Challenges for the Next Stage of Globalisation: The Factor of Ukraine

November 01, 2023

We argue that the fight of Ukraine for independence against Russian aggression is the principal event of the modern stage of globalisation.

Ukraine must take into account the geopolitical interests of strategic partner countries in the conditions of global polarization and, thus unquestionably should not succumb to the de-dollarisation.

Globalisation expansion (one factor was the collapse of the world socialist system) characterised by the dominance of the world’s most powerful country — the USA — has accelerated since the beginning of 1990. Today it has however exhausted its potential for comprehensiveness, whilst world politics and economics are acquiring more and more characteristics of the so-called bipolar world [1], giving new features to globalisation processes, and creating new risks and challenges.

At the same time, another feature of the modern globalised world is manifest: even events in small countries whose international influence has traditionally been considered minimal can become an environment for, or at least a catalyst of, global transformations. A typical example is Ukraine. It is not surprising that a significant part of events and processes at both the global and interstate levels is perceived and evaluated through the prism of the Russian invasion, the fight of Ukraine for independence, and the attitude of the world’s countries to this aggression.

In search of a new world order. The USA, the EU, China, Russia, and India have each, during the last decade, shown ambitions to occupy leading positions in world politics and economy. However, post-coronavirus imbalances and the war in Ukraine have provoked the strengthening of depressive tendencies in many countries of the world.

The war in Ukraine, created by Russia, essentially accelerated the strategic existence of two civilisation groups: democratic and autocratic, and ways of coexistence of these two worlds, including the choice of a strategic partner, the values that this partner offers to the world and the acceptable level of compromises between the declared values and economic benefits.

For Ukraine, the war essentially became a change of two historical eras: the country left existence in the post-soviet “family of friendly nations” for the chance of a civilised future. For European countries and European institutions, Russian aggression turned out to be a “perfect storm”, in which the European community, by providing huge assistance to Ukraine, understood the need for drastic changes in European and World security systems, the international division of labour, and global value-added chains for a peaceful future of humanity.

For Ukraine (and many other countries), the world is now divided into two large groups, in essence, based upon how a country treats Russian aggression: to what extent it supports, including with its own participation, sanctions against Russia and how actively it contributes to the exclusion of Russia from international institutions.

Events in Ukraine eased tensions in the distant Asia-Pacific region, which were growing due to the activities of China, particularly its claims to islands and territories in the South China Sea region (primarily Taiwan).

The two largest countries — the USA and China — from year to year not only maintain global leadership, demonstrate considerable economic, scientific and technical achievements, but also form a circle of partner countries around them, the strengthening of ties between which is likely to lead to new institutional alliances or formations. Thus, the environment around the USA already has a rather long history and is formed by the countries of the “big seven” G7 and other developed democracies. China claims leadership in BRICS+ (comprising Brazil, Russia, India, China, South Africa and others), which unites large emerging countries but does not yet have a proper integration history. However, the BRICS countries also do not have significant common trade interests (trade between the countries, with the exception of China, is quite insignificant). This, however, does not reduce the importance and challenges which will arise in the process of BRICSpansion.

Both of these global groups are trying to attract into their orbit other emerging countries or countries that possess rare resources, which in many aspects determine competitiveness. This only accelerates the so-called fragmentegration of the geopolitical world [2], which will probably replace “pure” globalisation.

Regarding the EU, the war forced a review of the attitude towards its own security, including its economic component, taking into account the high economic dependence of the European Union on China. The consequences of such transformational processes were that security priorities became dominant in determining economic partnerships and attention to countering excessive economic (import) dependence (of democratic countries from autocratic countries that possess strategic reserves of natural resources) is gradually increasing.

Events in Ukraine eased tensions in the distant Asia-Pacific region, which were growing due to the activities of China, particularly its claims to islands and territories in the South China Sea region (primarily Taiwan). AUKUS member countries (Australia, the UK, and the US) unquestionably supported Ukraine from the earliest days of hostile aggression. Such unity became a warning signal to China regarding probable aggressive actions, which played a positive role in preventing the development of the conflict in the region. At the same time, China received an unequivocal “economic” warning: its increased support for Russia (in its unjust aggression against Ukraine) will inevitably lead to its “separation” from European and American markets and incentives, and thus — with high probability it will mean the end of the Chinese economic miracle.

The end of dollarisation? Since globalisation accelerated during the period of dominance of the US dollar, it is not surprising that globalisation was associated with dollarisation. Therefore, the (most often not economically, but politically determined) desire of many countries to get rid of or reduce dependence on the dollar (de-dollarisation) essentially “fuels” the processes of fragmentegration.

So why is attention to the processes of de-dollarisation increased just now? High inflation, provoked by the hybrid aggression of Russia on food and energy markets, already starting in the spring and summer of 2022, forced central banks to abandon policies of low (zero) interest rates, which were practiced during the coronavirus period, and introduce instruments aimed at strengthening monetary strictness. The anti-inflationary increase in the interest rates of central banks, first in the USA, followed by most leading developed countries, increased fears in emerging countries. In the long term, these fears are about slowing down economic development, capital flight, washing away reserves, etc. In the short term, they concern the import of inflation and the acceleration of devaluation.

However, the current haste of the BRICS expansion process is due not so much to the economic risks of anti-inflationary policy as to political factors. It is connected with the fact that almost all (old and new) BRICS+ members are supporters of displacing the dollar from the current system of international settlements, from growing trade flows, and from loan and debt capital. This also means that one of the most important goals of the BRICS expansion is the acceleration of de-dollarisation processes [3].

And since the leader of the BRICSpansion is China, there are strong reasons to assert its intentions to strengthen its own presence in international economic and financial markets, which will mean that de-dollarisation will be accompanied by yuanisation.

The first steps have already been taken. Indeed, Saudi Arabia, which owns the largest oil fields and reserves, and China, its largest importer, are moving to international settlements that will be based not on the dollar, but on the yuan. We are talking about the formation of the concept of petroyuans — the creation of financial instruments that can significantly reduce the need for dollars, which will significantly accelerate the de-dollarisation process [4].

Therefore, the successive implementation of de-dollarisation and the spread of yuanisation will require, among other things, a change in the structure of reserves of the country. Will this make the world more financially stable? Remember: traditionally the dollarisation was not unreasonably associated with the political, military and economic power of the United States. Yet, there is hardly any reason to expect similar support for yuanisation in the coming decade. And the world currency, about which at least some economic agents have certain doubts, will rather become a source of instability and losses.

The next steps of de-dollarisation will be related to the elimination of the fundamental factor thanks to which dollarisation has no competitors to date: the SWIFT global system of payments and messages. The most devastating blow to the financial system of any country is the disconnection of this system from the SWIFT network, which will block any foreign economic activity.

China already has created the Cross-border Interbank Payment System (CIPS) bank transfer system that allows payments in yuan [5], and the Chinese system uses SWIFT to deliver messages. At this moment CIPS is not a full-fledged alternative. Indeed, any tool that claims to be global or systematic must first successfully pass the test of time (regarding its reliability, effectiveness, and efficiency).

De-dollarisation will be accompanied by yuanisation. The first steps have already been taken. Indeed, Saudi Arabia, which owns the largest oil fields and reserves, and China, its largest importer, are moving to international settlements that will be based not on the dollar, but on the yuan.

And what if emerging countries achieve the desired goal in terms of “liberation” from dollarisation? On the one hand, the primary “side” effect will be the weakening of the dollar. On the other hand, doubts about the stability of the global financial system will also increase. Moreover, to this day, the dollar, in addition to being an understandable equivalent of values for almost all exchange commodities, performs an understandable function of a “quiet harbour.” Weakening of such harbours, and reducing trust in them will certainly lead to a less predictable and even more chaotic flow of capital between different (short-term) jurisdictions. Of course, in such conditions, the most will be lost by those emerging countries, which, in the absence of financial benchmarks (in particular, dollar benchmarks that have been successfully tested for decades), will not be able to hedge their risks.

The main danger for the world financial system and the world economy is that aweakened dollar can undermine the confidence of international investors in US financial assets (long-term bonds), and later in the dollar as the main reserve currency, and perhaps in American financial institutions as a whole. The absence of a universally recognised reserve currency will significantly reduce the confidence of international investors, therefore — it will affect capital flows, and increase imbalances in the world economy, which will significantly slow down global economic growth.

What do fragmentegration and attempts to extrude the dollar mean for Ukraine? Ukraine has clearly and definitively decided on its own strategic priorities, on the most important partners, and on the values that help the country withstand the military pressure of the Russian aggressor. Therefore, in addition to a clear understanding of its own directions of socio-economic and socio-political reforms, Ukraine must take into account the geopolitical and geo-economic interests of strategic partner countries in the conditions of global polarisation.

Unfortunately, the way many countries of the Global South have perceived the war in Ukraine may indicate that they have quickly forgotten their own recent fight for independence against imperial enslavement and are unwilling to accept the simple fact that the fight of Ukraine is the fight against the Russian empire, the last global empire in the world.

Therefore, politically, the country has the right not to be subjected to various manipulations by those countries that profess their “neutral” view on events in Ukraine. Moreover, the USA is the main strategic partner of Ukraine, and therefore the dollar is the main financial instrument of support. Therefore, Ukraine unquestionably should not succumb to the phantom of de-dollarisation.

At the same time, the fight for Ukraine is in correlation with the geopolitical and geo-economic interests of the strategic partners of Ukraine in the conditions of the polarisation of the world community.

The experience of European integration of Ukraine in the conditions of war has a unique character. On the one hand, by protecting the eastern flank of the EU and NATO from armed Russian intervention, by suffering from colossal human, resources, financial and economic losses, the country has acquired the status of a candidate for EU accession, continues pro-European reforms, and deepens sectoral cooperation.

On the other hand, military and civilian aid to Ukraine will have a greater impact if it is considered by authorities and civil institutions in partner countries not only as a matter of international humanitarian solidarity but also as essential for global and national security. Therefore, the current support for Ukraine, aiming at the victory of Ukraine and the construction of Ukraine as a democratic European country, means — de facto — strengthening the security of partner (primarily European) countries both now and in the future, as well as the establishment of stable peace and prosperity in Europe and in the world.


Yurchyshyn V. Is De-dollarization a Good Thing? —

Korteweg R. “Fragmentegration”: A New Chapter for Globalisation. —

Pozsar Z. War and Currency Statecraft. — Credit Suisse Investment Solutions and Sustainability Global,

De-Dollarization Proceeds Apace. —

Ozanne B. Yuan Clearing & What is CIPS Onshore Settlement. —


Vasyl Yurchyshyn

Director, Economic Programmes

Born in 1955 in Kamyanets-Podilskyi.


T. Shevchenko Kyiv State University, Department of Cybernetics (1977).

Institute of Public Administration and Local Government at the Cabinet of Ministers of Ukraine (1994).

Professor in Public Administration. Author of nearly 100 scientific works.


In 1977–1993, worked at the Kyiv University as an engineer, research fellow and senior research fellow;

1994–1999 — head economic researcher at the International Centre for Policy Studies, Fund for Banking and Finance Development;

1999–2004 — Assistant Professor, Department of Economic Policy of the Ukrainian (currently, National) Academy of Public Administration, office of the President of Ukraine;

1999–2004 — Research Director at the Agency of Humanitarian Technologies, later — Agency for Social Analysis;

2002–2003 — advisor to the Minister of Economy of Ukraine;

since April, 2004 — Professor, Department of Economic Policy of the National Academy of Public Administration, office of the President of Ukraine;

since June, 2005 — Economic Programmes Director at Razumkov Centre.

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