DAVOS, Switzerland – Globalization is not over, it has simply outgrown the World Economic Forum.
At one time, globalization was mainly about the economy: boosting trade, falling tariffs, outsourcing and the rise of multinational brands.
It was run by the West, funded and supported by global institutions such as the World Trade Organization – and supposedly. In the days of world fame after the Cold War, this was the good and natural order of things, according to CEOs and political leaders who mingled at the World Economic Forum.
No longer. Today, political risk is multiplying and power is being decentralized, changing globalization with it.
This tension is fully apparent in Davos this week.
The city’s waterfront was dominated by crypto businesses with little interest in the official conference program. The Ukraine-themed space littered the city, where shining President Vladimir Zelensky was a bigger attraction than any of the political minuses on the WEF’s main stage. Governments may struggle to pay off the pandemic debt and support the pain of inflation, but success in finding a WEF panel on fair tax policy, despite calls from NGOs.
These many versions of Davos talked to each other instead of pulling in one direction on the free market.
Where once supply chains were globalized, rules and regulations are now more common, from closing corporate tax loopholes to imposing a carbon-neutral future.
“Our concept of risk has expanded,” said Arancha Gonzalez, former executive director of the United Nations International Trade Center and former Spanish foreign minister. “The part with the rules will be as important as the opening of markets. It is no longer a question of opening markets and thinking that everything will work out. I will not.”
These risks range from the ongoing global pandemic, which has set the world agenda for the past two years, to the global food crisis, which now threatens mass starvation.
And digital technology is more than finance that governs what is globalized today – everything from terror, hatred and misinformation to the proliferation of new cryptocurrencies and streaming services.
The story continues
Of course, there are concerns about cracks in the global economy caused by the blockade of Covid and the Russian war in Ukraine: a new Accenture study found that disrupting the supply chain could cost eurozone economies more than $ 1 trillion this year. 7.7 percent of GDP.
There is also a real risk that parts of globalization will stop or reverse in the long run, leading to a split in the world of democratic and authoritarian political blocs torn by sanctions and tariffs and fueled by regional internet.
Gonzalez is convinced that globalization, although changing, will continue because a world of global challenges needs a framework for cooperation. “I do not see a reduction in interconnection. For me, globalization is interconnected and it is increasing, not decreasing, “she said.
Former Danish Prime Minister Helle Thorning Schmid agrees. “We need to find a way to work with China. we [in democracies] we need to find ways to work with countries that do not fully share our values, “she said.
As China’s political fears grow in democracies, there is no widespread impetus for a significant change in human rights-based trade or intellectual property concerns.
UK Trade Secretary Anne-Marie Trevelyan told POLITICO that she would continue to express concern, but said that “we have very serious bilateral trade relations with China and our businesses want to continue to develop this.”
While Western governments are worried about China’s energy supply chains and rise, this is not the first thing for the rest of the world, which often feels marginalized in Davos.
“For most of Asia, becoming China’s number one feature is a return to the natural state of 1,800 from the last 2,000 years,” said Kishore Mahbubani, a prominent fellow at the Institute for Asian Studies at Singapore’s National University and an outspoken admirer of China. communist party. “Most of the region is trying to integrate with China,” he said.
It is clear to Mahbubani that “the United States has decided to try to stop China from becoming number one.” But the real risk is not that globalization will stop, but rather American self-sabotage. “If the United States tries to secede from China, it will secede from most of the region,” he said.
The future is regionalization
Adam Tuz of Columbia University has rejected the idea that globalization is over. “This is BS Stopping Globalization? “Life as we know it will cease to exist,” he told POLITICO. “When people say that, they are either naive or apocalyptic,” he said, adding that “it’s a bad way to think about the problem.”
Ace expects to “reconfigure globalization, rearrange and politicize certain relationships.”
Alexander Stubb, the energetic former Prime Minister of Finland who now heads the European University Institute’s School of Transnational Governance, warns of a difficult future. “It is too simplistic to say that I am moving towards a new Cold War, with a liberal world order and an authoritarian world order,” he said. “I think we will have more regionalization of globalization, but that will not happen.”
Instead, the West will have to adapt: ”If we want to work for a rule-based order, we no longer have to set the rules.”
Loic Tassel, European President of Procter & Gamble International Operations, says regional supply chains are here to stay: “90 percent of what we sell in Europe will be produced in Europe. This is a profound change that I think will be lasting. “
Politics matters
The greater risk to globalization may come from growing expectations that democratic governments and businesses, which call these countries home, will have to sever ties with nasty regimes.
A special report by the Edelman Trust Barometer, released Monday, found that businesses are now subject to extensive geopolitical demands: 95 per cent of respondents said they expect companies to respond to Russia’s unprovoked invasion through public speaking, political and economic pressure or exit from the aggressor market of the country.
“When businesses closed in Russia, they didn’t just make that decision for Russia,” said Microsoft President Brad Smith, who said the withdrawal from Russia was a message to all authoritarian regimes and an implicit acknowledgment that they could be forced to withdraw. . from other markets.
The WEF itself was forced to freeze relations with Russian organizations and leaders in March under political pressure and avoid litigation for violating sanctions.
As with other large global companies, the WEF has to face difficult questions about where it draws its moral lines. Traditionally, autocrats have been welcomed with open arms in Davos. This week, the love spread to Hong Sen from Cambodia and Emerson Mnangagwa from Zimbabwe.
But the days of believing that talks and open markets lead to democratization are over.
We now know that global economic ties do not lead to political relaxation. And like everyone else, the self-anointed high priests of globalization cannot avoid this redrawing of the global order.
The real question is not whether globalization will continue, but whether a market-oriented and Western-oriented WEF can develop with it.
Susan Lynch and Jamil Anderlini contributed to this report.
Add Comment