More than a year has passed since the outbreak of the imperialist war in Ukraine, and the NATO propaganda unleashed by the Western governments and media has faced up to the harsh reality. What was to be a turning point for US imperialism and NATO in reasserting its world leadership has turned into a nightmare with tens of thousands of deaths, destruction of vital infrastructure and impoverishment for the majority of the Ukrainian population. The war, desired and pushed by Washington from the beginning, has boomeranged against the West, exposing its decadence.
The situation has become very complicated for the US and the EU. If the sanctions against Russia have failed utterly, the likely prospect of a serious financial crisis, with its epicenter in American and European banking, could be a decisive milestone in the rise of China as the main imperialist power and determining arbiter in international relations. All the catastrophist propaganda about the evolution of the Chinese economy and the "millions of deaths" that would be caused by the rise of Covid is now a thing of the past. Much to the chagrin of Washington and Brussels, even the IMF has acknowledged that China will be the engine of growth in the next five years, accounting for 22.6% of the increase in world GDP compared to the 11.3% that the US will contribute.
Nobody can hide the obvious any longer: we are going through turbulent changes in the inter-imperialist struggle for world hegemony, with decisive consequences in every area of the class struggle. Capitalism is facing upheavals unprecedented since the 1930s.
Unity among the Western allies is cracking
The war in Ukraine cannot be separated from the battle between China and the US. Western propaganda about China's supposed calculated neutrality has been exposed. Xi Jinping's visit to Moscow, and the presentation of his peace plan for Ukraine, has once again demonstrated his intimate rapport with Putin. A relationship that has continued to grow stronger over the last year: bilateral trade has reached a new record high of 200 billion dollars, and Russia has decided to adopt the yuan as its currency in its commercial exchanges not only with China, but also with Asia, Africa and Latin America. A relationship that in the military field is taking solid steps forward, with the holding of joint military manoeuvres and the signing of new collaboration and mutual assistance agreements.
The war in Ukraine had a primary justification for US imperialism: to guarantee its decisive influence in Europe from the military and economic point of view, to discipline its allies, and to break the strong links that in recent years have been woven between the European economies - most notably Germany - China and Russia. But the strategy has ended in a resounding failure: China has continued to advance in its economic penetration of the old continent, to the point that trade exchanges will reach almost a trillion dollars a year by 2022.
But it is not just Europe. The Beijing regime is taking a giant leap towards becoming the new backbone of world politics. This is evidenced by the recent Chinese-sponsored agreement to re-establish diplomatic relations between two historic enemies: Saudi Arabia, which until recently was a strategic partner of the US, and Iran, the object of all the ire of US diplomacy. The Middle East map is being reshaped under Chinese leadership, but this is not the only problem for the State Department. The recent visit to Beijing by Brazil's President Lula Da Silva, who not only took a firm stand with China but also directly accused the US of 'fuelling' the war in Ukraine by backing Putin, is another major blow.
All this is not an anecdote, nor is it apart from the growing divisions between the US and some of its European allies, notably France and Germany. French President Macron, on his last trip to China, pointed to the need to guarantee Europe's 'strategic autonomy' to avoid being 'trapped in a crisis that is not ours', explicitly pointing to the need to distance itself from the US.
On a different level, if the rupture with Russia has dealt a heavy blow to the German economy, in the case of China the consequences would be colossal[1]. "With a foreign trade of 297.9 billion euros last year, China has been Germany's largest trading partner for seven years in a row... A study by the Kiel Institute showed that disengagement from China would be very costly for the whole of Europe, but especially for Germany, given the strength of its economic ties. The institute's calculations, based on 2019 GDP, showed that Germany could lose revenues of more than 131 billion euros, and even more if China retaliates.”[2]
As time goes by, the war in Ukraine only multiplies the rifts between the allies, to the point that a country as reliable as the Polish government, along with Hungary and Slovakia, has banned the import of Ukrainian grain in defence of its own farmers, hitting one of the few sources of income still available to Zelensky's government and effectively undermining its military capabilities.
The same can be said of other key allies such as South Korea, where the opposition leader has raised the need for pragmatic, collaborative diplomacy with China, criticising the US-Japan military agreements as a threat to the region[3]. South Korea is the world's second largest producer of semiconductors, 50% of which it sells to China. Hence its refusal to join the Biden Administration's trade sanctions against China for the time being, having set a one-year extension for their possible implementation.
The rise of the yuan
The President of the European Commission, Ursula Von Der Leyen, one of the most loyal and submissive representatives of US imperialism, has unambiguously pointed out that China intends to change the international order in order to become "the most powerful nation in the world". She is right.
A good example is the growing strength of its currency, the yuan. Shortly before Lula's visit to China, where he publicly questioned the use of the dollar as a global currency, both countries announced their intention to trade in their respective currencies, abandoning the dollar. This announcement is in addition to the one already made by Saudi Arabia, within the framework of a "comprehensive strategic partnership" agreement with China, to trade oil in yuan, and which the Asian giant intends to extend to the rest of the countries of the Gulf Cooperation Council (Kuwait, United Arab Emirates, Bahrain, Qatar and Oman), having already made the first purchase in yuan of 65,000 tonnes of LNG from the UAE through the French multinational Total! In the last year, China has signed trade agreements with the yuan as the currency with Iran, Iraq, Turkey, Belarus, Indonesia, India and Pakistan.
The rise of the yuan as an international reference currency has soared 64% since 2020, from being the eighth currency in 2019 to the fifth in 2022, and accounting for 12% of the foreign exchange reserves of all central banks, compared with 29% for the euro and 43% for the dollar. Paradoxically, as US Treasury Secretary Janet Yellen has pointed out, the sanctions against Russia have been a turning point, generating a growing distrust of the US and its currency[4]. This bleak picture can be summed up in the following quote from Bloomberg: "The dollar's share of global reserves fell last year at ten times the average of the past two decades as countries sought alternatives after Russia's invasion of Ukraine triggered sanctions (...) The dollar has lost about 11% of its market share since 2016 and double that since 2008."[5]
China has also become the world's creditor for years, and its loans of 843 billion dollars exceed those of the World Bank, the IMF and the Paris Club combined[6]. But it is now, in a context of crisis and indebtedness, that it is bringing its enormous financial power to the table in order to consolidate its geopolitical dominance vis-à-vis the international financial institutions still controlled by the US and the European powers. As Jay Newman, former manager of Elliott Investment Management, one of the world's largest investment funds, points out: "There is now a big state creditor with the power to dictate terms and the patience not to do a deal if it doesn't suit them. It has completely changed the rules of the game"[7].
The US is losing the war in Ukraine
The recent massive leak of Pentagon documents has confirmed what was already an open secret: that we are facing a war promoted, financed and directed by the US, and that despite the disbursement of almost 200 billion euros by Washington and its allies to arm the Ukrainian army and sustain its economy, and despite the intense propaganda to justify NATO's intervention, the Western bloc is losing the war[8]. This is already openly recognised by one of the main mouthpieces of US imperialism and the CIA, the Council on Foreign Relations, in an article in its journal Foreign Affairs [9]:
"However, for all the good that increased Western military assistance would do, it is unlikely to change the fundamental reality of this war, which is heading for a dead end... Even if the West increases its military assistance, Ukraine is far from defeating Russian forces. It is running out of soldiers and ammunition, and its economy continues to deteriorate... it would be foolhardy to stubbornly pursue a complete military victory that could prove pyrrhic. Ukrainian forces have already suffered more than 100,000 casualties and have lost many of their best troops. The Ukrainian economy has shrunk by 30 percent, the poverty rate is rising, and Russia continues to bomb the country's critical infrastructure. Some eight million Ukrainians have fled the country, with millions more internally displaced. Ukraine must not risk destroying itself in pursuit of goals that are likely to be beyond its reach... Maintaining Ukraine's existence as a sovereign and secure democracy is a priority, but achieving that goal does not require the country to regain full control of Crimea and the Donbas in the short term....".
Recent information uncovered by journalist Seymour Hersh has revealed that both the Ukrainian military leadership and the Ukrainian government, in addition to being dominated by Nazis and ultra-right-wingers, are a bottomless pit of corruption. The Ukrainian economy collapsed by more than 30% in 2022, but Zelenski and his closest associates, according to CIA estimates, are making a fortune thanks to the 400 million dollars of diesel purchases from Russia with money provided by the Americans!
"The issue of corruption was raised directly with Zelenski at a meeting last January in Kiev with CIA director William Burns. His message to the Ukrainian president, an intelligence official with direct knowledge of the meeting told me, was straight out of a 1950s mafia movie. Senior generals and government officials in Kiev were angry at Zelenski's greed, Burns told the Ukrainian president, because 'he was taking a large share of the dirty money that belonged to the generals' (...) Burns also presented Zelenski with a list of thirty-five generals and senior officials whose corruption was known to the CIA and other members of the US government. Zelenski responded to US pressure ten days later by publicly firing ten of the most ostentatious officials on the list..."[10].
We are faced with another tangible proof of the nature of the Ukrainian government, of its completely reactionary and corrupt character, and its complete subordination to Washington. The fact that from the reformist left, and even from some sectors that claim to be Marxist, attempts are being made to cover up this imperialist war with progressive motivations, such as the defence of democracy or the national liberation of Ukraine, is a real absurdity.
Putin is the representative of a capitalist and Bonapartist power that has nothing to do with either socialism or communism. On the contrary, his Great Russian chauvinism is the external programme of the Russian capitalist and imperialist oligarchy rising from the ashes of the USSR. But to think that Putin alone is responsible for the war is either astonishingly naïve or in total bad faith. No. Those responsible for sending tens of thousands of young Ukrainians to the slaughter are Zelensky and his masters in Washington, who knew perfectly well what they were doing when they launched an all-out war in 2014 against the population of Donbas and Luhansk that has caused thousands of deaths, when they sabotaged the Minsk agreements, and when they openly proposed Ukraine's entry into NATO and its expansion across the Russian border. Their permanent provocation was not accidental, not innocent. They prepared for war and have faced the war. Blowing up Nord Stream, in what would have been a blatant act of war against Russia, and against one of its supposed allies -Germany- was part of this strategy.
Now, after a year of atrocious conflict that has sown destruction in Ukraine and lined the pockets of the big Western arms companies, the energy and oil multinationals throw up their hands in horror. But the fundamental point Hersh makes in his latest articles is true: the US has no exit plan for the conflict, as it did in Iraq and Afghanistan.
This uncontrolled drift has made the US an increasingly unreliable power, even for many of its own allies, making it the main factor of instability in world politics. Hence the increasingly bleak prospects for victory in Ukraine, and the growing divisions within the US state apparatus and ruling class over how to end the conflict.
On the other hand, Russia, whose motives in this war are also imperialist, has managed to consolidate its territorial gains in eastern and southern Ukraine despite suffering heavy casualties and committing numerous military blunders. In recent months it has erected 800 kilometres of fortifications that make any kind of counteroffensive and advance by the Ukrainian army, whose morale is increasingly battered and whose ammunition and supplies are increasingly lacking, very difficult. Time is running against Ukraine and US imperialism, and the later a negotiated solution is accepted, the worse the outcome will be for both.
Footnotes:
[1] Volkswagen has 40 factories in China and BASF, Germany's leading chemical multinational, has another 30. For this reason, its top executives accompanied Scholz on his recent visit to Xi Jinping.
[2] As U.S. Tries to Isolate China, German Companies Move Closer
[3] Military alliance with US, Japan 'will deepen regional' tensions: South Korean opposition leader
[4] Yellen says sanctions may risk hegemony of US dollar
[5] Dólar pierde estatus de moneda de reserva a ritmo precipitado
[6] It is a space for discussion and negotiation between official creditors and debtor countries, with the following 22 countries as permanent members: Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, the United Kingdom and the United States.
[7] How China changed the game for countries in default
[8] As the Washington Post noted on 8 March: "The war has exposed the inability to rapidly ramp up production of many weapons needed for Ukraine and for U.S. self-defence". A reality that has been confirmed by secret US military documents that point to the growing shortfalls of the Ukrainian army and the difficulties of the US and its allies to make up for them. This has been the case with the 200 tanks that were to be provided, which have still not arrived, or with artillery shells: Ukraine needs 250,000 a month but the 12 factories that Europe has only produce 650,000 a year.
