Logistics and the decoupling of East and West

Sun Tzu’s “The Art of War” is a favorite of business and investment executives, to the point of becoming a cliche. It is, nevertheless, an appropriate book, especially as we are currently experiencing daily disruptions to global supply chains and logistics channels. On logistics, the great Chinese strategist wrote: “The line between disorder and order lies in logistics.” Our globalized world screams disorder and it is no surprise that logistics are broken. This entire situation can be summed up in a single headline: The decoupling of West and East.

Many analysts are blaming this situation on COVID-19 and the lockdowns, as well as on the war in Ukraine. But even before the pandemic hit, there were clear signs of this decoupling. I might have already given this example in a previous article but, at a time when President Donald Trump was imposing new tariffs on China, I asked a US West Coast-based venture capitalist for his views on this. His answer surprised me, as he stated that it was irrelevant and that, with new technologies, China would soon no longer be the factory of the world and everything would be localized thanks to innovations such as 3-D printing. This was definitely an exaggeration, but it set the tone of things to come.

Trump’s approach was one of readjustment. China is not the same country that agreed a deal with Richard Nixon and Henry Kissinger; it is today a leading global power. Therefore this Cold War agreement needed to be renegotiated and readjusted to China’s new stature. This renegotiation could have led to a new agreement and cohabitation or to a full-on confrontation. It seems Trump was open to both. It was also based on a belief that the US should fight for its position as the leading superpower and not cede it easily.

COVID-19 interrupted this and priorities shifted, but the pandemic did not change the course of events. Instead, it accelerated the trends. We now have a different administration in the White House and are in a position where a new deal between East and West is becoming harder and harder to achieve or even imagine.

Many analysts, regardless of which side they sit on, have described the war in Ukraine as a trial balloon for the future of the world.

Khaled Abou Zahr

Undoubtedly, the war in Ukraine has exacerbated this divide. Before Trump’s election, Democratic-leaning think tanks put forward a concept for relations with China. It started with an acceptance that the US would lose its leading power status to Beijing. And the best way to avoid the war that has always been coming with this transition was to support China in becoming the leading power — a little like the UK did with the US, but without the Second World War. Yet, today, I would say that the US still does not want to face China for the position of leading superpower; it no longer wants to co-lead and it no longer wants to support Beijing’s ascension. It wants to simply break up and China looks at it the same way for now.

The decisions made by US and Chinese policymakers on the current global situation encourage them to have separate financial systems and separate sets of rules. When looking at the war in Ukraine, the Western footprint in the East is disappearing. And whether it is for energy supplies or agricultural commodities and products, Russia is being canceled. In short, the West is looking for a new strategy and a new logistics plan. Many analysts, regardless of which side they sit on, have described the war in Ukraine as a trial balloon for the future of the world. From my point of view, it looks like the start of the divorce between East and West and the battle for who gets what.

Until now, the Middle East has been able, as the region’s name indicates, to perform a balancing act. All regional powers have understood the change clearly and it has been, until now, translated into a common block. I believe that sooner rather than later even Iran should join in. They all understand the risks but also the opportunities. Being in the middle, unlike Europe or Asia, we are left with a choice. It is a difficult one, but with unity it becomes an opportunity.

It is clear that the current war, like all wars of the past, relies on logistics. It certainly looks like a battlefield where cyberattacks resemble air raids. Who could have imagined that the biggest power in the world would be missing baby formula? If Biden were to listen to another great war leader, he would get rid of all his logisticians. Alexander the Great — two centuries after Sun Tzu — is said to have described his logisticians as a humorless lot, simply because they knew that, if his campaign failed, they would be the first to be slain.

Until now, Western governments’ actions have been more about printing money to face this transformation. This is causing high inflation, with high levels of debt, at a time when growth is threatened. This is adding pressure and causing even more disruptions, while limiting maneuvering capacities. One thing is certain, which is that as a result of this decoupling process between East and West, the logistics need to be transformed. This will take time. And the effects of broken logistics will be felt until a new order is birthed.

• Khaled Abou Zahr is CEO of Eurabia, a media and tech company. He is also the editor of Al-Watan Al-Arabi.