People carry wooden boards to cover the windows of a...

People carry wooden boards to cover the windows of a building damaged by a bombing the previous day in Kyiv, Ukraine, Monday. Credit: AP

Roughly half the U.S. population has little or no memory of the Cold War. Which is good; life ought to be lived without the existential dread of mushroom clouds.

Yet for many of us growing up in the West, the Cold War period was actually better than any time our ancestors experienced. We enjoyed economic growth, access to high-quality health care and education and jet-powered trade and travel. Plus peace, even if predicated on mutually assured destruction. In the post-Cold War years, when roughly half of today’s population was growing up, things turned positively fantastic. Economies boomed as trade barriers fell and Chinese manufacturing hit its stride. And there was the internet and on-demand everything. Plus peace, even if marked by occasional terrorist attacks and the odd faraway war. Nuclear weapons remained, of course, but came to seem like relics.

Russia’s attack on Ukraine marks the end of all that and the beginning of a new normal — or, rather, a shift back toward the old normality.

“What we think of as normal is actually the most distorted moment in human history,” writes Peter Zeihan, a geopolitical analyst, in his forthcoming book, “The End of the World Is Just the Beginning.” As the title suggests, this is not a happy read.

Zeihan’s central premise is that the globalized world now ending was founded on a bribe. In the aftermath of World War II, the U.S. offered access to the only functioning industrialized market of any scale — its own — with free trade policed by the only navy still capable of doing so — its own — and security guarantees for key allies in Europe and Asia. In return for this opportunity to recover, the other countries had to set aside their historical squabbles and imperial ambitions and support the Americans’ strategic priority: containing the USSR.

There had been an earlier era of globalization, in the decades leading up World War I. But that one stemmed from technological advances in shipping and communication rather than a true embrace of multilateralism. Back then, trade was dominated by the competing empires that ultimately clashed in 1914.

The decisive break from history at the end of World War II happened because its unequivocal victor, the U.S., declined to subjugate defeated enemies and broken allies. Instead, it used direct aid and economic access to rebuild them. And other countries, too. With free trade secured, otherwise economically marginal or previously insecure regions (except those aligned with Moscow) could develop, selling to and buying from a global marketplace. Without this peculiar order in place, it is hard to imagine a Singapore or even a Saudi Arabia — and definitely not a Ukraine — as sustained sovereign actors.

Weird as this was, its persistence after the USSR collapsed was even weirder. As the American bribe became harder to justify, the U.S. eventually ended up with a president who rejected free trade, openly denounced NATO allies as moochers and reveled in the old style of great-power politics.

Russian President Vladimir Putin’s attack on Ukraine, combined with a changed White House, has reinvigorated the U.S.-led alliance. Now, rather than wither, NATO may actually gain new members. Economic sanctions on Russia have been swift, harsh and surprisingly cohesive. And with the invasion clearly not going according to plan, it may seem as if the life span of our “distorted moment” could lengthen.

Not so fast. There’s no cease fire in Ukraine yet and, even if a settlement is reached soon, the world has changed.

For one thing, Russia, which spans 11 time zones and exports all types of vital commodities, is no longer part of the international system in the way it was just a few weeks ago. Sovereign debt default appears imminent. Putin’s pattern of behavior, his age and his apparent obsession with Ukraine make him more likely to double down than to back down. The oil majors that have withdrawn and the aircraft leasing firms that have had their planes, er, nationalized won’t be coming back — even assuming they get an invitation. And however unrealistic it might seem for Western Europe to sever its energy umbilicus with Russia, keeping it intact is at least as unrealistic.

The dislocation and cost involved in isolating Russia means it’s too soon to declare that the U.S.-led order is completely revived. This war is barely three weeks old, and we have yet to see how unity will hold up over an extended period of potential energy shortages.

One effect of postwar globalization was that it reduced the importance of location — which, in geopolitical terms, is about as distorted as things get. Dizzyingly complex, extended supply chains make it possible to lay your hands on gasoline or a smartphone or anything else pretty much anywhere. And security guarantees mean there’s little need to worry about that giant, revanchist power across your border.

Now location matters again. Germany, with its capital about 750 miles from Kyiv and its reliance on Russia for half of its gas, is in a different place in several senses from neighboring France, whose capital lies almost 1,300 miles from the war zone and gets only a quarter of its gas from Siberia. Poland and the Baltic states, despite also being members of the EU and NATO, are in an entirely different space from both. The border with Russia is now like a geopolitical event horizon, and proximity to it will shape how countries respond — raising the potential for divisions, as seen already in continental Europe’s reluctance to follow the U.S. and U.K. in sanctioning Russian energy.

Even assuming this current crisis revives the U.S.-led order, it wouldn’t look like the one we grew up with. Washington’s commitment can fade, as every U.S. ally is already aware. President Joe Biden is poles apart from his predecessor. But his recent State of the Union speech, while calling for the world to stand with Ukraine, also doubled down on protectionism and reshoring. “There has to be a recognition among America’s allies that their physical security depends on the Americans — and that comes at a cost,” says Zeihan.

Germany is the most striking example of a major ally suddenly recognizing this, though well past time. The idea that a $4 trillion economy built on international trade and surrounded by former adversaries would have barely a navy to speak of and a military smaller than Morocco’s is, in historical terms, ludicrous. This explains why, with Ukraine under attack, Berlin has decided to rearm with gusto — another apparition from the old normal.

Predicting the implications of this shift in the foundation is impossible; one can’t be sure which parts of the structure will collapse and which will hold up (apart from Russia’s capital markets, which are clearly ruined already). China’s unfolding reaction is crucial. There is a world of difference between Beijing doubling down on siding with Moscow and its accommodating the international order from which it has benefited enormously.

Yet the obvious potential change is accelerating fragmentation, something glimpsed already in rising protectionism and in the vaccine diplomacy (or lack of it) during the pandemic. In economic terms, “decoupling and deglobalization is bullish in the first order but bearish in the second,” says Kevin Book of ClearView Energy Partners, a Washington-based research firm. The alternative to outsourcing and division of labor is duplication of industries, which means doing and investing more in the near term but incurring the cost of inefficiencies over the longer term. And you thought inflation was bad already.

Surging gasoline prices and long lead times for sofa-buyers are not, however, the worst potential outcomes here.

Book, for example, has assessed the effects from Russia’s oil and gas exports (4.5% of global consumption) being cut off. He estimates that they range from 100% of the world managing with 4.5% less energy to 4.5% of the world going without altogether. The first endpoint mostly entails higher prices, assuming a world that still coordinates relatively uninhibited energy flows. If the world reverts to the older normal of great-power competition, the outcome would tend more toward some states being cut off completely.

Zeihan, in the section of his book that’s focused on agriculture, raises a similar, but more troubling, dimension:

The industrialized Order hasn’t simply enabled us to increase the total calories grown by a factor of seven since 1945, it has enabled vast swathes of the planet to have large populations when geography alone wouldn’t previously support them. Populations in North Africa and the Middle East in particular have expanded by a factor of seven since 1945. Bulk food shipments originating a continent (or more) away are now a commonality.

Given the news and images from Ukraine, it may seem petty to sound the alarm on access to stuff. Except that access to sometimes vital stuff, at broadly affordable prices and without fear of interdiction, has been the making of not merely Western prosperity but, in other parts of the world, sheer viability. Book characterizes the world’s apparent slip back toward its longstanding historical condition of disconnection and friction as “reversion to the mean.” “Mean” being the operative word, one might add.

Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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