Will Russia, China and India form an economic triad?

By: Dr. Jamal Alakkad

The failures of the West in dealing with the Russian – Ukrainian conflict, in addition to its ferocity of economic tools, are likely to push the global economy towards the inevitability of considering the re-formation of its blocs, including the possibility of creating a Russian, Chinese, Indian economic “cartel.” Could this trinity be formed?

The US could have considered the repeated Russian security concerns regarding NATO expansion. Especially since there is an American commitment not to expand NATO to the East, an organization that negated the character and justification of its existence as a defender of Europe from the danger of the Soviet Union that no longer exists. Yet, the USA did not fulfill what it promised. Instead, NATO continued to live for a different mission-related to bringing “rogue” states to their knees to control the supply lines of fossil energy sources and mineral deposits required to build clean energy tools.

NATO, led by the US and its allies, has kept moving forward to surround Russia until they tried to annex Ukraine to the western ally since 2008. This put Russia in a position to defend its historical heritage and vital interests. As a result, Europe has fallen victim in the middle of a crisis that will cause the continent to rupture, and the world has to prepare itself for the emergence of a new geo-economic bloc.

Days pass while Russia is still carrying out a special military operation – as described by Kremlin – to deter Ukraine from joining the EU and NATO. Meanwhile, the West, led by the US, seriously confronts the assertive (Cyber and nuclear) Russia, only by unprecedented economic sanctions if imposed for a long extended period. Russian President Vladimir Putin considered these sanctions as an act of war.

The problem is that sanction weapon against Russia will not hurt only Moscow but also the EU countries which have not recovered from Covid-19 implications besides the Eurozone debt crisis, inflationary pressures, and their energy dependency on Russian oil (2.5 million BPD) and natural gas (Finland dependence 100%, Germany 49%, Italy 46%, France 17%, Macedonia 100%, Slovakia 70%, Bulgaria 74%), So, the US seems that it forces Europe to hurt itself.

Furthermore, the West sanctions have implications on the European financial system, either directly when European companies take much loss in the mid and long term due to freezing their business in Russia, or by filing for bankruptcy such as suspending Nord Stream 2 gas pipeline, which would be supposed to pump Russian gas to Germany. Many oil & gas companies have been forced to end their 30-year successful partnerships in Russia, including BP. These companies’ officials know well that Russians are likely to find other investment alternatives from China, India, and MENA. In addition, the sanctions imposed on Russia will reflect on other several industries in Europe such as tourism, airlines, food, and manufacturing.

Moreover, the US gets hurt by its own sanctions against Russia. For instance, the sanctions may become a chance that opens the door to form a triple economic alliance consisting of Russia, China, and India (which are non G7 members) to transfer trade strength effect from the Atlantic Ocean to the Pacific, compete with the US dollar, and getting away from using SWIFT global interbank system to another international one. Or leads to depending on cryptocurrency technology as an actual start on a pathway towards a new world trade payment system.

Undoubtedly, Russia will face a complex challenge to achieve its goals, and Ukraine may be only the beginning. However, the EU will also face a challenge that is not easy. As a result, Europe will get fed up with the US political and economic domination. This has become clear when looking at the energy issue and other sectors besides the Ukrainian refugee crisis.

The US is not in a better position, especially with the trust in the US dollar and SWIFT domination shrinking and feared more than the US military power. This has been interpreted in recent warning signs raised by the World Bank, which said that imposing sanctions will have serious implications on the whole world where debts have reached $300 trillion. So, one of the sanctions’ likely results is the creation of an economic triad in the East that will tip the balances.