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World leaders are so preoccupied with wars, power struggles, social tensions, and political polarization that they appear largely unwilling to invest in preserving global economic integration. History, economic theory, and current empirical trends indicate that this is a mistake.
PARIS/VANCOUVER – Today’s economic outlook is strangely contradictory. While global markets, led by technology and energy, have been ebullient over high short-term profits, the mood at the Spring Meetings of the World Bank and the International Monetary Fund last month was decidedly somber.
Two global institutions that normally speak in banalities issued strong warnings about the growing risks of economic fragmentation.
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The idea that an interdependent global economy can work within a geopolitical system based on the national sovereignty of nearly 200 states has always reflected a certain amount of idealism. Or perhaps it was more like hubris.
This strange marriage did, after all, collapse in the 1930s, with the division lasting through the end of World War II.
But idealism was not dead, and the global system was subsequently rebuilt on a foundation of agreed rules, shared international institutions, a degree of mutual forbearance, and crisis management.
From the start, security considerations were kept as separate as possible from the economy, but this became especially important in the 1990s, when countries with radically different regimes began integrating into the global economy.
Today, however, the foundations of this system are eroding fast, and global economic integration has seemingly gone into reverse. As Gita Gopinath, the IMF’s first deputy managing director, recently explained, economic fragmentation could have far-reaching implications for trade, such as reduced efficiency gains, and increase the risk of macro-financial volatility.
Fragmentation could also reduce capital flows to the Global South and undermine the provision of global public goods, including climate action.
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Five key factors are driving this trend toward fragmentation. First, rising geopolitical risks have fueled mistrust and reduced systemically important countries’ will to cooperate.
Though policymakers rarely acknowledge it, a crisis over Taiwan – a flashpoint in the Sino-American rivalry – could well bring down the global economic system.
Second, key countries are increasingly allowing security considerations to shape economic policy, with some taking expansive action to secure access to inputs, infrastructure, and technologies. While this is understandable, countries must exercise restraint.
Whereas globalization happened gradually, a deglobalization process driven by security-motivated measures (which are almost guaranteed to trigger escalation by rivals and partners) would probably be fast and unwieldy, posing severe systemic risks.
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The third factor underlying economic fragmentation is a deepening rift between the Global North and Global South. Public and private support for developing economies has collapsed at a time when many are wrestling with the legacy of the COVID-19 pandemic and confronting climate change.
The decades-long trend toward convergence with developed economies has seemingly been interrupted, and resentment is building in the Global South. Net financial flows to developing countries have turned negative in 2023, and the trend is worsening in 2024.
This partly explains the reluctance or refusal of many Global South countries to back the West on key geopolitical issues, such as sanctions against Russia in response to its war of aggression in Ukraine.
Fragmentation also reflects the rapid escalation of climate risks and disasters. With “once-a-lifetime” floods, mega-fires, and droughts proliferating, many countries are at risk of destabilization within the next few years, and there is no global “safety net” in place. Meanwhile, as Harvard’s Dani Rodrik has pointed out, countries are competing for dominance in green technologies, rather than working together to accelerate progress.
Lastly, the exponential growth of artificial intelligence is fueling national competition, rather than the global cooperation that is required. As MIT’s Daron Acemoglu and Simon Johnson have noted, regulations, policies, and institutions will be essential to ensure that AI creates jobs, rather than only destroying them. Global South countries need a voice in AI regulatory efforts.
To be sure, the global economic system still has many sources of resilience. As the recent Indonesian, Indian, and Brazilian G20 presidencies have shown, most of the Global South remains committed to both interdependence and global governance.
Furthermore, the private sector is still characterized by interdependence. We still have dedicated international organizations, global education networks, and a global civil society.
But we must not underestimate the dangers ahead. There is good reason to think that the coming months and years will bring a series of shocks and crises.
If leaders respond with tit-for-tat policies aimed at securing advantages over rivals, the integrated global economy could unravel. The speed of that process could overwhelm policymakers, and the path from economic pain to social upheaval to the abandonment of shared global rules may well prove to be short.
As it stands, leaders are so preoccupied with wars, power struggles, social tensions, and political polarization that they appear largely unwilling to invest in saving the integrated global economy, let alone strengthening its capacity to deal with the existential risks we face. But history, economic theory, and current empirical trends indicate that this is a mistake.
Even a partial collapse of our interdependent global economic and financial systems would be catastrophic, not least because it would undermine investment in global public goods.
For politicians worried about migration’s effect on their countries, it is worth noting that, without massive investments in combating climate change, reversing desertification, and reducing poverty, millions could be attempting to cross the Mediterranean by 2050.
National security must be a priority for policymakers. But measures to “secure” the economy must be combined with efforts to improve communication with rivals and invest in global public goods.
To this end, world leaders should use the G20 and other plurilateral bodies to elevate working groups and institutions that support collective governance, with a focus on managing AI risks, addressing climate change, and averting the collapse of the global economic system on which we depend.
About the Authors:
Bertrand Badré, a former managing director of the World Bank, is CEO and Founder of Blue like an Orange Sustainable Capital and the author of Can Finance Save the World? (Berrett-Koehler, 2018).
Yves Tiberghien, Professor of Political Science and Director Emeritus of the Institute of Asian Research at the University of British Columbia, is a visiting scholar at the Taipei School of Economics and Political Science.
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US President Biden accuses Trump of making people anxious with false information
While former President Trump has criticized the administration’s response to the hurricane that made landfall in southern states last month and caused major damage, President Biden has released false information and made people anxious. accused of being.
Hurricane Heleen made landfall in the United States late last month, causing a series of floods and landslides in the southern states of North Carolina and other areas, causing major damage.
Photo taken on October 9th, Florida, before Hurricane Milton made landfall.
Regarding this hurricane, former President Trump stated that the Biden administration would allocate almost all of its disaster response funds to support illegal immigrants, and only provide support of $750, or approximately 110,000 yen in Japanese yen, to victims.
He claims that there is no such thing and criticizes it as ``the worst disaster response in history.
On the 9th, at a meeting held at the White House to discuss disaster response, President Biden denied these claims and emphasized that ``Mr. Trump is leading the attack on lies.
Irresponsible and persistent disinformation and lies are making people feel unsafe, undermining trust in rescue and recovery efforts, and harmful to those who need help most.
In the United States, there are growing concerns that another hurricane will land in the southern state of Florida and cause damage again, and with less than a month left until voting day in the presidential election, disaster response has become a new issue.
Politics
Germany’s ports and China: How to reconcile openness, resilience and security?
Germany is dependent on its ports for the smooth running of its open economic model and has benefited from globalization in recent decades when the internationalization of its value chains strengthened its competitiveness.
Yet, with today’s hardening geopolitics, the vulnerabilities of Europe’s leading economic power are becoming apparent.
Germany’s ports are an indispensable interface between its production base and its export markets, as well as for its sources of supply. Crucial to its competitiveness, Germany’s ports are becoming increasingly indispensable for energy supplies given the country’s decoupling from Russian hydrocarbons, and they are essential for the deployment of military equipment to Europe’s eastern flank.
This is why particular vigilance is required in ports such as Hamburg, where the Chinese shipping company COSCO has acquired a stake in the company operating the Tollerort terminal. This transaction would scarcely have worried anyone in the past.
But now it is the subject of bitter discussions, with the Zeitenwende (“change of era”) announced by Olaf Scholz in reaction to Russia’s war of aggression against Ukraine.
Increased caution seemed to gain a foothold in order not to repeat past mistakes –until the German Chancellor decided in favor of the acquisition. Given closer ties between China and Russia, China’s assertive stance on the international stage, and increased pressure on Germany from its American ally to clarify its position with regard to its main trading partner, Germany is seeing its room for maneuver shrink.
Today, we need a more European approach that goes beyond short-term, profit-driven concerns. But to achieve this, we need to put in place a range of resources to be deployed in a resolutely cooperative approach.
About the Author:
Marie Krpata is Research Fellow at the Study Committee on Franco-German Relations (Cerfa) at the French Institute of International Relations – Ifri, where she dedicates her research activities to the European Union and the external relations of the Franco-German couple.
Politics
Georgia’s ongoing struggle goes beyond the bill. It’s about finally breaking free from Russian influence
In 2023, Georgia found itself in the spotlight due to ongoing large-scale public demonstrations against the introduction of Russian-style laws that threatened to derail the country’s European journey.
One such proposal was the now infamous ‘Agents of Foreign Influence’ bill, which the ruling Georgian Dream (GD) party was forced to drop due to intense public opposition. Shortly afterwards, Georgia was finally granted EU candidate status.
Now the bill is back under a new guise, as a draft law on the ‘transparency of foreign influence’. Make no mistake about it – it’s the same bill with a fresh coat of paint, despite the GD’s promise to unconditionally withdraw it last year.
Now Georgians are taking to the streets once again. But the struggle is so much more than just trying to get rid of a deeply unpopular legislative proposal. It’s about breaking Georgia free from Russian influence once and for all and finally joining the European family.
What is this bill and what does it mean for Georgia’s European future?
Despite the title change, the bill’s text remains similar. Like a similar Russian law, if passed it would require non-commercial legal entities and media outlets to be labelled as ‘organisations pursuing the interest of a foreign influence’ if they receive more than 20 % of their total annual funding from abroad.
This would subject such entities to a separate legal regime, impose cumbersome reporting requirements and introduce heavy administrative fines in the case of non-compliance through a vaguely defined monitoring process set down by the government.
Suffice to say, the Russian version went on to gradually eliminate many civil society and media organisations within Russia. For Georgia’s bill, the Council of Europe’s Commissioner of Human Rights has declared that it would breach Articles 11 and 14 of the European Convention of Human Rights and would have a chilling effect on Georgian media outlets and civil society, particularly those working on human rights, democracy and the rule of law.
By restricting civil liberties and media freedom, the bill violates several conditions attached to Georgia’s EU candidacy. This bill is also just one in a series proposed by the GD that breach conditions that Georgia must abide by to eventually accede to the EU.
The ruling party has already abolished mandatory gender quotas for the national parliament and proposed legislation to clamp down on LGBTIQ+ rights. As noted by the EU’s High Representative, such legislation ‘can compromise Georgia’s EU path’.
A bleak domestic picture
The GD, led by billionaire Bidzina Ivanishvili and whose wealth is tied to Russia, cannot openly admit that he’s deviating from the European path, given that nearly 90 % of Georgians support EU integration.
So instead, Ivanishvili, in a notoriously provocative speech argued that the controversial bill would ‘bolster Georgia’s sovereignty’, linking it to a global conspiracy theory by suggesting that decisions are orchestrated by a ‘global party of war,’ which was behind Georgia and Ukraine’s confrontation with Russia.
He accused NGOs and the ‘radical’ opposition of serving this agenda. Naturally, he pledged to persecute his political opponents after the parliamentary elections. And in this spirit, he promised that a ‘sovereign and dignified’ Georgia would still join the EU by 2030.
Last year, massive protests forced the GD to abandon the bill. Now, with parliamentary elections looming, the bill could grant the GD control over civil society and the media, thus helping it to engineer another electoral victory.
President Salome Zurabishvili stands as the Georgian people’s primary representative, urging the EU and the international community to increase their support for Georgia. She has recently vetoed anti-European legislation and pardoned political prisoners.
However, her influence is limited, as her veto powers can be easily overridden by the GD, as has happened several times recently. This all means that the Georgian people really do need the EU’s help to keep their European future alive.
What should the EU do?
By granting candidacy to Georgia, the EU has put its carrots on the table. Now it’s time for Brussels to wield its stick.
The European Parliament (EP) has adopted a resolution suggesting personal sanctions on ‘Georgia’s sole oligarch’, Ivanishvili. Ivanishvili’s fear of sanctions is definitely real, as he’s already laid the groundwork to dodge such sanctions.
He’s done this by passing amendments to Georgia’s tax code to facilitate tax-free transfers of assets from tax havens to Georgia.
Suspending visa liberalisation would only punish the Georgian people, not the GD and the oligarch who runs it. Halting Georgia’s candidate status would also savagely strip away the European future from Georgia’s people, a people who have shown time and time again their dedication to joining the EU. Besides, suspending candidacy would again play into the hands of the GD and Russia.
Instead, the EU should actively address the GD’s actions. Council President Charles Michel should go beyond making phone calls, and should actually go and visit Georgia with other high-level EU officials. This would build on DG NEAR’s Director-General Gert Jan Koopman’s recent visit to Georgia to increase the pressure on the government before the bill has passed its third reading.
During such a visit there should be a clear warning about suspending pre-accession support and halting Georgia’s accession progress if the bill passes. The EU should also increase pressure on the Georgian government to stop violent crackdowns on peaceful demonstrators and should fully get behind Georgian civil society, the independent media, and the Georgian people.
If the bill is adopted, it will require a change in government during the upcoming parliamentary elections to ‘to correct all the laws that do not correspond to Georgia’s European integration’, as President Zurabishvili said. Thus, the EU should increase its monitoring efforts to ensure the elections are properly conducted in the face of likely GD threats and intimidation.
As stated by Michael Roth, ‘Tbilisi is currently the true capital of Europe.’ While Moscow meticulously interferes through Ivanishvili and the GD , Brussels seems oblivious to the increasing urgency of the situation.
The question to ask is, following Russia’s brutal invasion of Ukraine, can the EU afford to lose yet another European country to Russia simply because it chose a European future? If the answer is a resounding ‘no’ , then the EU has no time to lose – it must act now to help Georgia safeguard its European choice.
About the Author:
Dr. Tinatin Akhvlediani is a Research Fellow in the EU Foreign Policy Unit at CEPS, specializing in the EU’s enlargement, neighborhood, and trade policies.
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