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Globalization to the test of fragmentation

DISCUSSION BOARD. While in the recent past, globalization has survived major disruptions (global financial crisis, populism, climate change, pandemic), this time might be different.By Virgile Perret & Paul Dembinski

Keystone
"A growing number of business executives and commentators believe that the war in Ukraine and the sanctions against Russia may accelerate the shift towards more self-sufficiency and/or more regionalism."

In a letter to shareholders, BlackRock CEO Larry Fink warned that Russia’s invasion of Ukraine could put “an end to the globalization we have experienced over the last three decades” (Christine Schliesser). Fink is far from alone: a growing number of business executives and commentators believe that the war in Ukraine and the sanctions against Russia may accelerate the shift towards more self-sufficiency and/or more regionalism.

On the contrary, Valerio Bruno argues that “despite years of pandemics and the re-emergence of old and new blocs, globalization shows great resilience.” He explains, “it is clear from the recent conflict arising from the Russian invasion of Ukraine that while a country like Russia can opt for autarchy by virtue of its limited economy based on the export of raw materials, China has well understood that it is inconceivable for its economy to move away from the current dynamics of globalization.” Therefore, “it would be far too early to decree the end of globalization.”

Governments and firms will have to integrate geopolitics in their decision-making

Globalization may not be over. Nonetheless, the ninth largest economy in the world – Russia - is being cut off from the world economy (or at least form the West) and the trajectory of globalisation may be deeply affected. From now on, governments and firms will have to integrate geopolitics in their decision-making and the world economy will become increasingly split in at least two parts. In other words, “the currently foreseeable conjunction between Russia, China, India and some Middle Eastern countries and Africa suggests a possible regionalization (into two or three zones) of current globalization” (Etienne Perrot).

There is a risk geopolitical tensions and the push for the so-called “friend-shoring” (Domingo Sugranyes) will lead to further fragmentation. This would further weaken global governance mechanisms and create greater uncertainty. We may not “have enough time or resources to fully understand the interconnection between global events as we only hear the 'bang' of the new crisis and stay alert for the next one” (Christos Tsironis). However, in the presence of unprecedented challenges facing the world, now is the time to strengthen the institutional framework needed to govern globalization and preserve the achievements of the last 40 years.

“… a possible regionalization of current globalization…”

The growth of international trade slowed down long before Russia invaded Ukraine.  Even longer, WTO negotiations have been stalling; as the focus of discussions is not on tariffs and taxes but on quality, ecological and sustainability criteria. As long as China does not have a sufficient domestic market to support its economic growth, the main driver of international economic relations will be continued globalization. In the longer term, the currently foreseeable conjunction between Russia, China, India and some Middle Eastern countries and Africa suggests a possible regionalization (into two or three zones) of current globalization.

Étienne Perrot

Jesuit, Dr. Economics sciences, editorial board of the magazine Choisir (Geneva), editorial adviser of the journal Études (Paris).


“… globalization can be renewed…”

War after a pandemic and a great recession… Emergency and disruption are served. Combat in Ukraine, sanctions against Russia, opposing military alliances, increasing tension between the US and China: opposed blocks are back, “friendshoring” of supply chains is on many business agenda, lack of Russian/Ukrainian grain and fertilizers threatens disturbance and hunger in other countries. Through globalization, problems circulate worldwide as well as solutions, interdependence is a fact. Europe should remain true to democratic and free-trade principles, and actively promote new relationships. Protectionist or aggressive trade policies would prove extremely costly. Globalization can be renewed. There are opportunities to promote cooperation, investment, technology transfer and trade with relatively “nonaligned” actors, especially in Africa and Latin America.

Domingo Sugranyes

Director of a seminar on Ethics and Technology at Pablo VI Foundation, past Executive Vice-Chairman of MAPFRE international insurance group.


“… globalization is not over, but we need to radically rethink it…”

Russia’s invasion of Ukraine put an end to the globalization as we have known it in the past 30 years, says Larry Fink, BlackRock CEO. Add the fall of Kabul and the Afghanistan disaster, not to mention the pandemic. The wind of change is blowing harshly as it signals to the West that it cannot force its values onto the rest of the world. Especially not, when big words such as liberty and human rights have become the shabby disguise of self-interest. Humility and self-criticism have not been our core competencies so far. Globalization is not over, but we need to radically rethink it.

Christine Schliesser

Senior Lecturer at Zurich University in Systematic Theology and Ethics and Director of studies at Fribourg University’s Center for Faith and Society.


“… the issues raised in the context of globalization are as old as civilizations themselves…”

Globalization is a protean concept. It is embodied in on-the-ground processes (trade, finance, etc.) and in the institutions, laws and regulations. Underlying these are conceptual frameworks covering their rationale, their means, and the actions and inaction of human participants. Commentators sometimes classify the effects of globalization under the headings of sovereignty, autonomy and interdependence. Sovereignty and autonomy overlap. Sovereignty concerns the relationship of states to their own citizens and to external parties. Autonomy concerns the ability to make and execute independent decisions. Autonomy should serve to accommodate differences in national cultures within frameworks which also facilitate multilateral cooperation. Sovereignty and autonomy are difficult concepts in the design of a global governance that enables resolution of tensions and conflicts. The issues raised in the context of globalization are as old as civilizations themselves and will not disappear with enhanced consciousness of the shortcomings of the current version.

Andrew Cornford

Counsellor, Observatoire de la Finance; past staff member of UNCTAD, with special responsibility for financial regulation and international trade in financial services.


“… one paradigm ends and another one succeeds…”

Globalisation is not over if we have in mind a chain where one paradigm ends and another one succeeds. The rapid and constant change seems to be the character of a supersonic Globalization: within just a few years, the debt crisis shacked normative illusions in the economy. Afterwards, Covid-19 pandemic transformed not only economic functions but also the ways we understand the global-local interconnection. Just before the pandemic ended, the war in Ukraine refuelled long sleeping fears of a world nuclear war. One can observe many global events and concentric circles that succeed each other at high speed. We don’t have enough time or resources to fully understand their interconnection as we only hear the 'bang' of the new crisis and stay alert for the next one. The functional inter-dependency between economies, societies, sciences, and wars will further deepen and affect humanity.

Christos Tsironis

Assoc. Prof. of Social Theory at the Aristotle University of Thessaloniki


“… globalization shows great resilience…”

It would be far too early to decree the end of globalization. Even if we were to conceive it, strictly speaking, merely from a political-economic perspective, a possible moment of minor acceleration in the process and dynamics of globalization would not mean its end. On the contrary, despite years of pandemics and the re-emergence of old and new blocs, globalization shows great resilience. In fact, it is clear from the recent conflict arising from the Russian invasion of Ukraine that while a country like Russia can opt for autarchy by virtue of its limited economy based on the export of raw materials, China has well understood that it is inconceivable for its economy to move away from the current dynamics of globalization, let alone replace them with new ones.

Valerio Bruno

Researcher in politics and Senior Research Fellow at the Centre for Analysis of the Radical Right (CARR).


Commentaires

Virgile Perret / Paul H. Dembinski

Observatoire de la finance Project Manager / Director