Tuesday, June 02, 2015

What Happened to Globalisation?

In all the celebrations about the arrival of the flat world, we somewhat forgot, that Globalisation has a reverse gear. This was indeed the point made by Joshua Cooper Ramo in his 2012 Fortune article (see here). If that sounded alarmist then, some events recently would reconfirm the death of the flat world that we thought we were living in.

So, at this particular time, the frontier of globalism really messy right now. Consider these few things

1. There are refugee boats floating on the sea in Indian Ocean and the Mediterranean, caught in storm and running out of food and water. Countries like Indonesia are refusing to take them, letting women and children die. Britain is doing even better, with Murdoch Press proposing to send gun-boats to meet them, as immigrants are like cockroaches, they say.

2. Russia has more or less exited the Power system established after the Second World War and is trying to re-establish the old empire. It has dismembered a neighbouring nation with impunity.

3. European creditors have pushed Greece to the brink and it may now have no choice but to leave the Euro. An exit from EU may follow, and even more problematically, an exit from NATO, if only the Russian and the Chinese end up caring for them and extend a credit line.

4. Britain is gambling on its future in the EU, trying to cherry-pick what advantages it wants. The calculation is that this could be achieved through a threat of referendum on EU. However, the moment the British government has picked is precisely wrong - the anti-globalism is in the air - and this may end up meaning a British exit from EU and a dismemberment of UK, as Scotland may want to stay in.

5. The Middle Eastern balance of power is breaking down, with US being forced into a rapprochement with Iran, as a direct consequence of the earlier meddling in Iraq. And, Western meddling has left Libya as a non-state (creating the refugee problem), Egypt as a solidly militaristic one (but one set to descend in chaos and a great candidate for Islamic state takeover one day) and Syria a chaotic irony. Yemen is tottering and all the Gulf solidarity is on the line. 

6. South China sea is another mess, with China asserting its influence that the United States and Japan do not like.

But, more importantly than these political events, there are economic developments, such as the efforts to develop post-Bretton Woods institutions, such as the BRICS Bank (if it does indeed assist Greece, that would immediately make them a player!) and the possibilities of a new alignment of the economies (Germany looking East?) that make the global system as it is now under threat of extinction.

However, nowhere the threat to globalisation more apparent than the two key things that are truly global - The Internet and Football. 

The credibility of global Internet has been severely undermined by Edward Snowden leaks, leading the talk of virtual sovereignty in countries such as Germany. The recent reports that an American cyber-attack on North Korean nuclear capability failed because North Korea does not have any Internet worth speaking of would strengthen the argument for a walled virtual world along national lines (one of the key actions of Chinese authorities in the recent times was to clamp down on all too common VPN connections to Japan which undermined the Chinese censorship).

The threat to Global Football is also apparent. It is not just about the opaque operations of Fifa and the corruption, but this recent suggestion that the European and Latin American nations may boycott 2018 World Cup in Russia and host their own World Cup. Indeed, whatever the reason, this may be another example of the privileged (the Europeans and some Latin American nations, but not sure they would go together for political reasons) not being able to come to terms with globalisation, which creates new playing fields, metaphorically speaking.

Indeed, this is not meant to be an alarmist argument that all is falling apart, but ignoring these trends would be a mistake. I shall claim that these are interrelated trends indicating breaking of post-war institutions and a gradual decline of the global system that we know now, a pivot point of sorts. This has enormous implications for everyone, including the global businesses. At points like this in history, and we have had similar situations in the past, languages, values and ways of looking at things all change. The language that we use now, of freedom, prosperity and enterprise, is somewhat exposed to be meaningless as we pivot, and we shall need a new vocabulary soon for the brave new world we are entering.




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