THE Scottish historian Niall Ferguson has warned that the strategic alliance between China and Russia is more of a threat to the West than the credit crunch.

Ferguson, a best-selling author, broadcaster and professor of history at Harvard University, said that the development of the new Russia-China powerblock was set to put the two economic heavyweights on a path to confrontation with much of the rest of the world.

Speaking at Making Sense Of The Future, a conference organised by the Institute of Chartered Accountants of Scotland (ICAS) at Gleneagles, Ferguson also warned that unless Iran suspends its nuclear weapons programme a full-scale war in the Middle East is inevitable.

"I believe that Russia's prime minister Vladimir Putin is about to have his Molotov-Ribbentrop moment," said Ferguson, referring to the pre-second world war non-aggression pact between Nazi Germany and Soviet Russia. "He's going to realise that Moscow and Beijing can have a new and meaningful partnership."

Ferguson also warned that the West had to sit up and take notice of the Shanghai Co-operation Organisation. The SCO was officially founded in 2001 as a counterpart to Nato and the European Union. Aside from China and Russia its members are Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Ferguson said that the SCO had sneaked "under the radar" of the West, and its activities should be carefully monitored.

The group's heads of state held an under-reported summit in Dushanbe, the capital of Tajikistan, on August 28 and 29, at which Russia was praised for its "active role in contributing to peace and co-operation", despite its military action in Georgia.

"The more Russia and China establish that they have common interests, which could include Iran, the more powerful the SCO is going to become," Ferguson said.

"The strengthening of the SCO has profound implications. If the countries which belong to that organisation decide they are going to defy the rules of the World Trade Organisation, then a fundamental shift has occurred in the nature of our international order, and that would have implications for all of us. The real threat to globalisation today is not the subprime crisis. The real threats are geopolitical."

Ferguson believes the biggest of all theats is the resurgence of both Russia - which he says is intent on recreating the USSR's empire following its recent military success in Georgia - and China, which is "making a clearly calculated bid for Asian hegemony China's ambitions extend far beyond winning more gold medals than the United States. Rather like the Berlin Olympics of 1936, that's just phase one."

"Russia's agenda of resuscitating the Soviet Union doesn't stop with Georgia," said Ferguson, who is also a senior research fellow at Jesus College, Oxford, and a historian who has been likened to the great scholar AJP Taylor. "They will now move on to the bigger prize of the Ukraine and specifically to the Crimean enclave. That's the next card that Putin will play."

Ferguson also warned of a coming conflagration in the Middle East, which he said will be sparked by Iran's determination to develop nuclear weapons. "If Iran continues in this vein," he said, "then a major war in the Middle East is a racing certainty. There's no way Israel is going to allow this to happen and there's no way whoever takes over as US president will stand idly by."

Ferguson believes that Russia has an interest in stoking up such a confrontation at the expense of the West.