The US, China and the great eco­nomic de­cou­pling

Arab News - - Opinion - HAFED AL-GHWELL

Ade­cou­pling of the world’s two largest economies has come to dom­i­nate the plan­ning for a post-pan­demic world. The re­sult­ing global land­scape will be un­like any­thing since the Sec­ond World War ended 75 years ago. The world was firmly on the path to some form of re­align­ment be­fore the two big­gest economies be­gan ir­re­versibly drift­ing apart, al­beit grad­u­ally. But is needed is a grad­ual shift, not a head­long rush into the un­known as is hap­pen­ing now.

Brus­sels ap­pears to be set­tling for a “de­fen­sive de­cou­pling” to shore up in­ter­nal vul­ner­a­bil­i­ties ex­posed by the debt cri­sis, Brexit, COVID-19 and the sud­den rise of eu­roskep­tic, right-wing anti-im­mi­grant po­lit­i­cal groups. The lack of force­ful mea­sures to ad­dress such weak­nesses has em­bold­ened gov­ern­ments in Poland and Hun­gary to test the EU’s pa­tience, al­most daring the bloc to en­force Ar­ti­cle

7, or even es­tab­lish mech­a­nisms to ex­pel non-con­form­ing mem­bers.

Ex­ter­nally, the EU is con­sis­tently find­ing Wash­ing­ton an un­re­li­able part­ner, while the con­flict in Libya poses sig­nif­i­cant chal­lenges in terms of il­le­gal im­mi­gra­tion, traf­fick­ing, em­bargo vi­o­la­tions and ter­ror­ism. Ad­di­tion­ally, the bloc is heav­ily de­pen­dent on gas sup­plies from its big­gest ad­ver­sary, Rus­sia — it­self de­ter­mined to main­tain this monopoly by wad­ing into the Syr­ian and Libyan con­flicts to desta­bi­lize an am­bi­tious Mediter­ranean gas coali­tion aim­ing to sup­plant Gazprom as the EU’s prin­ci­pal en­ergy sup­plier.

Brus­sels has also sought to de­fend its eco­nomic in­ter­ests by tar­get­ing “mar­ket dis­tor­tions” caused by state-sub­si­dized for­eign com­pa­nies.

Ankara views the EMGF and the grow­ing in­flu­ence of the GCC as an ex­is­ten­tial threat, ne­ces­si­tat­ing its in­ter­ven­tion in Syria and Libya and a more ag­gres­sive stance against Greece and Cyprus. Turkey fears be­ing mus­cled out of the re­gion and hav­ing to rely on en­ergy im­ports as it vies to be­come an al­ter­na­tive man­u­fac­tur­ing cen­ter in the new global sup­ply chain pro­posed as an al­ter­na­tive to de­pen­dence on China.

Es­ca­la­tions at Gal­wan Val­ley, stok­ing ten­sions in the South China Seas, provoca­tive mil­i­tary ex­er­cises off the Tai­wanese coast and the sit­u­a­tion in Hong Kong sig­nal Xi Jin­ping’s ex­pan­sion­ist am­bi­tions. Bei­jing ap­pears to have deep­ened its ob­ses­sion with con­sol­i­dat­ing power do­mes­ti­cally and pro­ject­ing it abroad. Where Chi­nese war­planes, boots and war­ships can­not go, the yuan does — via ei­ther a grad­ual yuan in­ter­na­tion­al­iza­tion that ap­pears to have gained trac­tion in Africa or qui­etly al­low­ing its value to drop to the low­est level since 2008.

For a while, the widely held be­lief was that glob­al­iza­tion would re­main an un­stop­pable force and no mat­ter what pol­icy or ide­o­log­i­cal dif­fer­ences lay be­tween the world’s power cen­ters, the ex­pan­sion of global trade and un­in­ter­rupted in­vest­ment flows were ideals. How­ever, a mix of strate­gic and eco­nomic aims sparked po­lit­i­cal dis­course fa­vor­ing a grad­ual de­cou­pling, be­gin­ning with pro­tect­ing sen­si­tive sec­tors and re­ject­ing tech­nol­ogy trans­fers. The world did not ac­count for nor ad­e­quately pre­pare for COVID-19 ex­pos­ing glob­al­iza­tion’s Achilles’ heel and so eas­ily un­rav­el­ing what had be­come the nat­u­ral or­der.

With economies stalled, un­em­ploy­ment sky­rock­et­ing and sup­ply chains seized up, de­cou­pling has since over­taken glob­al­iza­tion as most coun­tries are look­ing in­ward or re­gion­ally to shock-proof economies and in­su­late so­ci­eties from far-off threats. Un­for­tu­nately, de­cou­pling is still very much the talk of politi­cians seek­ing to re­na­tion­al­ize na­tional core com­pe­tences. Nonethe­less, as the pan­demic has shown, there is lit­tle down­side to be­ing well pre­pared.

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