Last week we discussed the main themes of the G7 Summit in Japan. The final communiquereleased at the summit reflected those themes, in particular the commitment by G7 countries to a) support Ukraine “for as long as it takes” against Russia’s “illegal war of aggression;” b) strengthen nuclear “disarmament and non-proliferation efforts;” c) enhance economic resilience and security that is based on diversifying supply chains via “de-risking, not de-coupling” from China;” d) drive the transition to cleaner energy economies; e) launch the Hiroshima Action Statement for Resilient Global Food Security; and f) deliver the goal of mobilizing $600 billion in financing for quality infrastructure through the Partnership for Global Infrastructure Investment (PGII), i.e. the Western equivalent of China’s BRI.
The summit was dominated by the presence of Ukrainian president Volodymyr Zelensky, as well as other leaders who have recently expressed a more neutral position towards the war in Ukraine, such as Brazilian president Ignacio Lula da Silva and Indian Prime Minister Narendra Modi. In the past, India processed Russian crude oil and diamonds, while Brazil refused to sell ammunition to Germany as it could be used to help Ukraine. The FT reported that Zelensky directly confronted these leaders, asking them to more forcefully condemn the Russian invasion of Ukraine.
In Europe, 75,000-80,000 people have participated in Moldovan president Maia Sandu’s rally in Chisinau in favour of an expedited accession to the EU, to prevent further Russia interference in the Moldovan region of Transnistria, which borders with Ukraine and is already controlled by the Russian army. All this is happening while the Russians announced that, after months of conflict, their troops managed to conquer Bakhmut, which was considered a strategic position. President Zelensky admitted that the city is now only in the “hearts of the Ukrainians.”
Meanwhile, the G7 issued its strongest condemnation to date of China’s position regarding the war. They asked China to intervene with Moscow for a withdrawal of troops from Ukraine. They also criticised Beijing for its militarisation of the South and East China seas, and for its economic coercion of South-East Asian countries. G7 leaders also called for a peaceful solution to tensions across the strait of Taiwan.
Perhaps in response to all this, China has decided to ban the products by Micron, the US largest micro-processor producer, from key infrastructure projects, citing a national security risk. This is the mirror image of what the US has done in the past to semi-conductors produced by Chinese companies such Huawei and ZTE.
All of this suggests that the hot war between Ukraine and Russia, which in our opinion is the first proxy conflict of the new Cold War between US and China, will continue unrelentingly, with all its open fronts: the trade war, the tech conflict with its various battlefields (big data, AI, cyberwarfare, Regulatory Technology and Central Bank Digital Currencies) and the balkanisation of global supply chains.
In the absence of an effective forum for global governance (the UN Security Council and the G20 are both polarised between US and China), regional fora such as the G7 (for the advanced economies) and the BRICS+ (for emerging markets) are the only occasions in which these issues can be discussed at a global level.
