No longer. Today, political risk is multiplied, power is decentralized, changing globalization.
Those tensions were on full display this week in Davos.
The city’s promenade was dominated by crypto shops with little interest in the official conference program. Ukrainian-themed rooms were scattered across the city, where an ushered in President Volodymyr Zelenskyy was a bigger draw than any of the political minnows on the main stage of the WEF. Governments may struggle to pay down pandemic debt and prop up inflationary pains, but good luck finding a WEF panel on fair tax policy, despite screams from NGOs.
These different versions of Davos talked to each other rather than moving in a free market direction.
What used to be about globalized manufacturing supply chains is now more about rules and regulations – from closing corporate tax loopholes to envisioning a carbon-neutral future.
“Our concept of risk has expanded,” said Arancha González, former executive director of the United Nations International Trade Center and former foreign minister of Spain. “The rules part will be just as important as opening up the markets. It’s no longer about opening markets and believing that everything will work out. It will not.”
These risks range from the ongoing global pandemic that has put the world on the agenda for the past two years to a global food crisis that now threatens mass starvation.
And it’s more digital technology than finance that is powering what is being globalized today – everything from terror, hate and misinformation to the proliferation of new cryptocurrencies and streaming services.
Sure, there are concerns about cracks in the global economy caused by Covid lockdowns and Russia’s war in Ukraine: a new Accenture study found supply chain disruption could cost eurozone economies more than $1 trillion this year, up to 7.7 percent of GDP.
There is also a real risk that parts of globalization will falter or decline in the long term, delivering a world fractured into democratic and authoritarian political blocs, torn by sanctions and tariffs and fueled by regional internets.
González is confident that globalization will continue despite changes, because a world plagued by global challenges needs a cooperative framework. “I don’t see any reduction in connectivity. For me, globalization is networking, and it’s increasing, not decreasing,” she said.
Former Danish Prime Minister Helle Thorning Schmidt agrees. “We have to find a way to work with China. we [in democracies] We need to find ways to work with countries that don’t fully share our values,” she said.
As political fears of China mount in democracies, there is no widespread momentum to fundamentally change trade relations based on human rights or intellectual property concerns.
UK Trade Secretary Anne-Marie Trevelyan told POLITICO she would continue to raise concerns, but said: “We have a very extensive bilateral trade relationship with China and our companies want to develop it further.”
While Western governments are concerned about energy supply chains and the rise of China, that is not a priority for the rest of the world, which often feels marginalized in Davos.
“For most of Asia, it’s a given that China will be number one: a return to the natural state of 1,800 of the last 2,000 years,” said Kishore Mahbubani, a Distinguished Fellow at the Asia Research Institute and the National University of Singapore an open admirer of the Chinese Communist Party. “Most of the region is trying to integrate with China,” he said.
For Mahbubani it is clear that “the US has decided to try to prevent China from becoming number one”. But the real risk here isn’t stalling globalization, it’s American self-sabotage. “If the US tries to decouple from China, it will decouple from most of the region,” he said.
The future is called regionalization
Columbia University’s Adam Tooze dismissed the idea that globalization was ending. “It’s BS to end globalization? Life as we know it would cease to exist,” he told POLITICO. “When people say that, they’re either naive or apocalyptic,” he said, adding, “It’s a bad way of thinking about the issue.”
Tooze expects “a reconfiguration of globalization, a reordering and politicization in certain aspects of certain relationships”.
Alexander Stubb, the spirited former prime minister of Finland who now heads the European University Institute’s School of Transnational Governance, warns of a complicated future. “It’s too simplistic to say that we’re moving towards a kind of new Cold War, with a liberal world order and an authoritarian world order,” he said. “I think we’re going to have more regionalization of globalization, but it’s not going away.”
Instead, the West has to adapt: ”If we want to work for a rule-based order, we no longer necessarily have to set the rules.”
Loic Tassel, European President of Procter & Gamble International Operations, says regional supply chains will stay here: “Over 90 percent of what we will sell in Europe will be produced in Europe. This is a profound change that I think will be permanent.”
The greater risk to globalization may come from rising expectations that democratic governments and the corporations that call these countries home should sever ties with unsavory regimes.
A special one Edelman Trust Barometer Report The study, released on Monday, found that companies now face extensive geopolitical demands: 95 percent of respondents said they expect companies to respond in response to Russia’s unprovoked invasion by speaking out, exerting political and economic pressure or leave the attacking country’s market.
“When companies were shutting down in Russia, they didn’t make that decision just because of Russia,” said Microsoft President Brad Smith, who argues that withdrawing from Russia is a message to all authoritarian regimes and an implicit acknowledgment that they may be forced to withdraw are from other markets.
The WEF itself was forced in March to freeze its ties with Russian organizations and leaders under political pressure and avoid litigation over breaking sanctions.
Like other large global corporations, the WEF now faces difficult questions about where it draws its moral lines. Autocrats are traditionally welcomed in Davos with open arms. This week, love extended to Cambodia’s Hun Sen and Zimbabwe’s Emmerson Mnangagwa.
But the days of believing that conversation and open markets led to democratization are over.
Today we know that global economic integration does not lead to political relaxation. And like everyone else, the self-appointed high priests of globalization cannot avoid this reshaping of the world order.
The real question is not whether globalization will continue, but whether a market-oriented and western-centric WEF can develop with it.
Suzanne Lynch and Jamil Anderlini contributed to this report.
RIP Davos Man, long live globalization
Source link RIP Davos Man, long live globalization