Airlines are agents of geopolitical power. They are agents of geopolitical power, because they have the power to become the bridge between the core and peripheries of the world.
For example, in spite of the current civil strife in Mogadishu, Somalia, Turkish Airlines, during March, 2012, was the first and only internationally-acclaimed airline that began flying (via Khartoum at the time) to Somalia. Flying into Somalia, for Turkish Airlines, meant: We back Somalia. And let this flight herald our trust in Somalia and our Somali partners.
Geopolitically what does this mean? Since 2011 it was President (former prime-minister at the time) Recep Tayyip Erdogan that first visited Mogadishu (the highest non-African ranking official that Somalia has ever received after years of internal strife). Despite of the fact that Turkey initially began its bilateral relation with Somalia based on humanitarian aid, the Turco-Somali relationship would evolve into that of a political and commercial interest, particularly in Turkey’s interest of supporting vital infrastructure—i.e. ports—programs in Somalia by investing approximately over $500M. Yet, going back to the main topic of this article (airlines and geopolitics), what does it mean when an airline goes to another poorly served, connected country? It means one thing and one thing only: geopolitical trust (country stability) and geopolitical territorial linkage (exertion of state power from the airline’s country of origin. Think of Netherlands and Suriname).
Before studying and working in geopolitics and investment projects, I, myself, lived some kind of a hybrid life. Let’s say somewhere between business and aviation. From 2007—2011, I studied business administration at Embry-Riddle Aeronautical University (which actually has a huge military culture and values, and which also taught me, generally speaking, how many of my American colleagues in the military perceive the world), focused in the geographies of air transportation; in other words, commercial geographies and mobilities, combined with business administration critical thinking. Yet, throughout those years I became a pilot and even did an internship in Panama City, Panama, in Copa Airlines headquarters (Panama’s main airline).
Now, fast forwarding time, by combining both geopolitics and aviation studies, I have undoubtedly learned that airline routes are one of the prime indicators when a country’s socioeconomic status is improving, heading in the wrong direction, or a sign of the geopolitical influence one state exerts into another; airlines are the first geopolitical agents that have the power to suspend or completely terminate a destination, consequently, eliminating the bridge between one space and another, isolating an entire country, for example (e.g. Google: Yemen Sana’a airport).
Take for example Bangui, in the Central African Republic. What if I tell you that if you were to fly to the CAR, it is Air France (as the former—and still—colonial power) the only European airline that serves Bangui only once a week? What if I tell you that though Royal Air Maroc serves Bangui as well, it does so in the same degree—once a week—as Air France? And the same can be said for the relatively internationally known TAAG Angola airlines, which operates from Luanda. Regardless of how you look at it, if you were to fly to Bangui M’Poko International airport, in a trustworthy international airline (those that fly into Europe and the US are considered safe, trustworthy and high-standard airlines, because of both the FAA and EASA high-standard requirements on aircraft safety), most likely, you would have a really hard time in securing the correct flight schedule, price and, most importantly, the time and date you’d like to fly into the CAR. In the commercial aviation network and planning parlance, the CAR would be technically isolated. If Air France is the only European airline serving the CAR, can this mean that there are still some colonial, pastoralist-type of linkages? Or that an ex-colonial power controls the mobility and connectivity to its former colonies? I’ll let you be the judge of that question.
But, also, did you know that Air France has, from Europe, a complete monopoly on Cayenne, French Guiana, and to a certain extent to Papeete, French Polynesia? (Air Tahiti Nui—Air France’s only competitor—is supported by the French Government in the form of +$300M in subsidies, in spite of the fact that its main shareholder is the French Polynesian government, and though I am indeed generalizing, I am suspecting that the same French Government’s subsidies are the ones that are partially supporting Air Tahiti Nui vis-à-vis the Government in Tahiti). And, lastly, the same can be said about West Africa and the Sahel air travel network—until Turkish Airlines has come into play.
From a geopolitical point of view, Air France’s destination network is one of the most interesting to research as well as the rapid expansion of both Emirates and Turkish airlines’ networks (e.g. from Tajikistan to Eritrea). For example, Turkish airlines currently competes with Air France’s extensive West Africa network. Turkish airlines flies into the same cities were Air France’ airline empire once had a complete monopoly, including cities like Nouakchott (Mauritania), Niamey (Niger), Ouagadougou, (Burkina Faso), Conakry (Guinea), N’Djamena (Chad), and Libreville (Gabon). Therefore, as a result, one could generally conclude that Turkish Airlines is challenging many airline networks that aroused during colonial times (e.g. Turkish is challenging Aeroflot’s network in Central Asia; Air France and Brussels’s airlines West African network; and Turkish Airlines will eventually challenge US-based airlines hegemony in the Latin America-Europe-and-Asia controlled transit passengers market). Also, many of the gulf airlines (Etihad, Emirates, Qatar, particularly) have been gradually catching up by flying to cities like Buenos Aires and Sao Paulo, while continuing their expansion on US airspace (e.g. Emirates will fly into Orlando, Qatar is flying into Miami, Etihad is serving Los Angeles), which is why I am not surprised that many of the US legacy carriers’ CEOs are accusing the Gulf airlines from being heavily subsided, claiming unfair competition. Yet, I will leave that question to the legal experts.
What is the main lesson here? That airlines compete for power and influence as much as a state would.
An airline’s main geopolitical power is manifested as: 1) the power in controlling mobilities; 2) the power of transporting cargo, reducing the time, compared to shipping vessels and railway transportation; and 3) the power of being part of the propaganda and media machine of an hegemonic and/or rising power. For instance, in my country (Guatemala), which, unfortunately, due to high criminal violence and corruption, has been part of America’s illegal migration problem for a while. In spite of this migration problem, Guatemala is currently served by four US legacy airlines (Delta, American, United and Spirit), with 9 non-stop flights to United States, and with +50 frequencies of flights between America and Guatemala in a week. In turn, there are only five Latin American—and one European, Iberia—airlines legacy carriers that serve Guatemala, one of them is from Panama (Copa); three from Mexico (Aeromexico, Interjet and Volaris); and one is from Colombia (Avianca). Henceforth, and compared with the Latin American airlines, US-based carriers at least control 44% of the Guatemalan market; additionally controlling European and Asian mobility into Guatemala and the rest of Central America, except for Panama City—which is rapidly growing and served by major European legacy carriers (Iberia, KLM, Air-France, TAP, and Lufthansa this coming march 2016).
Last but not least, airline’s propaganda can dwell in our geographic imagination and induce our hearts and pockets. How? Well, they capture the essence of curiosity. The curiosity of traveling into their countries of origin. The curiosity of using them as linkages into another unknown, untraveled destination. The Curiosity of imagining what is life like in the airlines’ countries of origin. And, the curiosity of having the ‘experience’ of traveling with them. At least, from a Guatemalan standpoint, many of the US-legacy carriers advertise American hallmarks of touristic and geopolitical power, such as photos of the White House, the Statue of Liberty, the Golden Gate Bridge, and the giant Hollywood emblem in the hills of Los Angeles.
With that kind of propaganda, no wonder why many of my countrymen must imagine that as soon as you step in the US, your life will become great, suddenly change, and why not, you will be part of the American dream—and from a business and marketing standpoint, of course, that I congratulate the American airlines. They are making a fine job in serving and connecting Guatemala with the rest of the world.
Yes, airlines can provide many things for our self-esteem (the joy of looking forward to relax in a nice, sunny beach) and our egos (the joy of telling your family and friends that you will travel to a destination they are eager to go but can’t). But, the airlines are also part of the geopolitical architecture of a state’s power: connecting, uniting or burning the bridge between one space and another. The core and the periphery. The served and unserved.
So, my dear reader: are airlines agents of geopolitical power?
Can e-commerce help save the planet?
If you have logged onto Google Flights recently, you might have noticed a small change in the page’s layout. Alongside the usual sortable categories, like price, duration, and departure time, there is a new field: CO2 emissions.
Launched in October 2021, the column gives would-be travellers an estimate of how much carbon dioxide they will be responsible for emitting.
“When you’re choosing among flights of similar cost or timing, you can also factor carbon emissions into your decision,” wrote Google’s Vice President of Travel Products, Richard Holden.
Google is part of a wave of digital companies, including Amazon, and Ant Financial, encouraging consumers to make more sustainable choices by offering eco-friendly filter options, outlining the environmental impact of products, and leveraging engagement strategies used in video games.
Experts say these digital nudges can help increase awareness about environmental threats and the uptake of solutions to reduce greenhouse gas emissions.
“Our consumption practices are putting tremendous pressure on the planet, driving climate change, stoking pollution and pushing species towards extinction,” says David Jensen, Digital Transformation Coordinator with the United Nations Environment Programme (UNEP).
“We need to make better decisions about the things we buy and trips we take,” he added. “These green digital nudges help consumers make better decisions as well as collectively drive businesses to adopt sustainable practices through consumer pressure.”
At least 1.5 billion people consume products and services through e-commerce platforms, and global e-commerce sales reached US$26.7 trillion in 2019, according to a recent UN Conference on Trade and Development (UNCTAD) report.
Meanwhile, 4.5 billion people are on social media and 2.5 billion play online games. These tallies mean digital platforms could influence green behaviors at a planetary scale, says Jensen.
One example is UNEP-led Playing for the Planet Alliance, which places green activations in games. UNEP’s Little Book of Green Nudges has also led to more than 130 universities piloting 40 different nudges to shift behaviour.
A 2020 study by Globescan involving many of the world’s largest retailers found that seven out of 10 consumers want to become more sustainable. However, only three out of 10 have been able to change their lifestyles.
E-commerce providers can help close this gap.
“The algorithms and filters that underpin e-commerce platforms must begin to nudge sustainable and net-zero products and services by default,” said Jensen. “Sustainable consumption should be a core part of the shopping experience empowering people to make choices that align with their values.”
Embedding sustainability in tech
Many groups are trying to leverage this opportunity to make the world a more sustainable place.
The Green Digital Finance Alliance (GDFA), launched by Ant Group and UNEP, aims to enhance financing for sustainable development through digital platforms and fintech applications. It launched the Every Action Counts Coalition, a global network of digital, financial, retail investment, e-commerce and consumer goods companies. The coalition aims to help 1 billion people make greener choices and take action for the planet by 2025 through online tools and platforms.
“We will bring like-minded members together to experiment with new innovative business models that empower everyone to become a green digital champion,” says Marianne Haahr, GDFA Executive Director.
In one example, GDFA member Mastercard, in collaboration with the fintech company Doconomy, provides shoppers with a personalized carbon footprint tracker to inform their spending decisions.
In the UK, Mastercard is partnering with HELPFUL to offer incentives for purchasing products from a list of over 150 sustainable brands.
Mobile apps like Ant Forest, by Ant Group, are also using a combination of incentives and digital engagement models to urge 600 million people make sustainable choices. Users are rewarded for low-carbon decisions through green energy points they can use to plant real trees. So far, the Ant Forest app has resulted in 122 million trees being planted, reducing carbon emissions by over 6 million tons.
Three e-commerce titans are also aiming to support greener lifestyles. Amazon has adopted the Climate Pledge Friendly initiative to help at least 100 million people find climate-friendly products that carry at least one of 32 different environmental certifications.
SAP’s Ariba platform is the largest digital business-to-business network on the planet. It has also embraced the idea of “procuring with purpose,” offering a detailed look at corporate supply chains so potential partners can assess the social, economic and environmental impact of transactions.
“Digital transformation is an opportunity to rethink how our business models can contribute to sustainability and how we can achieve full environmental transparency and accountability across our entire value chain,” said SAP’s Chief Sustainability Officer Daniel Schmid.
UNEP’s Jensen says a crucial next step would be for mobile phone operating systems to adopt standards that would allow apps to share environment and carbon footprint information.
“This would enable people to seamlessly calculate their footprints across all applications to develop insights and change behaviours,” Jensen said. “Everyone needs access to an individual’ environmental dashboard’ to truly understand their impact and options for more sustainable living.”
Need for common standards
As platforms begin to encode sustainability into their algorithms and product recommendations, common standards are needed to ensure reliability and public trust, say experts.
Indeed, many online retailers are claiming to do more for the environment than they actually are. A January analysis by the European Commission and European national consumer authorities found that in 42 per cent, sustainability claims were exaggerated or false.
In November, the One Planet network issued guidance material for e-commerce platforms that outlines how to better inform consumers and enable more sustainable consumption, based on 10 principles from UNEP and the International Trade Centre.
The European Union is also pioneering core standards for digital sustainability through digital product passports that contain relevant information on a product’s origin, composition, environmental and carbon performance.
“Digital product passports will be an essential tool to strengthen consumer protection and increase the level of trust and rigour to environmental performance claims,” says Jensen. “They are the next frontier on the pathway to planetary sustainability in the digital age.”
2022: Small Medium Business & Economic Development Errors
Calling Michelangelo: would Michelangelo erect a skyscraper or can an architect liberate David from a rock of marble? When visibly damaged are the global economies, already drowning their citizenry, how can their economic development departments in hands of those who never ever created a single SME or ran a business, expect anything else from them other than lingering economic agonies?
The day pandemic ends; immediately, on the next day, the panic on the center stage would be the struggling economies across the world. On the small medium business economic fronts, despite, already accepted globally, as the largest tax contributor to any nation. Visible worldwide, already abandoned and ignored without any specific solutions, there is something strategically wrong with upskilling exporters and reskilling manufacturers or the building growth of small medium business economies. The SME sectors in most nations are in serious trouble but are their economic development rightly balanced?
Matching Mindsets: Across the world, hard working citizens across the world pursue their goals and some end up with a job seeker mindset and some job creator mindset; both are good. Here is a globally proven fact; job seekers help build enterprises but job creators are the ones who create that enterprise in the first place. Study in your neighborhoods anywhere across the world and discover the difference.
Visible on LinkedIn: Today, on the SME economic development fronts of the world, clearly visible on their LinkedIn profiles, the related Ministries, mandated government departments, trade-groups, chambers, trade associations and export promotion agencies are primarily led by job seeker mindsets and academic or bureaucratic mentality. Check all this on LinkedIn profiles of economic development teams anywhere across the world.
Will jumbo-pilots do heart transplant, after all, economic performance depends on matching right competency; Needed today, post pandemic economic recovery demands skilled warriors with mastery of national mobilization to decipher SME creation and scalability of diversified SME verticals on digital platforms of upskilling for global age exportability. This fact has hindered any serious progress on such fronts during the last decade. The absence of any significant progress on digitization, national mobilization of entrepreneurialism and upskilling of exportability are clear proofs of a tragically one-sided mindset.
Is it a cruise holiday, or what? Today, the estimated numbers of all frontline economic development team members across 200 nations are roughly enough to fill the world-largest-cruise-ship Symphony that holds 6200 guests. If 99.9% of them are job-seeker mindsets, how can the global economic development fraternity sleep tonight? As many billion people already rely on their performances, some two billion in a critical economic crisis, plus one billion starving and fighting deep poverty. If this is what is holding grassroots prosperity for the last decade, when will be the best time to push the red panic button?
The Big Fallacy of “Access to Finance” Notion: The goals of banking and every major institution on over-fanaticized notions of intricate banking, taxation are of little or no value as SME of the world are not primarily looking for “Access to Capital” they are rather seeking answers and dialogue with entrepreneurial job creator mindsets. SME management and economic development is not about fancy PDF studies of recycled data and extra rubber stamps to convince that lip service is working. No, it is not working right across the world.
SME are also not looking for government loans. They do not require expensive programs offered on Tax relief, as they make no profit, they do not require free financial audits, as they already know what their financial problems are and they also do that require mechanical surveys created by bureaucracies asking the wrong questions. This is the state of SME recovery and economic development outputs and lingering of sufferings.
SME development teams across the world now require mandatory direct SME ownership experiences
The New Hypothesis 2022: The new hypothesis challenges any program on the small medium business development fronts unless in the right hands and right mindsets they are only damaging the national economy. Upon satisfactory research and study, create right equilibrium and bring job seeker and job creator mindsets to collaborate for desired results. As a start 50-50, balances are good targets, however, anything less than 10% active participation of the job creator mindset at any frontline mandated SME Ministry, department, agency or trade groups automatically raises red flags and is deemed ineffective and irrelevant.
The accidental economists: The hypothesis, further challenges, around the world, economic institutes of sorts, already, focused on past, present and future of local and global economy. Although brilliant in their own rights and great job seekers, they too lack the entrepreneurial job creator mindsets and have no experience of creating enterprises at large. Brilliantly tabulating data creating colorful illustrative charts, but seriously void of specific solutions, justifiably as their profession rejects speculations, however, such bodies never ready to bring such disruptive issues in fear of creating conflicts amongst their own job seeker fraternities. The March of Displaced cometh, the cries of the replaced by automation get louder, the anger of talented misplaced by wrong mindsets becomes visible. Act accordingly
The trail of silence: Academia will neither, as they know well their own myopic job seeker mindset. In a world where facial recognition used to select desired groups, pronouns to right gatherings, social media to isolate voting, but on economic survival fronts where, either print currency or buy riot gears or both, a new norm; unforgiveable is the treatment of small medium business economies and mishmash support of growth. Last century, laborious and procedural skills were precious, this century surrounded by extreme automation; mindsets are now very precious.
Global-age of national mobilization: Start with a constructive open-minded collaborative narrative, demonstrate open courage to allow entrepreneurial points of views heard and critically analyze ideas on mobilization of small mid size business economies. Applying the same new hypotheses across all high potential contributors to SME growth, like national trade groups, associations and chambers as their frontline economic developers must also balance with the job creator mindset otherwise they too become irrelevant. Such ideas are not just criticism rather survival strategies. Across the world, this is a new revolution to arm SME with the right skills to become masters of trade and exports, something abandoned by their economic policies. To further discuss or debate at Cabinet Level explore how Expothon is making footprints on new SME thinking and tabling new deployment strategies. Expothon is also planning a global series of virtual events to uplift SME economies in dozens of selected nations.
Two wheels of the same cart: Silence on such matters is not a good sign. Address candidly; allow both mindsets to debate on how and why as the future becomes workless and how and why small medium business sectors can become the driving engine of new economic progress. Job seekers and job creators are two wheels of the same cart; right assembly will take us far on this economic growth passage. Face the new global age with new confidence. Let the nation witness leadership on mobilization of entrepreneurialism and see a tide of SME growth rise. The rest is easy.
Rebalancing Act: China’s 2022 Outlook
Authors: Ibrahim Chowdhury, Ekaterine T. Vashakmadze and Li Yusha
After a strong rebound last year, the world economy is entering a challenging 2022. The advanced economies have recovered rapidly thanks to big stimulus packages and rapid progress with vaccination, but many developing countries continue to struggle.
The spread of new variants amid large inequalities in vaccination rates, elevated food and commodity prices, volatile asset markets, the prospect of policy tightening in the United States and other advanced economies, and continued geopolitical tensions provide a challenging backdrop for developing countries, as the World Bank’s Global Economic Prospects report published today highlights.
The global context will also weigh on China’s outlook in 2022, by dampening export performance, a key growth driver last year. Following a strong 8 percent cyclical rebound in 2021, the World Bank expects growth in China to slow to 5.1 percent in 2022, closer to its potential — the sustainable growth rate of output at full capacity.
Indeed, growth in the second half of 2021 was below this level, and so our forecast assumes a modest amount of policy loosening. Although we expect momentum to pick up, our outlook is subject to domestic in addition to global downside risks. Renewed domestic COVID-19 outbreaks, including the new Omicron variant and other highly transmittable variants, could require more broad-based and longer-lasting restrictions, leading to larger disruptions in economic activity. A severe and prolonged downturn in the real estate sector could have significant economy-wide reverberations.
In the face of these headwinds, China’s policymakers should nonetheless keep a steady hand. Our latest China Economic Update argues that the old playbook of boosting domestic demand through investment-led stimulus will merely exacerbate risks in the real estate sector and reap increasingly lower returns as China’s stock of public infrastructure approaches its saturation point.
Instead, to achieve sustained growth, China needs to stick to the challenging path of rebalancing its economy along three dimensions: first, the shift from external demand to domestic demand and from investment and industry-led growth to greater reliance on consumption and services; second, a greater role for markets and the private sector in driving innovation and the allocation of capital and talent; and third, the transition from a high to a low-carbon economy.
None of these rebalancing acts are easy. However, as the China Economic Update points out, structural reforms could help reduce the trade-offs involved in transitioning to a new path of high-quality growth.
First, fiscal reforms could aim to create a more progressive tax system while boosting social safety nets and spending on health and education. This would help lower precautionary household savings and thereby support the rebalancing toward domestic consumption, while also reducing income inequality among households.
Second, following tightening anti-monopoly provisions aimed at digital platforms, and a range of restrictions imposed on online consumer services, the authorities could consider shifting their attention to remaining barriers to market competition more broadly to spur innovation and productivity growth.
A further opening-up of the protected services sector, for example, could improve access to high-quality services and support the rebalancing toward high-value service jobs (a special focus of the World Bank report). Eliminating remaining restrictions on labor mobility by abolishing the hukou, China’s system of household registration, for all urban areas would equally support the growth of vibrant service economies in China’s largest cities.
Third, the wider use of carbon pricing, for example, through an expansion of the scope and tightening of the emissions trading system rules, as well power sector reforms to encourage the penetration and nationwide trade and dispatch of renewables, would not only generate environmental benefits but also contribute to China’s economic transformation to a more sustainable and innovation-based growth model.
In addition, a more robust corporate and bank resolution framework would contribute to mitigating moral hazards, thereby reducing the trade-offs between monetary policy easing and financial risk management. Addressing distortions in the access to credit — reflected in persistent spreads between private and State borrowers — could support the shift to more innovation-driven, private sector-led growth.
Productivity growth in China during the past four decades of reform and opening-up has been private-sector led. The scope for future productivity gains through the diffusion of modern technologies and practices among smaller private companies remains large. Realizing these gains will require a level playing field with State-owned enterprises.
While the latter have played an instrumental role during the pandemic to stabilize employment, deliver key services and, in some cases, close local government budget gaps, their ability to drive the next phase of growth is questionable given lower profits and productivity growth rates in the past.
In 2022, the authorities will face a significantly more challenging policy environment. They will need to remain vigilant and ready to recalibrate financial and monetary policies to ensure the difficulties in the real estate sector don’t spill over into broader economic distress. Recent policy loosening suggests the policymakers are well aware of these risks.
However, in aiming to keep growth on a steady path close to potential, they will need to be similarly alert to the risk of accumulating ever greater levels of corporate and local government debt. The transition to high-quality growth will require economic rebalancing toward consumption, services, and green investments. If the past is any guide to the future, the reliance on markets and private sector initiative is China’s best bet to achieve the required structural change swiftly and at minimum cost.
First published on China Daily, via World Bank
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