I’m going to need it sooner rather than later.

The main thrust of the SCO meeting, however, is its demonstration that many of the nations of the world are sick and tired of the Western-centric, First-World-oriented politics and economics of the past.  As the First World economies of the west decay, other nations are looking east for their salvation, and a new beginning.  Given China’s rapacious economic neo-colonialism in Africa (there’s no other way to adequately describe it), that may be unwise of them – but frankly, they don’t have much alternative right now.

Larry Johnson shares his thoughts.  I find it hard to disagree with him.

I am certain that most Americans do not have a clue what transpired this week at the meeting of the Shanghai Cooperation Organization (aka SCO). It is a clarion call, a defiant declaration, that the countries, which account for over half of the world’s population, are no longer going to defer to the United States. The attendees included Russia, China, India, Turkey, Iran, Pakistan, Egypt and Saudi Arabia.

The speeches by Russia’s Vladimir Putin and China’s Xi Jinping are especially noteworthy. Both countries put the United States on notice that the United States and NATO will be treated as a sponsor of terrorism because they supply weapons to Ukraine that are being used to attack civilian targets. You may accuse me of exaggerating because neither Putin nor Xi mention the United States or NATO by name. But the actions of the NATO allies in Ukraine are seen by both Russia and China as acts of terrorism. I am reprinting the salient portions of each speech below.

Russia and China also put the west on notice that Iran is no longer going to be treated as a pariah state. Iran is welcomed emphatically by both Putin and Xi as a member of the SCO. Going forward, this means that Iran will do business with all members of the SCO under the rubric of a new financial order being organized by Russia, China, India and Brazil.

I am sure this is jarring news to the western allies. They have enjoyed the luxury of the dominance of the U.S. Dollar as the international reserve currency. It was the Golden Rule at work–those with the gold make the rules. The United States faces a dilemma because it insists on levying international sanctions on any nation or leader who refuses to toe Washington’s line, but the blow back effects of those sanctions are savaging the European economies and will hurt America as well.

China and Russia now realize and affirm that the United States is no longer a reliable, trustworthy partner. They see the United States as a petulant child that, in the past, coerced others by throwing temper tantrums and launching ill-conceived, foolish foreign military operations.

Most important, but not said, the leaders of the SCO realize that Washington is leaderless. Biden is a demented buffoon.

. . .

In the past, the United States controlled the ball and set the rules for the game. The countries of the SCO are no longer going to let the United States dictate where, when and how the game is played. They are bringing their own ball and setting up their own rules … There is a new and potentially more powerful player on the world stage and the United States may be relegated to the peanut gallery and forced to watch.

There’s more at the link, and it’s all worth reading.

Note the names of the countries involved.  India… Turkey… Iran… Pakistan… Egypt… Saudi Arabia… all of them are regional powers in their own right.  Iran, in particular, is virulently anti-US and anti-Israel.  All of them now have a much more powerful international base of support.  Terrorism from Iran and Pakistan (both hotbeds of it) is likely to expand along with their economic ties.  Furthermore, the raw materials produced by these nations, which we need as much as anybody else (e.g. lithium for batteries, oil and other fuels, vital industrial minerals, etc.) are more likely to be sold to other nations than to ourselves.  (We can expect many such trades to be conducted in other currencies, too.  The US dollar is on the cusp of losing its status as the preeminent international reserve and trading currency.  For example, Saudi Arabia is discussing selling oil to China in exchange for renmimbi, and is talking to India about accepting rupees as well.  So much for the petrodollar…)

Worse, Israel surely now realizes that Iran will feel empowered to act upon its oft-repeated promise to destroy the Jewish state, because it will no longer feel constrained by American threats.  It now has a counter to them – or so it will presume.  Will the feckless Biden administration act to protect Israel from this existential threat of destruction?  I have my doubts.  So, I’m sure, does Israel.  I’d say the likelihood of nuclear war in the Middle East just increased greatly – and if that once begins, where will it stop?

The geopolitical map is changing right before our eyes, and not in our favor.  My best guess is that the western powers (what used to be called the First World) are about to see a significant reduction in their influence and pre-eminence around the world.  I don’t think our governments – or the World Economic Forum and its acolytes – are prepared to acknowledge just how damaging that might be to our interests.  The WEF in particular has been trying to reshape human society in terms of its Great Reset program.  I rather suspect that program has itself just run headlong into its own SCO-centric reset.  Will the WEF acknowledge that, or will it still try to force its program upon the world willy-nilly?  I don’t think it’s any longer in a position to do that – except in the west, where our governments have been largely co-opted into lock-step obedience.

Interesting times . . .



  1. I believe the Russians still have some "unequal" treaties with the Chinese from the 19th Century. The Chinese will most certainly want to revisit these as well.

  2. We're not able to export our inflation either. I think the FED realizes this as Powell was actually a student in one of Paul Volchar's classes.

  3. I'm trying to figure out where to put some cash right now. I don't have storage for bulk goods and none too confident in the stock market. Probably not enough $$ to move offshore but it looks a lot safer.

    Interesting times …

    1. Permanent portfolio or Hussman or Rawles tangibles investing good for ideas… Get maintenance done and spare parts deep for all your stuff too.

  4. Always with the Israel…

    They've got nukes. Plenty. They stole their first batch of raw material from the USA, come to think of it.

    They've got delivery systems.

    They know every underhand and dirty trick of statecraft and cloak and dagger in the books. And more.

    Let them defend themselves.

    Iran has never done anything to hurt me or mine.

    And no, I am NOT my Brothers' (sic) (who thinks, anyway, that I'm disposable 'Cattle') Keeper.'

    Really, the only thing the people of the USA should be thinking about is what to eat in the next 12 months and how to replace their government and governing 'elite' so as to not be hated and despised by the rest of humanity. Israel shouldn't rate in top 10 issues.

  5. Peter…

    Why are you quoting – and quoting quotes – of totalitarian government pronouncements as tho they are serious beliefs instrad of politically-correct propaganda?

    As you wrote of your own experience in high-security institutions, there is nothing more common than criminal thugs inventing excuses for their own actions and blaming their victims and “the system”.

  6. China “believes” that the Chinese are racially superior, that Communism is politically and economically superior…. and that their race and political system should rule the world, or a large chunk of it.

    If anyone thinks we should kowtow to their “opinions” without doing any critical comparisons , then we had better shut down this blog and cease engaging in any criticism of authority at all.

    Or maybe just move to China and put your mask on.

  7. When the Nazis came for the communists,
    I remained silent;
    I was not a communist.
    When they locked up the social democrats,
    I remained silent;
    I was not a social democrat.
    When they came for the trade unionists,
    I did not speak out;
    I was not a trade unionist.
    When they came for the Jews,
    I did not speak out;
    I was not a Jew.
    When they came for me, there was no one left to speak out.

    Friedrich Gustav Martin Niemöller on the gradual oppression of opposition in Nazi Germany..

    Or there is the Churchill line that an “appeaser” is one who feeds others to the crocodile, hoping that it will eat him last.

    That is how American isolationists appear to this US-ally.

    You claim to not care about Ukraine, Taiwan or Israel. An Australian might wonder whether you are a fair-weather friend. A historian and economist might wonder how secure the US might be, if would-be superpowers are permitted to rapaciously absorb other nations until they gather the resources to build a military that can challenge that of an isolated America.

    Isolationists seem to have forgotten one of their own founding principles – the one about hanging together if they are not to be hanged separately. There is a reason why – for all the difficulties and expenses involved, you have a “United” States, instead of 50+ small nations.

    Oh and incidentally, the “not my brother’s keeper”, was the excuse used by a jealous, murdering fool. Someone who would rather see his brother dead, than pay the price of being good himself. It’s still an excuse, not a reason. .

  8. I agree that we're seeing a divorce between "the West" and China/Russia and I agree that Russia is now China's bitch. But I don't think this is going to work out as well for the Chicoms as they imagine (though I certainly don't think it's going to do the Russians any good).

    There are a ton of problems, starting with the basic one that there's only two practical routes into the PRC from Russia for raw materials – both branches of the Transsiberian Railway (one direct at Zabaikalsk and one via Mongolia). You can have all the airy fairy agreements you want, but that doesn't help the transfer of goods between the two nations. The transfer isn't helped by the fact that Russia uses broad gauge and China uses standard gauge and that, to the best of my knowledge, the line in Russia is single track in most places

    Yes there are cross-border roads. They don't work for mass good transit because there are no long-distance road routes to the relevant bits of Russia. Also Russian roads uniformly suck.

    Theoretically Russia can direct oil and gas to China instead of Europe. But that will require new pipelines that don't exist right now. There's 1 (one) gas pipeline and zero (0) oil pipelines at present

  9. China is backing away from Putin, and India's PM is throwing outright shade at his Ukraine adventure.
    The alliances of convenience are becoming inconvenient.

  10. Look here, PeterW, Old Mate…

    You're bloviating about Muh Fine Moral Principles which you simply cannot afford to have. Unless you would blithely destroy all those you love and your fellow Australians to boot.

    Two dozen Chinese cruise missiles into power station step up transformers and some strategically-chosen switchyards and DC-DC links would put your entire country back into the Stone Age. You'd be reduced to cannibalism within two months. Have you looked lately at how many gasoline refineries there are in Australia? Guess where all your gasoline comes from?

    Oh… those big transformers the size of a house and more… Want to take three guesses where they are manufactured? News flash: you can't pick one up at Costco — not even if you're a VIP member. Guess what the lead times are like even when you're not at war with the supplier nation? Longer than it would take you to write out Soylent Green 10 million times with a calligraphy brush jammed up your posterior.

    The simple, brutal truth is that the best thing that Australian can do is come to a modus vivendi with the Chinese. So all this nonsense about They Came for This and That and I've got a boner for Anne Frank is a waste of oxygen. Makes you feel good and maybe look good. But it's all distractions.

    The Global American Empire is dying and you'd be a fool to go down with the ship. Of course I wish Peter Grant and all Americans of good will well… they're not responsible for their criminally insane government and its death throes. Don't get me wrong.

    But It's not 1985 anymore. Wake up.

  11. "We may see Biden go into history as the President who oversaw the decline of the US"

    Or her death altogether, if Putin on the Ritz follows through with his recent nuclear threat.

  12. Aesop spouts Cold War thinking and not watching the behind the scenes work.

    Russia is selling oil to China and India at a good profit and doing it quite well. One of the methods for oil to China is ship to ship transfers on the high seas. It's perfectly legal and the Chinese are not paying in dollars. The Indians are happy to purchase Russian oil too. Consider also, that the majority of heavily populated nations are not going along with the US/EU sanctions against Russia. Instead, those nations following the sanctions are shooting themselves in the figurative foot.

    Ziehan loves his platform of geopolitics; however, his thoughts on the world today don't hold up when examined closely. Previously Zeihan postulated that the US with the natural resources available here would manufacture everything we need. That is pie in the sky as it will take years to get the basic machinery working again producing consumable articles in the US. Also, he ignores the fact that young working age Americans won't work, don't know to accomplish simple tasks or how to use simple hand tools.

  13. Dave,

    Life moves pretty fast. You should try and keep up.
    I'm telling you China and India's positions from yesterday.

    You're talking about five months ago.

    One of these things is not like the other.

  14. Thanks Aesop. You are still thinking from the Cold War days. It shows in your posts on other blogs and it shows here when you only have invective rather than ideas or useful thoughts.

    Peter: Yes, Russia is supposed to be selling at a discount but none of us really know the price and we don't know if the Chinese sales are gold backed as Russia and China have discussed gold backed exchange for several years. India and China both are selling the oil at good prices; however, Russia is still doing really well instead of being economically destroyed as the sanctions were supposed to do.

    Before the Nord Stream turbine fiasco, Germany was reselling gas to Poland. Other EU countries were doing similar swaps to make everyone happy with a tiny bit of gas. Now, EU fertilizer production is down 75%, aluminum smelting down 25%, industrial activity overall down significantly. In southern Europe, one aluminum company shut down because the cost of production was four times the selling price for aluminum ingots.

    Russian rubles are still strong while the Euro is slipping. Russia isn't as bad off as the media tells us.

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