Some countries are adopting a position of active non-alignment (ANA). What exactly does this mean, what are the economic consequences, and how are some ASEAN and BRICS countries putting it into practice?
ANA can be defined as “pursuing your own interests in every case.” It is a more dynamic geopolitical approach, depending on the issue at hand. For democracy or humanitarian matters, countries may lean toward the European way of thinking, while on trade they may favor China’s model.
Two ASEAN examples are Vietnam and Malaysia. Vietnam relies on the United States for its security, yet China is its largest trading partner. It therefore works with both superpowers without binding itself to one bloc. Malaysia, like Vietnam, cooperates with the US on security while at the same time benefiting from large-scale Chinese investments.
This often means taking opposite positions toward a given country, depending on the specific goal. By nature, this approach carries a conflictual element. Diplomatic efforts become far more extensive and do not always lead to solutions.
The higher tariffs imposed by President Trump on India and Brazil illustrate this. At the same time, India’s purchases of cheap Russian oil demonstrate its stance of active non-alignment vis-à-vis the United States.
Traditional order challenged
We increasingly see this trend extend to the BRICS and ASEAN groups. Let’s not forget that BRICS originally came together informally because institutions like the IMF and the World Bank failed to adequately defend their interests.
Today, BRICS accounts for 36 percent of global GDP and nearly half of the world’s population. The existing international order is therefore being challenged more and more. Examples include climate change (US versus China), sovereign debt (the IMF’s approach versus China’s toward emerging markets), or currency (de-dollarization versus the renminbi).
Egypt, Ethiopia, Iran, and even the United Arab Emirates have joined BRICS (originally Brazil, Russia, India, and China). We should also not overlook the new partner countries such as Belarus, Bolivia, Cuba, and Uzbekistan. These are not nations typically associated with a Western economic culture, yet they are increasingly following a policy of active non-alignment. Vietnam became the tenth partner country in June of this year.
Official organizations like the World Bank or IMF are gradually being sidelined by new institutions with enormous financial resources. In Asia, ASEAN (Association of Southeast Asian Nations), APEC (Asia-Pacific Economic Cooperation), and the ADB (Asian Development Bank) are drawing up the outlines of global economic infrastructure.
In its long-term projection note The World in 2050, consulting firm PwC estimates the following growth rates in Asia: Vietnam 5.3 percent, the Philippines 4.5 percent, Indonesia 4.3 percent, Malaysia 4.1 percent, and Thailand 3.5 percent. These countries are expected to climb significantly in the economic rankings over the coming years.
Economic calculus
The rise of China as an economic superpower is one of the drivers behind the ANA strategy. Countries are increasingly weighing their economic interests between those with the United States and those with China, whether in trade or technology.
This includes trade in resources such as food, rare metals, iron ore, or oil. The Financial Times has reported on oil shipments from Venezuela, Iran, or Russia to India and China despite US sanctions. China is also investing in securing future supply chains, as shown by the recent debates around the Panama Canal.
The degree of active non-alignment correlates with potential economic benefits in the near future. The key question is what there is to gain or lose—an opportunity cost is always involved.
India, for instance, has recently reestablished new trade relations with China. After months of border disputes and economic wrangling, both countries are once again sitting down to revive their trade ties.
Protection
For ASEAN countries, an ANA strategy offers several advantages. They gain access to both superpowers, providing a degree of economic protection. Both the United States and China invest in ASEAN nations: China in infrastructure (notably the Belt and Road Initiative) and the US more in technology. Each hopes to gain a foothold in the region.
By actively choosing not to choose, these countries reduce geopolitical risks. They play the superpowers against each other, which strengthens their bargaining power and allows them to sign separate trade agreements with both.
Conclusion
ASEAN countries, and to a lesser extent BRICS, are essential in a diversified portfolio. Their policy of active non-alignment is likely to pay off over time.
Jan Vergote is an independent financial consultant and analyst.