Testing time for interdependence

THE secession of Crimea from Ukraine and its annexation by Russia is a test of one of the great promises of the 21st century.

The hope was that in an interdependent world, nations that are closely linked to one another economically and to the international order are less likely to go to war against each other. Countries that trade don't go to war, is the popular saying. There is too much at stake, and too little to gain from upsetting the global apple cart.

This hypothesis gained greater credence after the end of the Cold War, and the subsequent globalisation of trade and investment, which brought unprecedented economic benefits to many countries.

So entrenched is this thinking that it is often prescribed as a forward-looking policy option to ensure a more stable and peaceful world.

For example, many people argue that deepening the economic links between China and Japan is the best way to reduce the chances of a major conflagration between the two Asian giants, which have many festering disputes still unresolved.

Perhaps the best example is the European Union, which was conceived after the devastation of World War II to forge closer integration among the countries in Europe to lessen the risk of future wars.

Indeed, Russia itself seemed to embrace this philosophy.

That was why - many pundits believed - it spent an eye-popping US$51 billion (S$65 billion) to hold the recently concluded Winter Olympics in Sochi.

It was a remarkable though expensive coming-out party for President Vladimir Putin, comparable to what the 2008 Olympic Games meant for China.

As the eighth-largest economy in the world, Russia is well-enmeshed in the global grid, and is home to many international corporations.

It had seemed so different from the old Soviet Union, whose tanks rolled into Hungary in 1956 and Czechoslovakia in 1968, indifferent to what the rest of the world thought.

There was no stock exchange in Moscow then and the rouble wasn't freely convertible.

In contrast, the Moscow stock index plunged more than 10 per cent at the height of the military stand-off in Crimea last week, and the Russian currency fell to its lowest level against the US dollar.

Russia has clearly changed, and is as exposed to the vagaries of the international market place as any free-market economy.

Does Ukraine prove this was all a fanciful dream, and that when push comes to shove, the interdependent world be damned?

Will Russia's move lead to it being isolated from the West and forced to carve out its own sphere of influence? Or does it reinforce the interdependent theory, given the limited nature of the economic sanctions being threatened by both the Unites States and Europe?

In fact, the argument cuts both ways. By ruling out any military options and focusing on economic sanctions, the West is tacitly acknowledging a limit to what it can do without putting the world at risk of a major conflict.

But the US and Europe are also divided on how far to go to inflict economic punishment, with Europe reluctant to go beyond visa restrictions and asset freezes.

London, for example, isn't keen to do more because of the billions of Russian money that has found its way into the British financial centre.

Does this prove the interdependent theory works, putting a natural brake even as tensions ratchet up?

For the moment, yes, though it might still be too early to say.

Why then did Russia embark on this risky move?

Listening to Mr Putin on Tuesday, it seems clear that there are issues that Russia considers as part of its core interest, with Ukraine firmly part of it.

"Crimea has always been an integral part of Russia in the hearts and minds of people," he said.

According to an account in The New York Times, he cast himself as the guardian of the Russian people, even those beyond its post-Soviet borders, restoring a part of an empire that the collapse of the Soviet Union had left abandoned.

Russia, he declared, was prepared to defend itself from any further interference in areas it considers part of its core security.

The message was warmly received by the Russian people with one report saying that Mr Putin's domestic popularity had risen to 70 per cent as a result.

The reality is that a large part of how the Ukraine crisis unfolds, and its potential for upsetting international peace and security, depends on how the Russian strongman defines his country's place in the world.

That's both a product of the past - the historical narrative that Mr Putin summoned so forcefully in his speech - and of the future, which is about his vision of Russia in the brave new world.

For us in Asia, the Ukraine crisis is an ominous reminder of the fragility of international peace, especially when countries with complicated histories have problems that touch on their core interests.

The growing tension between China and Japan over territorial issues - and their different interpretations of their troubled past - is the most obvious example.

It is not hard to imagine a future Chinese or Japanese leader invoking the same nationalistic arguments that Mr Putin did to press their case.

Will realpolitik always trump economics? Where core interests are involved, the evidence so far hasn't been encouraging.

For all its interdependence, it is still a dangerous world.

hanfk@sph.com.sg

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