A Davos panel offers an incorrect assessment
One of the first sessions at the World Economic Forum this year — ‘De-Globalisation or Re-Globalisation’ — raised some very interesting issues.
According to historian Niall Ferguson, the anti-globalisation populist insurgency had failed. Despite all the talk of de-globalisation following the election of Donald Trump and the Brexit referendum, international trade has actually gone from strength to strength.
Hungarian Minister for Foreign Affairs and Trade Péter Szijjártó agreed. He noted that Hungary is located where west meets east and that the international automotive business of which Hungary is a hub continues to thrive. Indeed, the batteries required for the electric vehicle revolution are made in South Korea and China — US and European companies won’t be turning them away.
Yet everyone on the panel recognised that, with the sanctions placed on Russia — which Ferguson argued had not worked to stifle trade between the country and the rest of Europe — and the trade wars between the United States and China, something new is afoot. Perhaps not de-globalisation, but a new form of globalisation – one in which global trade may continue apace but with periodic interruptions caused by geopolitical tensions.
It was clear from the panel that the Davos set is not yet sold on major global conflict, especially with China, and would much prefer that tensions calm down. All expressed fears about ‘Cold War 2’ because it would destroy global trade and prosperity. War fever has not yet consumed our leaders, thankfully.
But one interesting point that stood out was that the moderator, Ian Bremmer of the Eurasian Group, seemed very keen not to take the recent growing friendship between the Russians and the Chinese seriously. When Szijjártó spoke about Hungary’s need for openness to the east, Bremmer was quick to clarify that Szijjártó was not talking about some sort of collective Eurasian bloc. This stood out as a point of anxiety for Bremmer, as it no doubt is for the Americans more generally.
Yet there is growing awareness that the Russians and Chinese seem intent on much closer cooperation. Meanwhile, in Europe, tensions are rising due to the energy costs associated with the sanctions and America’s attempts at protectionism – these tensions could have consequences for a relationship between Europe and America that many seem to assume is ironclad. These two trends seem related, as they suggest a much more fragmented global system moving forward. Yet none of this was on the menu at Davos this week.
Ultimately, what was missing from an otherwise fascinating discussion was the argument that the world is not so much de-globalising as it is re-polarising and that the global conflict — whatever shape it takes — will not be between China and the West, but rather between an emerging BRICS+ bloc and the West. One came away with the sense that this was an unsettling prospect for some of the panellists, but even a cursory glance at Chinese trade growth by trade partner suggests that it is a perspective that needs to be taken seriously.
If we look at these trade statistics, they suggest that China is pivoting away from the West and focusing on the rest of the world. Certainly, this does not suggest an end of globalisation, but it seems to indicate that alliances and trade deals will be more fluid moving forward, with the potential for new blocs to emerge as their interests coalesce around certain key issues. But all of this was too much for the Davos crowd to consider this year.