Welcome to the new transactional world order

Welcome to the new transactional world order
The world was divided into developed countries that believe in values and the emerging markets that are just trying to get by. Now everyone is a deal maker and values count for less. / bne IntelliNews
By Ben Aris in Berlin March 21, 2025

Welcome to the new world order. Values and liberal democracy is giving way to a world run on the basis of deals. The West has dominated the unipolar US-led hegemony since WWII but has lost its mojo. The right-makes-right approach to international affairs adopted by the fast-growing leading emerging markets is spreading around the world and the West is increasingly powerless to counter it.

Only a few months ago the world was characterised as being split into two camps: the West and China. But since the war in Ukraine started things have become a lot more complicated. Now with the arrival of Donald Trump in the White House the global rules-based international order has been tipped on its head and has rapidly given way to a new set-up: a transactional multipolar world. The values-based order is not dead, but it is sick.

In the space of little more than two months, political scientist Stewart Patrick argues that Trump has revolutionised US foreign policy in a way not seen since Pearl Harbour in a paper for Carnegie Endowment for International Peace. He identifies ten major changes:

·        An abdication of US leadership and responsibility

·        A mindset of sovereignty on steroids

·        A denigration of the West – and US alliances

·        A revival of spheres of influence

·        A dismissal of international law

·        A preference for bullying bilateralism

·        Repudiation of economic multilateralism

·        A disavowal of global development

·        An abandonment of democracy promotion

·        A rejection of global public goods

Trump has pulled the US out of dozens of international organisations that represent liberal values such as the UN Human Rights Council and is actively dismantling US soft power tools like USAID and closing Radio Free Liberty and VOA. At home Trump has openly attacked values-based legislation like America’s Equity & Inclusion (DEI) laws and institutions. And he has destroyed the trust of the US’ oldest and most loyal allies, threatening to annex Canada, Greenland and Panama, and slapping painful tariffs on the EU and other trade partners from liberal countries. He is even threatening to pull out of Nato, which has undermined European security, as no one believes that the US will come to the EU’s aid anymore if Russia invades the Baltics or Poland.

Most shocking of all, Trump appears to have abandoned Ukraine, demanding it pay for the war by signing away its mineral rights, and more recently, handing over control of its nuclear power stations. On the other hand, he has gone remarkably soft on Russian President Vladimir Putin and made it clear that he wants to do business with Russia and is prepared to ease the sanctions as part of the deal.

Ukraine has been fighting a bitter war against Russia for three years in the name of defending the liberal values that are enshrined in Article 2 of the EU’s founding treaty. "The war in Ukraine is a war in general for values: life, democracy, freedom. So this is a war all over the world," the Ukrainian president said only a few days after Russia invaded his country. But in the space of a few weeks Trump has dumped values for the sake of “America First” and making some money.

Without America’s support, the EU is coming under increasing pressure and faces the possibility of breaking up. Cracks in EU unity have already turned into fissures in the last month. That has been illustrated by the UK-led vague “coalition of the willing” to take over the military support of Ukraine that has been an EU project until now, after several members refused to join or pay for support.

Like Xi and Putin, Trump appears to have largely abandoned the values-based model completely. Canada and the EU have threatened to fight back and impose their own equally painful tariffs on US goods, but Trump seems fine with that. He is pursuing a transactional-based foreign policy where mutual tariffs can be negotiated until a “good deal” is struck. A recent article in the Financial Times concluded that this puts the US closer to the way Russia and Turkey are run than the EU. Even Italy’s far-right party adheres to values more than the US, according to the FT.

Fragmentation from bipolar to multipolar

Trump has thrown geopolitics into chaos and politicians and analysts are scrambling to keep up. The model has changed.

Only last year, it was popular to see the world divided into two poles: the US and its allies, with the EU playing Robin to America’s Batman; and China and its allies and dependents.

Capital Economics described this model as a fractured world with a complicated graduation of loyalties amongst the allies that was evolving over time.

Other analysts preferred a tripolar model where China and Russia were allied, but since the start of the Ukraine war Russia has risen in prominence and avoided simply becoming a Chinese “commodities warehouse” that some predicted.

“The scales have now tipped in favour of the affirmation of three spheres of influence led by the United States, China and Russia. Europe’s place in this system is at best an afterthought, and at worst up for grabs – and division – between the three,” political scientist Rym Momtaz said in a recent paper for Carnegie Endowment for International Peace.

Russia has been actively building up its own network of suzerains in Africa, Eurasia and SE Asia. The two Russia-Africa summits, which were launched well before the war in Ukraine, have been a huge success and Russian Foreign Minister Sergei Lavrov, who turned 75 this week, has been constantly touring the world handing grain, nuclear technology and arms deals to cement these relations with some success.

Still, others stress Iran’s participation in an axis that spans Asia, Eurasia and the Middle East. If it comes to war, then the US could be facing troops across three global theatres that will stretch even Washington’s formidable resources.

Geopolitical patchwork quilt

Another more sophisticated way of cutting the world up is to focus on the rapid development of the proliferating multinational organisations. The pre-eminence of the G7 has been superseded by the G20 that is being mentored by India. At last year’s G20 summit , the 54-member African Union joined the G20, considerably bolstering that organisation's international clout in global affairs. The shift towards the Global South in the geopolitical centre of gravity was highlighted by Trump’s recent offer to the Kremlin to rejoin the G7, which Lavrov turned down, saying it the latter now “irrelevant.”

Russian President Vladimir Putin and Chinese President Xi Jinping have been promoting the expansion BRICS+, which now has ten full members, 17 members in waiting and another 22 countries that have expressed an interest in joining. From the 51 members of the BRICS+ club perhaps only India, Malaysia and Thailand can be described as functioning democracies. Many of the rest, such as Syria, Yemen and Sudan, are basket-cases. However, between them, the BRICS countries are home to 42% of global oil reserves, 50% of gas reserves, 72% of rare earth metals and 95% of their processing. And most importantly of all, nine out of ten people on the plant today live in one of these emerging markets.

But there is a plethora of other organisations that are being developed in parallel to create a patchwork quilt of interlacing relations, most of them excluding the Western powers. China and Russia are both promoting the Eurasian Economic Union (EUU), Shanghai Cooperation Organization (SCO) and its security sister, the Collective Security Treaty Organisation (CSTO). There is ASEAN (Association of Southeast Asian Nations) in the south and Mercosur in Latin America. The Gulf Cooperation Council (GCC) has become more important and Crown Prince Mohammed bin Salman (MbS) of the Kingdom of Saudi Arabia (KSA) has been very active in his region and increasingly on the international stage.

Everyone is friends with everyone. Many countries are members of multiple associations and meet constantly. The majority of these institutions are there to promote mutually beneficial economic cooperation, such as the New Development Bank (NDB, formerly known as the BRICS Bank) and the emerging world’s answer to the International Monetary Fund (IMF). Unlike the EU, none of these organisations have much in the way of a values agenda, but many of them do promote mutual security.

This is an increasingly mobile society that is actively building up non-Western partnerships. Putin and Xi enjoy a “no limits” friendship and have met personally a total of 42 times. In 2024 alone they met three times, including at the BRICS summit in Kazan. Prime Minister Narendra Modi was in Moscow last July to do energy and arms deals with Russia. The Ukrainian ceasefire talks are being held in KSA, as there is a Middle East peace deal component to the negotiations. And Saudi’s MbS and Putin have met in person half a dozen times, and talk regularly by phone.

Coalition of the willing

Against the frenetic diplomatic activity of the emerging markets, the unity of the Western world has been shattered by Trump. He has picked much publicised fights with allies such as Canada and Mexico, but the decades-old special trans-Atlantic relationship has gone sour too.

That has come as a shock for Brussels. Since the end of WWII Europe has relied on the US security umbrella and its “most favoured nation” trading status. But the umbrella has abruptly snapped shut and Trump is threatening to impose a 25% import tariff on all European goods. Europe has suddenly found itself alone with a well-armed and angry Russian bear loose in its Ukrainian backyard.

In response, European Commission President Ursula von der Leyen has launched the ReArm programme to raise hundreds of billions of euros to re-equip Europe’s military. At the same time UK Prime Minister Sir Keir Starmer is putting together a “coalition of the willing” to provide Ukraine with military support.

On March 15, 2025, in an interview with Parisien, French President Emmanuel Macron said that European countries could send up to 30,000 peacekeepers and instructors to Ukraine without Russia's consent to defend the country post-ceasefire.

On 17 March, Starmer's spokesman said that more than 30 countries could join the coalition to monitor compliance with any deal on Ukraine and ensure peace. The politician said that representatives of the countries would meet on March 20 to discuss the "operational phase" of protecting Ukraine as part of a peacekeeping force.

But the whole project remains vague and while 18 countries have voiced their readiness to cooperate, there is still no definite list of members nor any concrete plan of action. Moreover, while the EU has been a key Ukrainian partner for all of the last three years, nine EU countries – not just the publicly pro-Russia Hungary and Slovakia – have said they will not participate in the coalition.

The EU has been entirely excluded from the Ukraine ceasefire talks that kicked off in Riyadh on February 18 and can’t find a way in, said chief of European diplomacy Kaja Kallas on March 17.

"We are discussing this matter with different interlocutors," she said, when asked about potential participation of the Union in negotiations between Russia and the US on a peace deal in Ukraine. "It is right now a really shuttle diplomacy, because there is no negotiation table [which could be used by EU representatives]."

The rationale for countries like Hungary for refusing to cooperate is that it will cost a lot of money they would rather spend at home. The EU would be “economically ruined” if it decides to fast-track Ukraine, Hungarian Prime Minister Viktor Orban said in the wake of an EU summit on March 20.

“Sooner or later, everyone will understand that Ukraine's accession to the European Union at this stage would mean its economic collapse," he said on a morning programme of the Kossuth radio station. The situation is further complicated by impending interest payments on outstanding loans received to stimulate the economy during the COVID-19 pandemic.

"Repayment of a massive loan taken out earlier is on the horizon. In 2027-28, interest and principal will be paid. Calculations show that this will use up 20% of the EU budget – HUF20 forints out of every HUF100 forints," Orban said, adding that taking out new loans is "a bad idea."

So far the countries that have put their hand up to say they are willing to join the coalition include: United Kingdom, France, Germany, Canada, Australia, Finland, Estonia, Lithuania, Latvia, Norway, Poland, Romania, Spain, Sweden, Italy, Czechia, Denmark and the Netherlands.

Those EU countries not participating are: Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Greece, Hungary, Ireland, Luxembourg, Malta, Portugal, Slovakia and Slovenia.

The new map of the West vs Emerging Market allies now looks starkly different from that at the start of the year, when the unipolar world dominated by the US was still in effect. Now the “West” has been reduced to two thirds of the EU and without the US, whereas just the BRICS club has dramatically expanded in the last year alone.

Made with Flourish

KEY:

Blue: member of coalition of willing

Light blue: EU member not participating in coalition

Mustard: full BRICS+ member

Orange: candidate BRICS+ member

Brown: have expressed interest in BRICS+ membership

Grey: neutral

 

Features

Dismiss