The globe is moving away from hyper-globalization after pursuing it vehemently for the previous 30 years or more, as states see its proponents embrace protectionism more and more. Each country’s trade, technology, industry, and competition policies are becoming weapons. Neoliberalism has been supplanted by nationalism, and it now influences trade policies all across the world.
Protectionism is pulling the world apart. Today, we listen to slogans like “India first, China first, America first,” and, unsurprisingly, these slogans sit well with their respective audiences. Even the world is not coming together to act on shared challenges. Climate change, for example, is a global challenge that requires collaborative efforts and global solutions; it is also clear that without adequately addressing environmental concerns, sustainable growth will remain a mirage. The major carbon emitters appear hesitant to cut greenhouse emissions in accordance with the Paris Agreement, largely because developing countries have borne the brunt of climate-induced disasters thus far. They are not ready to move away from their manufacturing-led, export-driven model of development only for the sake of the poor south. What’s more, countries facing the wrath of climate-induced calamities are left to their own devices, and the global north, which is responsible for the environmental mess is unwilling to gouge out the finances it committed to pay to vulnerable countries, which are to be channelised into climate mitigation and adaptation.
Policies promoting privatisation, deregulation and liberalisation, which became popularly known as the Washington Consensus, now have few supporters, even in Washington. Of late, Washington has resorted to trade policies that run counter to its professed ideology of trade liberalisation. It has recently moved to block exports of advanced chips to China.
Similarly, in the Ukraine war, the world has not come up with a united response. Though countries called out Russian aggression, it must not blind us to the fact that almost all of Africa, Asia, Latin America and the Middle East stand aloof from sanctions against Russia and even not condemned Russia for its war crimes.
All this underscores the fact that the world is on the cusp of deglobalisation. This shows that countries no more want to remain inter-connected and are hell-bent on disintegrating their economies from each other. Is this new model good for humans? Before answering this question, it is more important to determine what is causing this retreat and why countries that established international institutions to facilitate cooperation are behaving uncooperatively.
The primary reason for this phenomenon is the emergence of populist leaders across the globe. They used paranoia, magnified real and perceived threats, and tickled false alarms. For example, populist leaders of the far-right FrP party of Norway enthusiastically campaigned against immigrants, thus setting the stage for xenophobic anti-immigrant policies. Populist leaders have sowed seeds of mistrust and hatred in people across the world.
And when some of these populists succeeded in reaching the highest offices, like Modi in India, Trump in America, and Bolsonaro in Brazil, hate was mainstreamed and became state policy. They set about implementing their agendas of hate and resorted to policy measures that set the stage for protectionism and deglobalisation. Donald Trump, for example, when he entered office, built a security wall along the Mexican border, citing that illegal immigrants from Mexico were responsible for the transportation of contraband into the country. Similarly, the Trump administration, in January 2018, started setting tariffs and other trade barriers on China under the pretext that the free flow of Chinese products was a death knell for the manufacturing sector of the US and thus was responsible for declining manufacturing jobs at home. All that set the stage for a deglobalised world.
All this led us to a point where, unlike in the past when economics used to drive politics, economics is now driven by politics. As a result, the win-win economics of mutually beneficial commerce have given way to zero-sum rivalries of “I win, you lose.” Multilateralism has been taken over by unilateralism.
Now let’s sink into how this unilateralism and retreat from globalisation are death knells for the growth and prosperity the world has achieved so far by virtue of globalisation and cooperation. If the world continues to tread on this path, there will be a risk of monetary and fiscal overkill, thus falling prey to a global recession. Moreover, there may be enough grain in warehouses in Europe and America to feed the world, yet people would be dying of hunger and famine in Africa due to supply chain disruptions created by deglobalisation and protectionism. All this would result in lost jobs, lost prosperity, lost peace, more inequality and poverty. Ultimately, wars and conflicts would erupt in every corner of the world and no nation would escape the adverse impacts of unilateralism.
But we don’t deserve this. This unholy journey of uncooperative conflicts needs to be stopped here. But the question remains if this can be realised. This can surely be realised but it is the US that holds the key. Being a global leader and a staunch advocate of liberalisation, it must stop acting unilaterally and it must shun policies that promote protectionism. It should not sacrifice its ideals just to settle the score with its strategic competitor, China. Also, President Biden and other G20 leaders should ask IMF to double its outlay. It should be made sure that lending to developing countries, which have to suffer a lot due to the bickering between superpowers must be subject to less conditionality so that they can allocate more and more finances for safety nets and thus ultimately bring down inequalities and poverty. Debt relief for developing nations is also an indispensable step right now. Moreover, the UN General Assembly, where the entire world has representation, needs to be empowered so that wars can be prevented because wars can only be prevented if nations have trust in some forum that if they bring their contentious issues before it, it will surely peacefully settle disputes. Also, there can be no second opinion that the sovereignty and independence of all countries must be respected, and aggressive acts of any nation should be condemned in the strongest words.
However, it is yet to be seen whether global leaders are ready to rise above nationalism and embrace internationalism once again. If they don’t, the deglobalised world will be embroiled in zero-sum rivalries which ultimately would eat up peace and prosperity from the planet earth.
The writer is based in Chiniot.