The current political and economic system is increasingly prone to instability, and that requires greater attention by the world’s leading powers to the creation of new, more robust alternatives at the regional level.

Ukrainian protesters pelted the Russian embassy in Kiev with eggs on June 14, 2014 and ripped up a Russian flag in protest at what they called Moscow's backing of separatist rebels in east Ukraine. Photo: Reuters

In attempting to characterize the modern economic system, one might allege that the entire system of international relations - including both the monetary and financial system – has recently been marked by extensive instability and intrinsic volatility. Indeed, this affirmation would be correct if one considers the frequency of what could best be called political and economic “micro infarctions” that a number of countries, including Russia, have been experiencing for almost a decade.

By this term is meant a set of political, economic and strategic issues which produce a detrimental effect on the system of international affairs on a local level, and which generate a real international deadlock on a global scale. Often, they are transformed into a truly global crisis when they occur simultaneously in different regions. This is especially true after the last financial crisis in 2008 and during the ongoing Ukrainian crisis.

Akop GabrielyanThis phenomenon was exactly the case in 2007-2008, originating as a financial crisis and triggering a whole chain of political-economic uncertainty that included the Georgian-Russian war, the "Arab spring," and then the isolated crises in Iran, Syria and Ukraine. In that respect, it is crucial to give a correct assessment of those processes, which are directly related to the world financial and political system. Describing them will hopefully shed some light on how those “micro infarctions” can be at least reduced in both frequency and intensity.

One of the most notable features of history is its repetitiveness. The ancient, medieval and modern philosophers noticed that any event that has ever happened in a particular historical moment could occur again on a higher level of historical circularity. In that regard, the whole tragicomedy of mankind is that each new generation often disregards the experience of the previous one, making the same mistakes again and again.

This statement is true also concerning the realm of politics and economy, particularly, to organizational aspects of the international economic system. Permanent societal ignorance of the opinion of one’s counterpart in international dialogue, simultaneously with groundless positivism about the 'victorious' overcoming of the Great Depression, in practice led to a new version of the same problems in a more sophisticated dimension. From this perspective, a form of realistic pessimism is underpinned by a widespread political and economic atmosphere of unpredictability. Some leading country that wants to proliferate its own influence across the entire globe, mistakenly thinking that a unipolar world still exists, intensifies this.

In that respect, one can define two fundamental issues of the modern world system and formulate them as two corresponding questions:

1) Can the American economic model that is also exported to the rest of the world still be trustworthy, or does it just postpone the inevitability of international financial collapse that with some degree of certainty will affect all states?

2) How can the European political system maintain its sustainability in terms of the current situation around Ukraine and recent political shifts in Italy, France, and Hungary?

Regarding the first question, needless to say that the modern financial and economic model presumes international unity of all countries under the same common denominator, that is, the American national currency, which has been transformed into a supra-national currency after the Bretton Woods agreement. This kind of model which simplifies any exchange by proliferation of one common currency across the globe and which has already generated a number of troubles has both advantages and weaknesses.

Obviously, the financial system of the United States seems far from being an excellent example for countries with a more or less independent external and internal policy, but for the United States itself the system does present a nearly ideal model of self-sufficiency, as it retains and endorses its own existence through the very fact of own existence. This creates an infinite circle of financial repetitiveness, which in turn, makes infinite the very possibility of printing the dollar. Under these conditions, the notorious American debt ceiling practically can have no limit, because the facing of the limit will mean the immediate loss of the dollar's accountability and credibility almost everywhere across the world. This, in fact, is not something that this world wants, even those states that gradually deviate from the dollar.

However, needless to say that such a house of cards cannot hold forever, as every tiny fluctuation and inclination from the predetermined model of development can drastically affect on each and every actor of international process as it did in 2008. Therefore, the possible solution of this problem may lay in the opinion of the Nobel Prize winner Joseph Stiglitz, who foresaw the inevitability of the dollar's departure from the pedestal of universal supremacy.

Instead of the dollar, it remains a possibility that the creation of a less global and more robust regional models with the dominance of local currencies seems a sufficiently rational option. For instance, the euro can dominate in Europe, the Chinese yuan in East Asia, rubles in the post-Soviet space, and the hypothetical “amero” in North and Central America.

To answer the second question, it’s best to turn to allegorical analogy. Suppose a person feels a minor disease, and he takes appropriate medicine to recover. Imagine also, that in this particular case the drugs do not bring desirable results, albeit a patient continues to take the same painkillers which in some period of time bring him to overdose and, subsequently, to death. If one fits under this example the current European political situation, more precisely, the recent gaining of votes by right national parties in a number of states, it’s possible to come to the inference that this analogy to a certain degree is correct.

Why does mainstream politics gradually lose popularity? Because struggling against political and economic issues with the same technique for a quite long period of time has not led to decent results. People are frustrated of seeing that central political parties in their countries do not produce much change in terms of qualitative improvement and are upset, as it was noted above, of making the same mistakes twice, turning to more radical powers of the right.

This assumption also can be applied to the realm of culture, as it is already obvious that the universal policy of European multiculturalism requires some type of specification and more sophisticated mechanisms of implementation if someone wants it to survive after all. Thus, in order to maintain political sustainability, a clear understanding of the final goal is needed. Europe should understand what it wants and how that desired effect could be achieved, all while escaping the impact of radicalism.

The Ukrainian case in that sense is quite illustrative, as the country's population has remained frustrated for a very long period of time, witnessing a lack or even complete absence of notable improvement. This frustration eventually turned into aggression and originated a sudden collapse of the entire system with a subsequent implosion of radicalism. In other words, the aforementioned internal micro infarctions gained critical mass within Ukraine, shifting the very essence of the problem on a broader level and undermining the state's sustainability.

Now what do these two arguments suggest about Russia as a great power and its ability to become one of the major actors in international relations?

Two inferences can be made: First, it is time to consider the possible creation of an alternative currency for affairs and bargaining on a regional level. The Eurasian Economic Union in that sense can be viewed as a perfect possibility to exercise that action, at least in a mid- or long-term perspective. Secondly, radicalism and those who represent ultra-radical forces should be always constrained in their possibility to affect a country's policy, otherwise a detrimental result, similar to the Ukraine example, will not take long to appear.

All in all, the current international period precisely fits under the model of uncertainty outlined above. It is difficult to evaluate how it will change even in a year, assuming that those micro infarctions will not disappear instantaneously even if some countries do expend decent diplomatic efforts in that matter. Real improvement in both economic and political stability requires efforts from all sides that are truly interested in improvement. Unfortunately, the recent international tendencies do not evidence that.

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.