Section:GDN 1J PaGe:2 Edition Date:190808 Edition:01 Zone: Sent at 7/8/2019 19:04 cYanmaGentaYellowblac
- The Guardian Thursday 8 Aug ust 2019
2
globalisation’s high point. The Soviet Union
had collapsed, former communist countries
were becoming market economies,
independent central banks were all the rage and a
multilateral trade deal was concluded after more than
seven years of negotiations. Europe’s integrationist
project was in full swing, with preparations under way
for a single currency. Politics during the 1990s was
dominated by parties of the centre right and centre left,
pursuing broadly similar economic policies: budgetary
discipline, liberalising capital fl ows, encouraging the
incursion of the market into sectors hitherto off limits.
Sure, it was accepted that there were teething problems
with the new world order, but the cold war was over
and Russia no longer a threat. America would use its
unchallenged military might to police the world and
keep factories booming internationally through its
willingness to act as the consumer of last resort.
Little of this utopian vision has survived. There has
not been a completed set of multilateral trade talks
since the Uruguay round was wrapped up in late 1993, in
large part because this was the last time the US and the
EU were able to carve out a deal to their mutual interest
and then impose it on the rest of the world.T
he G7 – the US, Canada, Japan and the
four biggest economies of Europe – no
longer call all the shots at international
summits. The independence of
central banks is threatened. The US
is unwilling to soak up all the world’s
excess production and instead
demands that countries such as
Germany run down their trade surpluses. Europe’s
drive for integration has stalled. Parties of the centre
have been hollowed out, either because they failed
to spot the weaknesses inherent in globalisation or
were too timid to act if they did. The Washington
consensus – that there was a one-size-fi ts-all solution
to the problems of developing countries that involved
privatisation, abandoning capital controls and
budgetary rectitude – has fallen into disrepute. And
Russia is not the busted fl ush it was supposed to be.
The risk that the current iteration of globalisation could
end in military confl ict is much higher than generally
acknowledged.
To prevent such an outcome, there needs to be
change at all levels, starting with the local one. Even
during its heyday, large chunks of economic activity
remained untouched by globalisation and that segment
is likely to grow as economies become more service-
sector dominated. In addition, countries such as the US
are already bringing production back within its borders- in part because of the high cost of transporting goods
around the world, and in part because technological
change – greater use of robots and artifi cial intelligence –
has reduced the fi nancial incentive to off shore.
There is also going to be an enhanced role for the
nation state, the death of which has been exaggerated.
It will no longer be good enough for politicians to fob off
voters with the idea that globalisation is an unstoppable
force of nature against which they are powerless. Telling
the public that inequality, industrial decay and stagnant
living standards are something they have to suck up is
asking for big populist trouble.
China’s Belt and Road initiative is an example of how
countries are starting to operate at a sub-global level.
Beijing’s network of infrastructure projects across Asia
and Europe has a dual purpose: to provide a market for
Chinese goods and to extend Beijing’s reach in parts of
the world where America’s hard and soft power is weak.
Finally, there’s a need for reform at a global level: to
mobilise eff ective climate-change action , to meet the
United Nations’ sustainable development goals , to rein
in the power of global fi nance through curbs on capital
fl ows, and to piece together a system of rules-based, but
managed, trade.
None of this will be easy – in fact, it will be hellishly
diffi cult. But three developments provide cause for
optimism. The fi rst is that the failings of the current
system have become too big to ignore. The second is
that failure has led to new thinking. The third is that the
new ideas are starting to infl uence policy.
During the EU referendum campaign Barack Obama
warned that Brexit put Britain at risk of relegation as
a global trading power. Boris Johnson, then mayor of
London, hit back, attributing the US president’s view to
“ancestral” dislike of the UK , rooted in “part-Kenyan”
heritage. It is not unusual for British politicians to
resent being reminded of their country’s junior status in
relations with the US (although most manage to express
that frustration without nasty racial insinuations). There
is no symmetry of clout in the “special relationship”.
One side is a superpower, the other is not. Inability to
grasp that disparity is a weakness among Eurosceptics.
The belief that Britain would be better off without
EU membership is sustained by an infl ated sense of the
country’s capacity as a solo actor on the global stage.
That generates obsession with the idea of trading peer-
to-peer with the US, which has led to a misallocation
of diplomatic eff orts across the Atlantic. Dominic
Raab, the foreign secretary, briefl y met Donald Trump
in Washington this week. Liz Truss, international
trade secretary, was also in the US, promising
business audiences that Britain would be “fast-
tracking” a trade deal.
Such assiduous attention boosts only the vanity
of the ministers involved. It is pitifully na ive of Mrs
Truss to suppose that the tempo of a trade deal can be
dictated by Britain. Terms will be set by the superpower
at leisure, not the supplicant nation in a hurry. It does
not matter that President Trump has said approving
things about Mr Johnson. There will be no favours,
just an imposition of brutal realpolitik. It is Congress
that can satisfy or frustrate UK preferences, and in that
arena the interests of Iowa farmers and US corporations
have precedence.
The truth about the balance of power in a UK-US trade
negotiation was spelled out this week by former US tradeBeijing and Hong Kong’s protest ers can agree on this
much about the unrest now in its ninth week: the turmoil
is growing and violence is intensifying. The region is
facing its most serious crisis for decades. In the fi rst eight
weeks, police fi red 160 rubber bullets and 1,000 rounds of
teargas. On Monday, they came close to matching those
fi gures in a single day. Meanwhile Beijing issues barely
veiled threats, such as the mass drill of 12,000 riot police
in Shenzhen, just across the border, or explicit ones:
“Those who play with fi re will perish by it.”
Hong Kong’s fabric is unravelling. Thirteen of the city’s
18 districts have seen protests. The youngest of those
arrested is 14 , the oldest 7 6. Thousands of civil servants,
fi nance workers and lawyers have rallied. On Monday,
Hong Kong’s fi rst general strike in half a century brought
out teachers and construction workers alike, halted
metro lines and cancelled hundreds of fl ights. Many
who were largely apathetic about the original issues are
furious at the behaviour of politicians and police , but
views are polarising: others are angered by or fearful of
the disruption.
A small but growing number in this leaderless
movement has turned to force, mostly against property,
but also against police. Others are dismayed by thosesecretary Larry Summers when he said: “Britain has
no leverage. Britain is desperate.” That vulnerability
will be exacerbated by Brexit. Yet Mr Johnson is
putting no eff ort into relationships with Angela
Merkel, Emmanuel Macron or any of the players on
the EU council that will settle Britain’s fate in the
run-up to the 31 October Brexit deadline.
This is partly an aff ectation to signal that the
negotiating strategy has changed. Continental leaders
are meant to observe Mr Johnson’s unfl inching march
towards a no-deal outcome, and conclude that,
unlike Theresa May, he is not bluffi ng. They are then
expected to soften their insistence that the Northern
Irish backstop be part of any withdrawal agreement.
Sulking in Brussels will not work any better than
sycophancy works in Washington. The EU would
prefer an orderly Brexit, but Britain’s negotiating
strength decays at an accelerated rate in the messier
scenarios. Mr Summers’ equation – leverage
decreases as desperation increases – applies to deals
with the EU too.
Mr Johnson appears to think that dealings with
Brussels are made harder by the formal article 50
Brexit process. The opposite is true. Article 50 is not
generous to the leaving member state, but it has the
virtue of effi ciency. It is a genuine fast track. Mrs
Truss will discover what the slow track feels like once
she starts negotiating with Brussels as trade minister
from a non-EU country.
For decades, British foreign policy was designed
on the principle of the bridge between the US and
continental Europe. London had a unique mediating
function which was valued in Brussels and in
Washington, amplifying UK power in both capitals.
Brexit knocked down one supporting pillar of that
bridge, and yet Mr Johnson appears not to have
noticed or not to care as the edifi ce crumbles and
slides into the sea.
It is not too late to adopt a more realistic approach.
He might yet engage with EU leaders in a spirit of
professionalism and respect. Sadly, those are not
qualities often exhibited by Mr Johnson. Diplomacy
was once a source of British infl uence in the world.
It should not come as a surprise if the country ends
up diminished by its chronically undiplomatic
prime minister.tactics, and fear the reaction to direct if symbolic
attacks on Beijing’s authority, but are outraged by the
double standards. A student union leader has been
arrested for possession of “off ensive weapons” – laser
pointers – and other s have been charged with rioting,
carrying a jail sentence of up to 10 years. In contrast,
the men arrested after a gang rampaged through
a metro station assaulting suspected protest ers
with metal and bamboo rods – while police were
mysteriously absent – face the much lighter charge of
unlawful assembly.
Though demands have proliferated , many of
those taking part would probably think again if the
government formally withdrew the extradition
bill which ignited this movement, rather than
simply repeating that it is dead, and launched
an independent inquiry into the unrest and its
policing, as even pro-establishment lawmakers have
requested. But offi cials ruled that out yesterday.
Protest ers are moved more by despair than hope.
Some even say they are sticking it out because they
could be arrested later: they see it as now or never.
A deployment of the People’s Liberation Army
remains a last resort for Beijing. Offi cials in Hong
Kong and Beijing probably hope the return of schools
and universities in September, as well as the sheer
exhaustion of non-stop activism, will take the steam
out of the movement before the Communist party
celebrates the 70th anniversary of its taking power in
China on 1 October. But they also seem to be relying
on harsher policing on the streets and a more punitive
pursuit of protest ers through the justice system.
Everything to date suggests this will pour fuel on the
fi re. How much more can Hong Kong take? Continued from frontHong Kong is becoming
unrecognisable, and
there is no end in sight
China
Brexit
Britain has forgotten
the art of diplomacy just
when it needs it most
Founded 1821 Independently owned by the Scott Trust No 53 ,794
‘Comment is free... but facts are sacred’ CP Scott
Globalisation as we know it is
over. And that’s a good thing
Larry Elliott
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