Yalta 2.0 - What Comes Next

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Over the spade of last few weeks and months in many opinion pieces we have tried to encapsulate the flux in the global order and unraveling of the post war Pax Americana order. Global Trade rules are all set to be rewritten, it would have been difficult to imagine America giving up on its unipolar order post Cold War 2.0 in bid to save itself knowing very well that its empire its declining. It is an humbling thing but the world is yet to come to terms with the fact that global order is changing at a fast speed than it can even fathom. American elite now thinks that the old order it has tried to nurture for several decades is now broken. The ruling elite in America knows that its matter of time before the American empire is challenged from a worthy challenger in the East. Thus it is now drawing up plans and putting in action a strategy on how to slow down its gradual decline where it gets sufficient time to reshore and build its capacities.

Decline of Pax Britannica

This would remind our readers that the world stands at similar chaotic situation where it was in the 1930s in a Deep Depression where the markets had crashed, global economy was reeling with trade wars between America and Europe, America first policy was in full swing of an Isolationist America, League of Nations collapsed, rise of ultra nationalist movements in Germany and Italy in response to a fractured global order and trade system. The British Empire economy slowly collapsed after World War 1 with Great Depression and with the rise of American finance on the global stage, consequently the British government suspended the the gold standard and went into debt, and the British Empire for the first time relied on its colonies for military support rather than vice versa.

The situations today are eerily similar as to what is happening to American empire from Bretton Woods I, to removal of Gold Standard with US Dollar to America now going under 37 trillion dollars of debt which has become unsustainable. Resultantly the American establishment is responding to it classically by implementing the Monroe doctrine, retreating back to between the oceans in an isolationist policy of “America First” while withdrawing gradually from the global institutions that it built in the post world war II order. Imposing trade tariffs and blowing apart Trans-Atlantic relationship is not new phenomenon for the world. America and Europe have on opposite sides before the World War II dating back to the American civil war. Americans have earlier under Lincoln’s Republican party worked with Russia who even sold Alaska to America for all its help. To understand the decline of Pax Americana order we would need to understand how British Empire was financially ruined which lead to its ultimately demise post World War II.

First of all its important to understand that the British Empire was built on a complex financial system that centered around London and the strength of the Pound Sterling as a global currency much in the same way that the American-led international order of today revolves around the strength of the US dollar as a global reserve currency. World War 1 was significant because it was the inflection point at which the international financial system effectively shifts from London to New York, with the US dollar becoming the primary global currency.

The period between 1880 and 1920 is the time frame during which the domestic GDP of the US economy overtook the combined GDP of the entire British Empire this is what economic historians call the “second great divergence,” as in the divergence of the US from the rest of the industrialized world. The first great divergence refers to industrialization in Western Europe (the time frame of which is highly debated), and is in reference to Harvard Economic historian Kenneth Pomeranz’s book “The Great Divergence” published in 2000. So it is important to recognize that going into WW1, the British Empire has already been superseded by the American economy.

What changed during the war was capital flows and debt. By 1916, the major European powers in WW1 had effectively depleted all of their material resources and all of their reserves. This is when France and Britain started coming to the US to borrow money to continue financing the war. But remember that the US has an isolationist republican administration that is committed to neutrality. So it is not the US government that lends them money; it is Wall Street. The great JP Morgan banking empire strikes a deal to become the exclusive underwriter of war material and loans to both the French and British governments. During the war, they loaned arms and money, worth about 2 trillion USD adjusted for today’s values.

The US also lent out money to Germany and Russia, creating a cycle of war debt that intertwined all the major economics during the inter-war period, and is a large reason why France and Britain extracts such heavy reparations from Germany to pay back American debt. This is a huge oversimplification of the economic architecture of the inter-war period, but you get the point of how it shaped up. Post World War 1 is when American finance becomes a truly global force, with Wall Street becoming the chief lender and bankers for pretty much every major European power. So actually, the American financial system comes out of WW1 more powerful than ever on the global stage, and this is what accounts for the subsequent decline in British power.

This was a huge watershed because it marked the beginning of a transition of financial power from Britain to the United States. Britain had not only gone bankrupt during the war, they also were now indebted to America and had to suspend the gold standard in 1914. Why is this bad? Because the gold standard ensures stability, which makes a currency ideal for lending. Deflationary monetary policy like the gold standard is good for lenders because it guarantees the real value of a loan over time. The war therefore destabilized the sterling, which by extension stymied London’s ability to serve as a financial hub, particularly for lending. This made it difficult for the British Empire to finance the complex operations involved in controlling its overseas interests, whose nationalist groups were further emboldened by the weakening of Britain during the war.

The result of all this is a transfer of international financial hegemony, so to speak, to the Americans, who had a huge economy, massive amounts of excess capital, a gold-backed currency, and a powerful, international-looking banking system. After WW1, JP Morgan became the official bank for the Japanese, German, and Italian governments, and was also the largest holder of French and British sovereign debt. Any international borrowers that would have previously went to London, to the Bank of England or family banks like the Rothschilds and Barings, were now being redirected to the United States, effectively redirecting global capital flows out of Britain and towards the United States. You can think of it as a massive redistribution of wealth but between countries.

Of course, this is just one element of a very complex puzzle, but the root of it is very much the financial and economic strain put on the British by WW1. It was the destabilization and bankruptcy that resulted from the war that destroyed London’s ability to serve as an international financial hub, a key component of the British Empire’s power and influence. From 1916 onward it was American power and money that organized the world, and Britain effectively became beholden to America. And the Americans had an interest in seeing the British Empire go, so it became a matter of time until the sun would finally set on the empire.

The decline in British economic and military power certainly did start after WWI, due to the severe debt load that the British took on from that war, as well as the loss of an entire generation of young men in the trenches of Europe. However the British Empire actually expanded after World War I in total, because of its acquisition of territory that had belonged to the Ottoman Empire and Germany, who were the losers of WWI. American ambitions and plans for taking over the world with the globalized free trade system that we have today appeared and is now in the process of getting dismantled. These ideas formed in the aftermath of WWI and were fully developed before the US had even entered World War II.

After WWI, and with the rise of Hitler and Nazi power, there was definitely a resurgence of German pride in America, and German Americans were recruited for political purposes by the German-American Bund organization, which initially had direct ties to Nazi Germany. In addition, a lot of prominent and influential Americans took the side of the Nazis to varying degrees. Most were just strongly against entering or intervening with the beginnings of WWII in Europe, but some also clearly held favorable views of the Nazis as well as having strong antisemitic views. While Nazi Germany tried to influence American politics but the British were not far behind British Prime Minister even tried to influence American elections to get FDR elected using British Intelligence to plant public fake stories to drum up public opinion in its favour. This was done to seek American aid and help in its war efforts in Europe.

British PM Winston Churchill had no clue what it was when he was signing away, and he certainly did not steam all the way across the Atlantic to meet up with FDR (Franklin De Roosevelt) to sign the death warrant for the British Empire. But that's what the Atlantic Charter was. Bretton Woods was of course a key part of that New World Order, establishing the US dollar as the de facto world reserve currency. Prior to WWII, and for about a century before WWI, the British pound had been the de facto world reserve currency. Losing the pound as the world reserve currency only confirmed this new second rate status of Great Britain and accelerated the decline of the British Empire.

Rather America was also meddling in the politics of every other major power. JP Morgan bankers sat in on the Versailles treaty, helped arbitrate German reparations, worked closely with the Japanese ministry of finance through the Mukden Incident that started the second Sino-Japanese war, worked closely with the Italian fascist party, and helped Churchill and the Bank of England put Britain bank on the gold standard in 1925. Not to mention they oversaw both the Dawes and Young plan which brought Germany out of stagflation, and literally helped them re-arm their economy. American politics and finances in the inter-war period was already the greatest political force in the world. It were these American Philantro-Capitalist like Rockefeller Foundation who funded War & Peace study which laid out the blueprints of Pax Americana post war order.

Yalta Conference - Spheres of Influence

During the world war II, Yalta Conference of 1945 played an important part in shaping the world order and lead to revival of Cold War between United States and Soviet Union where European continent was divided between two powers i.e. Anglo-American alliance lead by NATO in Western Europe while Eastern Europe under Soviet occupation. The Yalta Conference was held from February 4 to 11, 1945 involved American president Franklin D. Roosevelt, British Prime Minister Winston Churchill and Soviet Premier Joseph Stalin. These leaders essentially shaped new ego political landscape in Europe specially Eastern Europe. There is where these leaders agreed to certain territories extending to parts of Germany to be liberated and governed by Soviet Union for which US provided military aid during lend lease programme during the war time.

Countries like Poland, Hungary, and Czechoslovakia found themselves under the influence of the Soviet Union, which imposed communist regimes that suppressed political dissent and curtailed freedoms. Critics slam the Yalta agreement of the few who decided for the fate of millions in Eastern Europe sacrificing their independence for a working arrangement with Soviet Union in a bid to defeat Nazi Germany. This was essentially the Wall Street using Yalta agreement as a stepping stone in dismantling British Empire which was crippled economically and working with Soviets to keep European mainland fractured so that America could retain its dominance as a pole in Western hemisphere with European partners as junior allies. It was kind of a G2 agreement between USA & Soviet Union bankrolled by Wall Street that was in place till the Berlin wall collapsed and Soviet Union disintegrated.

This brings us to the unstated aspect of Yalta Conference, where these powers even decide the fate of China. We documented this in our book “The New Global Order” (2016). Reproducing some of the passages of the book for the benefit of our reader. Since Chiang Kai-Shek’s Nationalists were fighting the Japanese, the US’s official position was to support Chiang especially after President Roosevelt met with Chiang at the Cairo Conference in 1943. Stalin advised the Chinese communists to help in the war against the Japanese. The Chinese communist leader Mao told his followers: “Our determined policy is 70 percent self-development, 20 percent compromise, and 10 percent fight the Japanese.”

When Roosevelt and Stalin met at the Teheran Conference (late 1943) and Yalta Conference (February 1945), he asked Stalin if he would break his pact with Japan and enter the Far East War. Stalin agreed, but with certain conditions. He demanded that that the US should equip his Far Eastern Army for this expedition. The Americans not only accepted but also ably provided Stalin’s Far Eastern Army with more than twice the supplies, they gave to Chiang Kai-shek during the four years as an ally. Stalin did not merely want ammunition but also the control of the Manchurian seaports of Dairen and Port Arthur to gain a strategic foothold in China and the joint control of the Manchurian railroads with the Chinese.

President Roosevelt, without consulting with the Chinese or the US Congress made these concessions. The State Department official representing the US in drawing up the Yalta agreement was Alger Hiss, who was subsequently exposed as a Soviet spy. General Patrick Hurley, the US Ambassador to China, later wrote: “American diplomats surrendered the territorial integrity and the political independence of China and wrote the blueprint for the Communist conquest of China in secret agreement at Yalta”. The US State Department’s Far Eastern Division was dominated by Communists and pro-Communists, such as Alger Hiss, John Carter Vincent (director of the Office of Far Eastern Affairs), John Stewart (Foreign Service Officer in China), John P. Davies (Foreign Service Officer), Owen Lattimore, Whittaker Chambers, the US Army General Joe Stilwell, Elizabeth Bentley and several others.

Subsequently, the Soviets won over the Japanese and promptly handed over the recovered arsenal to Mao to overthrow the Chinese Nationalist Government. Meanwhile, the Japanese invasion led to impossible inflation and prompted Chiang Kai-shek to request a loan of US gold. President Roosevelt approved, but the gold shipments were delayed and withheld by Assistant Treasury Secretary Harry Dexter White (another Soviet agent). The Chinese currency collapsed. The above has also been confirmed by the Venona Transcripts and the Russian archives.

At World War 2’s close, Mao’s guerrilla’s launched a full attack on Chiang Kai-Shek’s Nationalist government. Mao’s rebellion would have failed but for George Marshall, whom President Truman designated as his special representative to China. Marshall has gone down in history for furthering the communist interests everywhere he has served. Marshall’s 15-month China mission ended in January 1947. Upon his return to the US, President Truman anointed him Secretary of State. Marshall later imposed a weapons embargo on the Nationalists, while the Communists continued receiving a steady weapons supply from the USSR. By 1948, due to Marshall’s weapons embargo, the Nationalist government was defeated by Mao with the blessing of the USSR and by 1949, the communists controlled China. Chiang Kai-shek escaped to Taiwan with his followers.

David Rockefeller, the noted American industrialist and philanthropist said the following about the Chinese Revolution in the New York Times on August 10, 1973, “Whatever the price of the Chinese Revolution, it has obviously succeeded not only in producing more efficient and dedicated administration, but also in fostering high morale and community of purpose. The social experiment in China under Chairman Mao’s leadership is one of the most important and successful in human history”

Yalta 2.0 - What Lies ahead

There is increasing chatter that current restructuring of relationship between United States and Russia offers another Yalta accord in pipeline where America wont mind Russia gaining sphere of influence in Eastern Europe and soviet satellite states in return for its co-operation to contain China. The biggest hurdle to this would be Europe who might not agree to Ukraine and parts of Europe being served on platter for sake of American exceptionalism. However Europeans do realize that their options are limited and sooner than later they would have to learn to live with Russia even if it is a state of cold peace. The other big question is will Russia trust America over China and India who supported it during tough phase of Ukraine war. How will Europe navigate this unchartered territory.

The unipolar order for two decades post Cold war carried on with America as global policeman till China rose as an economic and military power and interestingly it is the same wall street who bankrolled rise of China with World Bank providing blueprints for Chinese economic miracle in 1980s. We have documented this in detail in our book “The New Global Order”(2016) how wall street and American corporations enabled the rise of China as techno-industrial powers by sharing critical pieces of technology with it for whatever the means. Rather after General Financial Crisis of 2008 and endless wars in first decade of 21st Century, America came to terms that China’s rising as a challenger to USA.

Thus President Obama first proposed G2 idea to China in 2009. In different names like “Chimerica” or the G2, both meant a model of global governance structure where two powers USA & China decide and set the rules for the world order recognizing China’s rise as a techno-industrial power. Recent events have revived proposals for such a format. These advocates have stressed the need for the two countries to resolve currency disputes and jointly enforce IFI reforms. China refuted the idea then in 2009 but Chinese President Xi Jinping in recent meeting with U.S. Secretary of State Antony Blinken in Beijing said that: "Planet Earth is big enough to accommodate the respective development and common prosperity of China and the United States."

What is disconcerting America now is that China has launched its financial architecture in AIIB, BRI (Belt & Road Initiative) and formed trading blocs like SCO & BRICS. The competition in defence, stealth technology, semi conductors and artificial intelligence now makes America believe that era of co-operation with China like G2 is over and it must make a move towards reshoring its own prowess as manufacturing and industrial power de-risking its supply chains from China. Thus if we see carefully patterns are repeating with Wall Street funding rise of American empire and scripting the demise of the British Empire and then bankrolling China’s rise as Techo-Industrial power. The Trump administration is very well aware of the daunting challenges America faces at home and abroad, in a weakened economy, de-industrialsed country side, debased dollar, ballooning trade deficits and high debt which is becoming unserviceable every year.

We are witnessing fracture of global alliances, where multi-polar blocs will emerge amid the broader Bi-Polarity between USA & its primary challenger in China. This phase of global re-alignments will be dictated by pragmatism and transactional realism. What Trump is seeking to do is revive America of 1970s & 80s which was a manufacturing power before the globalist elite enabled the rise of CCP and European Union as rival economic unions while America slowly de-industrialized. Endless wars post 9/11 and General Financial crisis only accentuated American decline from a manufacturing nation to a consuming one, from innovation to woke culturalism. Trump is following Henry Kissinger’s pragmatism that America cannot take on Russia & China simultaneously. It is kind of a strategic compromise with Russia it is seeking in Ukraine.

The western world specially the liberal elite in Europe and America post the cold war have been living in a bubble of liberal world order with an idea of global citizen when in the reality countries like China, Russia, India, Turkey are following their national interests over this lofty utopian ideas. European Union is a broken concept with a union serving globalist ideals outsourcing its energy needs to Russia, Military ones to NATO lead by America hoping that war would never return to European continent. The Ukraine conflict and its aftermath has broken the myth of delusional ideas of free trade unions which are not enforced by security guarantees and energy needs powering it. All that waxing eloquence by the European leaders is soon going to be hit by hard reality as they face a retreating America from the continent. In the real world, sovereignty is measured in energy production, supply chain resilience, and military capability not in bureaucratic decrees from Brussels. The realists have long argued that the biggest threat to American power is not Russia, but China.

Unlike the neoconservatives, who wasted decades trying to turn the Middle East into a Jeffersonian democracy, Trump sees the economic and technological rise of Beijing as the defining challenge of the 21st century. While Biden’s administration obsessed over Ukraine, Trump understands that America needs factories, not speeches about climate change. The West cannot deter China with soaring national debt, deindustrialized cities, and a dependency on Beijing for rare earth materials and semiconductors. If America wants to remain the dominant power, it must reindustrialize something that J.D. Vance and Elon Musk both recognise. Trump understands what the establishment refuses to admit: the U.S. can no longer afford to be the world’s only policeman.

In essence ideological utopian ideas is giving way to transactional realism in America and the world will get a rude wake up call specially the one drunk on utopian globalism. This would mean the America wouldn’t mind strategic convergence with Russia on issues like Ukraine, Energy, Space and Nuclear Arms while aiming to re-industrialise itself with an aim to contain China. There was an idea floated when Russia invited Trump to victory day parade in Moscow on 9th May 2025 that may be Trump, Putin & Xi could forge a new Yalta conference i.e. Yalta 2.0 where three could virtually decide to divide world in spheres of influence and terms of Co-existence. This line of thought emerges as Secretary Rubio candidly admitted that it is not a unipolar world anymore.

Yalta 2.0 though may not be imminent but this on the lines of what we had forecasted long back. In our first book on “The New Global Order” (2016) we had written about marriage of convenience between Russia & China and how Dutchy of Moscow is more aligned to Eurocentric with Orthodox Christian value system and not the oriental system of China in the east. Yes there has been periods of historical convergence between Russia & China like in 1962 war where it stayed ambivalent qua India. But Trump’s reset with Russia will give USA that room to go after China by forging strategic alliances in Indo-Pacific. Europe and Ukraine are proving to be irritant in the scheme of things specially with Syria & Iranian threat sorted out in the middle east.

The Next Great War

During the conceptualization of our second book on “Korean Peninsula” (2018) we had written hypothetical scenario of the next great war. In that scenario we had mentioned about a Yalta 2.0 happening, the relevant text is extracted below and the file of the the said scenario is attached at the end for our readers in detail.

The allied coalition led by US assures Russia of concessions over Eastern Europe, pro-Russian regimes in the Middle East and Central Asia in a bid to get its participation in the Far East on the Korean peninsula much like the Yalta conference of 1945. Russia & America could essentially barter out their sphere of influence with an aim to defeat Islamic Communist alliance of China, Pakistan & Turkey actively backed by North Korea. The Chinese on the other hand also have allies in the South East Asian region like Malaysia, Cambodia and Laos which gives it far deeper penetration into South China Sea.

The Russian entry into global conflict decisively swings the war in Korean peninsula and the Middle East in favour of the allies leading to ultimate defeat of Islamic communism axis of China, Pakistan and Turkey with North Korea. The world comes back from a brink of a nuclear war but not without huge damage to the global economy and millions ravaged across the world. The Global Order built up after World War 2 in form of UN is in tatters and it requires a new geo political and geo economic system to emerge from the ashes of this Great War. Russia and America consequently with other allied nations like India and Japan could implement their agreement of Spheres of influence over Korean Peninsula, South and South East Asia, Middle East and Eastern Europe.

A new global geo political entity is carved out with an army of its own, nation states as its member pooling in their sovereignty with a single global reserve currency in form of IMF's eSDR (Digital Currency) for the world after the demise of the petro dollar. The new Geo Political Union essentially has divided world into ten zones i.e. North America, Western Europe, Eastern Europe, Japan, Rest of Developed World, Latin America, Middle East, Rest of Africa, South and South East Asia and China. In this Global Geo Political Union, the allied states like America, Russia, India, Japan, and Israel are the big gainers while China, Turkey and Pakistan are made to abandon part of their territories acquired during the conflict and consequently are admitted new Global Union post the Great War.

The Development of New Geo Political and Geo Financial Unions is built upon on mandates of laws, rules and protocols for countries who would administer their subjects locally zone of areas so specified. The primary areas of various organs of the Geo Political Union is developing World Economic System that has been developed on extensive set of data both micro and macro across regions across the world. Other areas where a Global Policy is drafted out from the Union is on Population Model, Food and Water Resources, Energy Resources, Universal Income and Health Care and application of Artificial Intelligence and New Technologies for the betterment of Mankind.

“The United Nations (UN) has nothing to be replaced by at the moment, and there are no means to agree on the establishing a new global organization”, Kremlin Spokesman Dmitry Peskov said in an interview with VGTRK journalist Pavel Zarubin. "When it comes to the UN, we have nothing to replace the UN with. And in the current international situation, we clearly have no possibility to agree on the creation of a new UN," he said. "Currently, it is impossible to imagine the Russians, Americans, French, Germans, and English to agree on the establishment of a new UN. There is no such possibility," the spokesman emphasized. Even Russia admits that at current there is no alternative of UN as America seeks to withdraw and abandon global rule based order in bodies like UN, WTO, WHO, UNHRC & UNRWA etc. American senator Mike Lee has called US to leave NATO which was further endorsed by Elon Musk who also backed the call to leave NATO & UN by stating “I Agree” !

In sum and substance the recent developments project a very uncertain and chaotic times for the world. There are many questions which are lurking in the minds of people. What happens if the US withdraws from WTO and United Nations ? Will the global trading system collapse ? Will the European project survive ? Will Russia hedge its over-reliance on China with India & USA ?. The bigger question will be what happens to the global order with a monetary reset in offering as America will seek to ferociously protect its dollar hegemony and how will the tariff wars play out ravaging the global trade and commerce.

One thing is certain that the world is going to go through chaos in next decade or so and it will need some deft handling by world leaders to thrash out another Yalta 2.0 the alternative to which will be a deadly conflict which will consume the whole world. Lets hope sane minds and wisdom prevails advocating transactional realism instead of conflicts and wars which is nothing but mutually assured destruction.

Notes:

1. Golden Fetters: The Gold Standard and the Great Depression by Barry Eichengreen

2. The Deluge: The Great War, America and the Remaking of the Global Order, 1916–1931 by Adam Tooze

3. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow

4. The Great Divergence: China, Europe, and the Making of the Modern World Economy by Kenneth Pomeranze

5. When a Foreign Government Interfered in a U.S. Election — to Reelect FDR - 16th January 2017 - https://www.politico.com/magazine/story/2017/01/when-a-foreign-government-interfered-in-a-us-electionto-reelect-fdr-214634/

6. The Yalta Conference: A Betrayal of Eastern Europeans by the West? - 11th February 2025 - Munich Times - https://themunicheye.com/yalta-conference-western-betrayal-eastern-europe-10283

7. The New Global Order (2016)

8. The Korean Peninsula: Pawn on the Geo Political Chessboard (2018)

9. Currently no possibility to agree on creating new global organization — Kremlin - 23rd February 2025 - https://tass.com/politics/1917643

10. Elon Musk’s tweet - 2nd March 2025 - https://x.com/elonmusk/status/1896026564019830820

The Next Great War

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