WTO without United States?
At present, it makes no sense for anyone to discard membership in the World Trade Organization (WTO), and the US’ exit from it will not become fatal, -said the Russian Minister of Economic Development Maxim Oreshkin commenting on a statement made by US President Donald Trump to the effect that Washington could leave the WTO.
The minister remarked that “it is not the first time that the United States has suggested the possibility of withdrawing from the WTO. When these kinds of “reminders” begin to appear too often, they become negotiating techniques designed to impress counterparties on trade deals under discussion. ” According to the Russian minister, the position of American trade diplomats that they stick to at talks on a dispute resolution system in Geneva is suggesting the same idea. It seems that by blocking the work of WTO’s appeals organ, the United States is trying to create an additional instrument for influencing trading partners with a view to encourage them to take decisions that would be beneficial for the White House on how to reform the WTO, ” – said Maxim Oreshkin. According to him, “since there is no global alternative to WTO which would be equally effective, there is no reason for such large international trade players as the United States to walk out of it. As for the World Trade Organization itself, a loss of even one of top players will not be fatal .
Simultaneously, the Russian Minister of Economic Development has suggested that the US withdrawal from the World Trade Organization (if it takes place) will stimulate WTO reform, change the configuration of “tactical alliances” and interest groups within the WTO, and will alter multilateral rules in those areas where negotiations have long been in a deadlock.
If the United States chooses to leave the World Trade Organization (WTO), then the entire existence of this organization will be put into question, ” – confirmed presidential press secretary Dmitry Peskov. According to Peskov, “there are no doubts that the existence of, let’s say, a global system-forming economic organization after the world’s top economy walks out will cast doubt on its future”. “In any case, this is an internal affair of the United States,” – Dmitry Peskov added.
That the US might leave the main international trade organization was signaled by President Trump as he addressed employees of the Royal Dutch Shell chemical plant in Monaca, PA. “We will leave the organization if necessary.” He warned that a situation like now when the WTO is helping other member countries to “use” the US, will not happen again.
As an instance of that, Donald Trump predictably cited his main “opponent” in its trade and economic debate – China. The American president spoke about a rapid development of the Chinese industry after Beijing joined the WTO. In the meantime, the USA complained about the theft of American technology in China, – the US president added.
Donald Trump’s current speech can be seen as a key feature of his own election campaign, considering that the US’ possible exit from the WTO served as an important point of his election program back in 2016. Back then he promised to take such a step if his plans to use tariffs to protect domestic producers ran into resistance from the above organization.
A similar idea was voiced by Donald Trump in 2018. The then WTO Director-General Roberto Azevedo tried to reduce tensions saying that the US concern about those areas of the organization’s work that they wanted to improve was not new. What Donald Trump is speaking about now is “consistent with what the US has said before,” – Roberto Azevedo said.
However, given that the current situation in the world is strikingly different from what it was just a couple of years ago, the future of international trade and economic relations becomes a matter of serious concern. The “trade war” between Washington and Beijing is not only showing no signs of subsiding but threatens to hit a new high. Donald Trump has promised to slap higher tariffs on the remaining imports from China totaling about $ 300 billion as of September 1, despite a “trade ceasefire” which was reached earlier with Chinese President Xi Jinping at the G20 summit in Osaka. Although the American leader has postponed the introduction of duties on a number of goods (primarily electronics) till December 15 this year, world markets do not expect any stabilization yet, particularly after Donald Trump declared China a “currency manipulator” following a sharp fall in the yuan rate.
Significantly, despite higher tariffs already imposed by the two parties on the total volume of bilateral supplies of $ 360 billion, it is China that is clearly taking upper hand in the “trade war”. Despite the duties, the Chinese surplus in trade with the United States continues to grow, having increased in the first half of the year to $ 140.48 billion, against $ 133.76 billion in the same period of 2018. In July, US exports to China fell by 19%, while Chinese exports to the United States fell only by 6.5%. The new round of tariff increases will be more noticeable, also in terms of its negative impact on the socio-economic situation in the United States, Capital Economics experts warn in this regard.
However, it’s the US’ European partners that are sustaining yet greater losses. In AugustGermany’s monthly economic index, published by the Center for Economic Research in Europe, fell to the December 2011 low, while national economy found itself on the verge of the first recession in six years. The Center’s experts say this situation was triggered by the ongoing “trade war” between the US and China, along with the growing possibility that Britain will likely exit the European Union in line with the “tough” scenario.
“Trade conflicts, global uncertainty and the problems experienced by the car manufacturers have finally thrown the German economy down on its knees,” – ING economist Carsten Brzeski says.
Negative trends are also visible in the British economy, where inflation has exceeded the Bank of England target of 2%. “Where is the world, and especially the historical allies of Washington, pushing the ever worsening economic conflict between the USA and China?” – the London newspaper The Financial Times asks and continues: “Under normal circumstances, they would certainly side with the USA. But we have unusual circumstances. Under Donald Trump, the United States has turned into an unreliable rogue superpower: they even oppose the fundamental principles of a trading system based on multilateral agreement and strict compliance with the rules. Now, even the US allies are drawn into this mutual hunt. ” “And while the United States is locking horns with China, what should the American allies do?” The problem is not Trump. That he is concerned about the trade surplus is half the trouble. What is much worse, many Americans are dissatisfied not only with China’s behavior, but also with its economic growth ” – the British publication states not without reason and offers its own vision for resolving the situation: “ What should the US allies do? ” They should not support America’s attempts to hinder China’s growth – this would be dishonest. Instead, they should make clear what US goals in trade and technology they agree with, and if possible, adhere to this shared position. Significantly, the EU and Japan are already demonstrating similar views. They should support principles of the multilateral trading system under the auspices of the WTO. Should the US break the quorum needed to resolve disputes, then the rest should agree on some kind of informal mechanism. ” “Hostility between the US and China poses a threat to global peace and prosperity. Outsiders cannot stop this conflict. But they are far from helpless. If superpowers go beyond the multilateral trading system, others will take their place. The majority of them are also major players. All you need is to summon up your courage and behave appropriately, ” – The Financial Times points out.
However, the current problems in US relations with China and the WTO go far beyond the bounds of the trade organization itself. According to reports, Beijing is considering two options that could be really devastating for Washington: building up strategic cooperation with Iran and crushing financial markets and the dollar through the sale of US securities. According to Iranian sources, China has resumed cooperation with Iran on three oil projects and is considering what Washington and Beijing call the “nuclear option.” In particular, according to the director- general of the Iranian Pars Oil and Gas Company (POGC), negotiations with Chinese developers are already under way on the first of these projects – phase 11 on the super-giant South Pars field.
China has also agreed to boost production at Iranian oil fields off Western Karun, including North Azadegan and Yadavaran, by an additional 500 thousand barrels per day by the end of 2020. This is consistent with Iran’s plan to step up effort in these fields.
If one or another of these Chinese projects in Iran runs into a rejection from the United States, then Beijing will resort to the “nuclear option” of selling all or a significant part of its package of American bank-bills worth a total of 1.4 trillion dollars. A large-scale sale of these securities will result in the destabilization of the dollar, a surge in bond yields, a collapse of the real estate market and chaos in the stock market. This measure fits well into China’s long-term strategy, which wants the yuan to challenge the status of the US dollar as a key global reserve currency and the main currency for global energy operations. “China wants to get away from the dollar system,” – confirms Rory Green, an economist with TS Lombard.
What is currently happening in global trade opens up tremendous opportunities for Russia in terms of strengthening its relations with present and potential allies and partners, both on the bilateral and multilateral basis. Apparently, Moscow’s “need” for trade, economic (and, consequently, political) structures will increase visibly in the near future.
From our partner International Affairs
Has Sri Lanka Recovered from the Economic Crisis?
Sri Lanka is navigating an unparalleled economic crisis, and according to the Asian Development Bank’s (ADB) annual report, the Asian Development Outlook (ADO) April 2023, the country’s GDP would continue to decline in 2023 before starting to slowly recover in 2024. In 2022, the economy shrank by 7.8%, and in 2023, it is expected to shrink by 3% as it continues to struggle with debt restructuring and balance of payments issues. The country’s efforts to stabilize its economy will be aided by reform measures including the rollback of the 2019 tax cuts and the recent acceptance of the Extended Fund Facility agreement with the International Monetary Fund (IMF). The speedy resolution of the debt issue and the unwavering execution of reforms are essential to Sri Lanka’s recovery from the crisis.
However, due to policy mistakes, global economic shocks, rivalries among the big powers, and pre-pandemic macroeconomic vulnerabilities, Sri Lanka was already in a precarious position when the crisis began. In 2022, a lack of foreign currency caused a shortage of goods that were necessary for survival, as well as an acute energy crisis that resulted in protracted power outages and traffic jams since Sri Lanka was running low on fuel. Many fell into poverty as a result of rising inflation and declining living conditions. The poor and vulnerable have suffered disproportionately from the economic crisis.
While different economic packages have been sanctioned for the island state and relatively sound political stability is on the eve, it can be perceived that an upward movement may be seen in the next year. This year is the year of policy reformations, then the reaping time will be 2024. Meanwhile, the Sri Lankan currency last appreciated versus the dollar by 4.5 percent on March 14. The writeup will therefore shed light on the prospects of economic upwardness.
Finally receiving approval from the IMF for a $3 billion rescue package for Sri Lanka, the island nation may now restructure its debt and expect economic growth in 2024. The IMF’s decision will enable for the prompt disbursement of a $333 million loan over four years to the South Asian nation, which is currently experiencing its worst financial crisis in decades. According to IMF director for Asia and the Pacific Krishna Srinivasan, Sri Lanka has been “hit hard by catastrophic economic and humanitarian crisis.” In an interview with CNBC’s Sri Jegarajah in Asia, he said, “This you can trace back to three factors: One is pre-existing vulnerabilities, policy mistakes, and shocks.”
However, Ranil Wickremesinghe, a six-time prime minister, was elected president by the nation’s lawmakers in July. Wickremesinghe congratulated the IMF in a tweet in response to the most recent IMF bailout and stated that his nation is dedicated to its “reform agenda,” adding that the IMF program is “critical to achieving this vision.”
Previously, as mentioned, the biggest economic crisis the island nation has seen since gaining independence began in early 2022, according to the Central Bank of Sri Lanka, and is projected to gradually cease in the second half of this year. According to Xinhua news agency, the central bank stated its monetary policies for 2023 on January 4 and noted that the sharp acceleration of inflation that started in early 2022 reversed in October. “The Sri Lankan economy, which is projected to register a real contraction of around 8.0 percent in 2022, is expected to record a gradual recovery in the second half of 2023 and sustain the growth momentum beyond,” the bank stated.
According to a recent study by the Central Bank of Sri Lanka, the GDP of the nation increased by 3.6% in the first quarter of 2023 compared to the same time in 2012. Compared to the previous quarter, when the GDP expanded by just 1.5%, this is a huge increase. This development has been attributed to a variety of factors, including increasing industrial production and greater demand for Sri Lankan exports. Particularly, the manufacturing industry has experienced rapid development, with production rising 6.9% in the first quarter of 2023. The agricultural industry has also done well, with considerable increases in tea and rubber exports. Additionally, there have been indications of a rebound in the tourism sector, as seen by a 29% rise in visitor arrivals in the first quarter of 2023 compared to the same period in 222. Given that the tourist sector has been one of the hardest hit by the COVID-19 pandemic and associated travel restrictions, this is particularly noteworthy.
However, since Sri Lanka’s governmental collapse and near-bankruptcy last summer, there appears to be a return to calm in the South Asian country. Fuel lines that once snaked for blocks have been removed, and a beachside area that had been the location of a protest camp for months was decorated for the holidays with Christmas lights and carnival rides. Moreover, the island’s economy still runs on a ventilator since the government has not found a solution to escape its crippling debt. Sri Lankans have come to terms with a depressing reality that includes fewer meals, smaller paychecks, and lower aspirations.
Meanwhile, instead of fixing the economy, a series of punitive tax hikes and subsidy reductions that further limited demand have brought about a semblance of stability. Although necessary, the actions are unpopular and provide fodder for the political opposition, increasing the likelihood that this administration or the one after it will back off from them. Therefore, the economy is still running on a thin line.
Economic sanctions as instruments for foreign policy: circumstances, conditions, legality, and consequences
Since the end of World War II and the emergence of the Bretton Woods Institutions, the idea of global rule-based order evolved considerably, the Western-led efforts to create the International Institution started with the Wilsonian vision, but that vision was cut short by the nationalist forces in Europe when Hitler and others disrupted world peace with a global conflict. The end of world war II offered an opportunity to the Western powers to make a true society and make it work, thus with the evolution of multilateralism, globalization, and international organizations helped the world to build a genuinely interconnected International system, where no nation can tread its own path but is always dependent on other nations, thus it’s every action has consequences. To achieve foreign policy objectives economic sanctions work as initial softening of the targeted country, organization, or any individual, but it’s not always the case as countries with dilapidated human rights record, war criminals, terrorists, and individuals of particular concern can be sanctioned without any reversal so that they cannot continue with their violations of international law, thus economic sanctions are not only categorized as the form of economic coercion. When we tie economic sanctions with a foreign policy we include its various implementation phases as well because without the implementation or enforcement the economic sanction will be of no use, in this case, we can term the naval blockade as an enforcer of those sanctions if we are pursuing it under the foreign policy objectives. The Central point here I want to make is that in today’s world the economic sanctions are an effective tool to achieve foreign policy objectives and the efficacy of these sanctions is because of the interconnected global economic system, in which the West is still seen as a dominant player. In this paper, we will explore various dimensions of economic sanctions under the garb of foreign policy objectives, and will thus focus on various circumstances and conditions will ascertain the legality of those economic sanctions and once imposed the strategic and economic consequences of enforcing those sanctions, in doing so we will focus on a variety of examples from the real world politics. As we are exploring economic sanctions as an instrument of foreign policy, here we won’t be able to enlist examples from WTO or UN, as they are international organizations, but we will be using examples from EU, because its both an economic and political union, but WTO and UN do ascertain the legality of economic sanctions.
Economic sanctions are not a new concept but it existed from ancient times and is pursued by kingdoms and states throughout history mainly as a military tool to subdue the enemy. Thus the economic sanctions have clear foreign policy undertones. But the economic sanction after the peace of Westphalia was first used by nation-states following the creation of the League of Nations (Economic Sanctions, 2019). The traditional embargo tactics emerged in the colonial era when countries developed seapower capabilities, and thus naval blockades were the main enforcer of economic sanctions (Economic Sanctions, 2019). But the development of International Organizations following the end of world war II, and later after the dissolution of soviet Union marked the beginning of a new era of the multilateral world, in which the World Trade Organization became the successor General Agreement on Trade & Tariffs the GATT (Masters, 2017). And the new era offered new ways to enforce economic sanctions, both in terms of bilateral sanctions or organizational sanctions of any country, or any other entity. Sanctions are thus not just imposed by a country on another country, but also imposed by international and regional organizations such as the United Nations, WTO, and the European Union.
Economic Sanctions. Circumstances and Conditions.
Economic sanctions are imposed by the nation as a coercive measure to halt any economic activity that goes contrary to the national interests of that state. But sometimes these sanctions create a dilemma, as one nation is friendly or an ally while the other is an enemy state. Like we have the case of Nord Stream II, a gas pipeline from Russia to Germany via the Baltic Sea (Nord-stream2.com, 2017). The gas pipeline goes contrary to the United States global Liquified Natural Gas plans, as it is now set to become the largest LNG producing nation (Anon, n.d.). The Russian pipeline will allow Germany to get Russian gas throughout the year without any disruptions as it will become a direct buyer of the natural gas, and will escape being trap in a Russia-Ukraine political scuffle. The United States to halt the construction of the pipeline imposed economic sanctions, by putting the PEES Act (Protecting Europe’s Energy Security Act) into the National Defence Authorization Act, to limit the role of the Western technological firm in the construction of Nord Stream II pipeline (Atlantic Council, 2019). This decision was taken by the Trump administration in circumstances that will create a permanent dent in the US global energy future, as Germany is well connected to its European Neighbours and any direct gas link will surely extend to other countries as well, putting a question mark on its European energy market utilization plans. The sanction bill provided a few months window to Western firms to pull out of the Russian-backed pipeline. It was a result of these economic sanctions that all major Western firms withdrew from the construction putting a lid on the project for almost a year (www.spglobal.com, 2020). Thus the efficacy of economic sanctions as a foreign policy tool cannot be overruled and is used excessively in international politics. The US sanctions on Nord Stream II is an interesting case because it’s against a major power, which is Russia in this case. Quick compliance can minimize and entirely reduce the cost of economic sanctions (Doxey, 1980). The Western companies involved in the construction of Nord Stream quickly withdrew from the project to escape the sanctions. But in the case of major industrial power like Russia, compliance is out of the question. As there is a must reaction cycle to the economic sanctions (Doxey, 1980). Russia brought back the project with its indigenous technologies and national companies to complete the pipeline, though missing a crucial completion deadline this year due to US sanctions. Another important aspect is the economic sanctions and state responsibility, as China is continuing its crackdown on Hong Kong protesters there are growing calls in the UK to impose magnitsky style sanctions on selected individuals directly linked to human rights violations in Hong Kong. These kinds of sanctions are powerful foreign policy tools to tarnish the credibility of those individuals internationally. The UK is weighing whether to impose these sanctions on China as an answer to its flouting of the terms of understanding with the UK over Hong Kong (edm.parliament.uk, n.d.). State responsibility is thus the main reason for these potential sanctions, to impose costs on Chinese actions (Routledge & CRC Press, n.d.). The magnitsky sanctions were first formulated in the US, as being the economic center of the world, and the dependence of other major economic powers and institutions give it an upper hand in freezing the assets of individuals involved in violations of international law. The IEEPA, The International Emergency Economic Powers Act gives the US a comparative edge to freeze the assets of these individuals (Alerassool, 1993).
Unilateral sanctions are the most rampant form of sanctions imposed by the US on many enemy states like Iran, North Korea, and Libya, etc, while also on renegade nations like Pakistan, and few Latin American countries. (Routledge & CRC Press, n.d.). The United States is an active player in the South Asian region, as it is finding a suitable way to pull out its troops from Afghanistan, prior to that since 1970, South Asia remained a proliferation concern for the White House, as two of the leading countries in South Asia, India and Pakistan intended to acquire nuclear weapons, though there were no prior economic sanctions on Pakistan, Indian space related trade activities with the Soviet Union came under US sanctions. After the nuclear tests in 1998 US activated an economic sanctions regime on both countries, to achieve the non-proliferation policy objectives. The sanctions were imposed using The Glenn Amendment, which was enacted in 1977, which was formulated to impose on countries that detonate a nuclear device (South Asian Voices, 2018). The economic sanctions against these new nuclear powers did achieve its intended foreign policy objectives, as both nuclear powers focused greatly on the non-proliferation aspect of these weapons, and invested a right share to beef up the nuclear command and control, to avoid theft of the nuclear device and its proliferation pathways. The sanctions were lifted later after compliance from both nations as both nations imposed a moratorium on nuclear testing and since 1998, no other nuclear test was conducted in the South Asian region.
Trade relations are either harmonious or full friction. This was the case in a recent US-China Trade relations, which saw an upward trajectory for over 2 decades and was turned into a friction saga by the Trump administration, as Trump hefty tariffs on Chinese imports. The US is leading in the innovation industry, and thus repeatedly blamed China for Intellectual Property theft, to combat this theft, US Democratic Senator Chris Van Hollen and Republican Senator Ben Sasse introduced targeted legislation to punish China for the IP theft by imposing economic sanctions on Chinese technological firms (Wolfe, 2020). This particular upcoming legislation shows that the concept of economic sanctions evolved considerably and now there are a separate set of legislations for each kind of violation, which can determine the circumstances and conditions of the breach, and these set of laws provide the executive with a foreign policy tool to impose sanctions and halt any potential danger to the economy. These new targeted sanction legislation according to some experts ushered in an era of smart economic sanctions (LSE International History, 2015). These kinds of smart sanctions give a credible narrative to the sanctions as it is not targeted at the innocent people of that country who don’t pose a threat to that country’s interest but affect only those entities which are being sanctioned or whose assets are being frozen.
Modern trade relations are regulated between nations via bilateral and multilateral trade agreements, as developing and underdeveloped nations seel more trade with developed countries, these industrialized countries offer certain trade concessions in the form of market access as is the case of European Union GSP (Generalized Scheme of Preferences) plus status (Generalized System of Pr Generalized System of Prefer references HANDBOOK ON THE SCHEME OF THE EUROPEAN UNION, n.d.). This kind of trade access depends on developing countries’ human rights, environment, climate change, and level of democratic standards, and low in these indicators will automatically shun the GSP plus status for that country. This kind of trade instrument thus turns into economic sanctions as it imposes costs on that particular regime to mend its ways or lose a trade partner in Europe. The GSP plus is a strong foreign policy tool to change the attitudes of hybrid regimes.
The legality of the Economic Sanctions.
The economic sanctions imposed by any country or Multilateral organization does raise an issue of legality, as mentioned earlier that most foreign policy objectives pursued by states are based on national interests and thus to protect those interests that state can go to any length using its economic relevance or might to hurt the other state. This on certain occasions raises an issue of the legal status of those sanctions. Here we have a relevant example from the US-Iran rivalry over the decades. The US is one of the first countries to link national security with International law, and thus used economic sanctions as a foreign policy, trespassing its legality. The US economic sanctions regime against Iran since a revolution and the hostage crisis is the most sustained economic sanctions framework in the world, in 1996, the US enacted the ILSA Iran and Libya Sanctions Act (Bhala, 1998). From that era in one form or another sanction, regimes remained in place against Iran. In 2015, a breakthrough nuclear deal JCPOA The Joint Comprehensive Plan of Action was signed between Iran and P5 states including the United States ended the sanction regime for a brief period of time (Armscontrol.org, 2019). Trump on winning the elections reimplemented the maximum pressure policy on Iran and breaching all International conventions announced a unilateral withdrawal from the Peace Deal and reimposed harsh sanctions on Iran (Gould, 2018). This withdrawal places the EU in a precarious position. As it saw no legal justification to withdraw from the deal, as Iran was complying as per the official IAEA International Atomic Energy Agency reports. The EU implemented its part of the deal with Iran till now. The European Union devised a trade framework with Iran to escape the US sanctions this framework is known as Special Purpose Vehicle (ECFR, n.d.). The US over-reliance on these trade sanctions compelled some of the biggest Trump critics, Nobel Prize Winner Professor Joseph Stiglitz, that the EU and China which are under illegal tariffs, must impose joint economic sanctions on the US. Illegal coercion contributes to a sustained sanction regime (Amazon.com, 2020). The US has a long history of legislation pertaining to economic sanctions as mentioned earlier that IEEPA was promulgated in 1977, the act was a replacement of the Trade with Enemy Act TEWA, in 1917 (Rogers, 1989). The repeated violation of International conventions brought the US in a very precarious situation, and two successive Presidents, President Bush, and Obama strived hard to change that image and it was the reason that the US opened to China by facilitating it to join WTO and the Obama administration did a lot to change the course of history with Iran. Which was later undone by President Trump.
The secondary economic sanctions are the right way to deal with rogue states and their leaders, as they commit mass atrocities against their own people, targeting the whole population under the stated foreign policy objective is unlawful (Fabre, 2016). The sanctions policy in the West evolved rapidly after the fall of the Soviet Union, as it was the beginning of a unipolar era, as the year 1992 saw the most number of economic sanctions imposed (PIIE, 2016). As mentioned earlier, it’s now been four decades that Iran is under a sanction regime. Many experts believe that unilateral sanctions are illegal from the perspective of international law (Marossi and Bassett, 2015). The recent Chinese opening to Latin America and Central Asia is also under the US lens, and countries relying on Chinese loans come under intense scrutiny, as most nations go to IMF and world bank to bring some monetary and fiscal discipline in their countries, the Trump administration put on notice all the renegade nations and due to United States influence in these institutions their payments were delayed or halted, this is tantamount to indirect economic sanctions, but it does violate the principles of these international organizations and is thus illegal to influence or disrupt the process if all conditions are agreed upon between that particular state and the IMF or World Bank.
Consequences of the Economic Sanctions.
There are multifaceted consequences of the economic sanctions, if economic sanctions are imposed due to economic expediency to punish or change the behaviour of nations which are involved in predatory trade or dumping practices, its outcome is always positive, But if the main reason behind imposing economic sanction is political and tied to the achieving the foreign policy objectives then it can create large humanitarian disasters. As seen in the case of Iraq, which came under sanctions regime in 1990 (Breuning, 2007). This was the beginning of globalization and due sanctions regimes in place the globalization never reached Iraq, Syria, Libya, Cuba and Iran and these are one of the worst places on earth in terms of the standards of living and security. Many of the International organizations such as FATF Financial Action Task Force, which is also known as a minilateral organization, in which powerful countries influence can label any country as a grey list or black list, if this is done through unbiased scrutiny then it’s always produced great results to cap money laundering and terror financing (Nance, 2017). Due to political reasons FATF is used for foreign policy objectives, any grey or balck listing can tarnish a country’s economy in which the main victims are the common people. The targeted economic sanctions such as freezing of assets compel dictators to look inward and exploit the local economy to its own advantage thus creating more misery for the people, thus Humanitarian consequences are the multifold of the economic sanctions. Some economic sanctions against established major powers can bite back, as is the case of Russia and China, which devised its own sanctions regimes against the EU and United States. Russia is a major gas supplier to most of Europe, and it devised its own expediencies to deal with targeted US sanctions on its oil, gas and LNG companies, these expedencies allowed these countries to bypass those sanctions resulting in a foreign or energy policy failure for the other nations (www.nlb.gov.sg, n.d.). The non economic assessment to gauge the efficacy of these sanctions is often carried by our political think tanks, which rarely ascertain the costs of those sanctions on those companies. But platforms like S&P Global, Bloomberg, The Economist and Forbes do come up with irrefutable data that show where these sanctions are hurting. The multifaceted consequences make it clear that economic sanctions come with ethical and legal costs for the nation who imposed such sanctions, and in case of major powers these sanctions can backfire.
All the examples explained in the paper clearly depicts that political expediency is the major impetus behind imposing economic sanctions, and these expenedicies are thus part of the larger and sustained foreign policy objective of any nation. US and EU are in military and economic alliance and thus have more potent frameworks to impose the most effective economic sanctions, new emerging powers like Russia, China India and Brazil are well placed to impose their own sanctions, but due to their precarious or ungraded position in the rule based order make their sanctions less effective. International organizations like the EU and UN are not intended to serve the foreign policy objectives of any nation in imposing heavy sanction of tariffs on any country, but due to constant blackmailing of the WHO World Health Organization, World Trade Organization and UN as a whole, under the Trump administration created so many new precedents. The EU as a political bloc can also impose economic sanctions based on its urge to achieve foreign policy goals in any particular region.
Brick By Brick, BRICS Now a New Bridge for a New World
Measuring BRICS in single decades, in 2001, BRIC started as an acronym for Brazil, Russia, India, and China; Goldman Sachs economist Jim O’Neill claimed that by 2050 the four BRIC economies would come to dominate the global economy. So South Africa was added to BRIC in 2010. The following countries are now expressing interest in joining: Afghanistan, Algeria, Argentina, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, the United Arab Emirates, Thailand, Tunisia, Turkey, Uruguay, Venezuela, and Zimbabwe. Is this now the awakening of BRICS+ or BRICS power?
BRICS+ by 2030 will add dozen new members and carve new indices, and by 2040, it will lead to new intellectualism on geopolitics and socio-economies for the super complex 2050 age of smart living.
Historically, BRICS nations pushed on their people-power agenda over super-power titles. They made extreme value-creation economic models over focusing on powerful military-industrial complexes. They focused on nation-building and avoided special mandates to manage global affairs. They have been on a quest to upgrade them. They were feeding hungry mouths, as they were population rich, constantly up-skilling, and improving value creation as they were SME rich. They kept a steady watch to create multilateralism to uplift humankind.
They, too, made mistakes, as did the rest of the world
In the third decade of the third millennium, come 2020, three transformations erupted. First, futurism changed the rules on the ‘physicality of work’ and created a new imbalance with the ‘mentality of performance’; this has divided the workforce of world; the old system of over a billion commuting daily to the center of a complex maze to arrive daily at the sanctum of the company and create climate change. So now, in response, some 50% of the world’s workforce has chosen to stay away and work remotely in the surroundings of wide-open choices. Furthermore, technology uplifted micro-power-nations and exposed Western economies now stripped naked in bubble baths on slippery floors, they tippy-toe practicing conga-lines
Newly magnified economy: Behold, what microscopes exposed the magnified inner workings of the body. Similarly, the integrated networks have exposed the digital connectivity and working of millions of villages, cities, and nations with additional billions of people to interact, trade, improve grassroots prosperity and create a well-informed and opinionated citizenry. Some 100 years ago, if only 1% of the world’s population knew what was happening, today it is a dozen times more, and by 2030 double again. Why would these numbers change the global economic matrix when translated into micro-trading, micro-manufacturing, and micro-exporting? International opinion today is already strong enough to crush any national opinion of any nation still lingering under the illusion of a self-promoted victory.
When the SME sector already exists within each nation, the global markets are always hungry for good quality goods and services, and the rains of almost free digital technologies make such transformation a quick turnaround. Therefore, mindsets are critically essential; the need to define the difference between the job seeker mindset that builds the organizations and the job creator mindset that originates and creates that organization in the first place.
So what are the lessons, key features, and blueprints in sight?
Mistakes and new lessons: Last many decades, as the new world was rising, Western citizens felt like China experts, and their regular visits to local China towns restaurants in each city misguided them that Laundromat trained Chinese could only produce some chicken fried rice. Ever since the advent of the camera, the East was always projected as poor and dysfunctional; mesmerized by the media coverage during the last many decades, the West was equally convinced that India, a land of only snake charmers and fakirs, finally someday speak better English. The general perceptions about Asia, besides eating rice, if they could ever make cheaper products for the West. The rest is history, mistakes, and lessons.
After the big ding-dong nights of 2000 New Year’s Eve, today’s new story starts from the 20th chapter. Now China and India alone have created some 500 million new entrepreneurs, not by a magic pill or meta-crypto-wand but by National Mobilization of Entrepreneurialism, a slow, painful deployment of SMEs across the nation, and by creating mobilization protocols to identify, classify, and digitizing based on multiple factors from type and size to the evaluation of their “respectable” role in future communities and economic factors. This methodology was far more advanced in strategy and stern management over the globalization frenzy from the West, where sudden exporting of manufacturing of the industrial plants to kill manufacturing and destroying the middle class out of the West already declared globalization a great success.
The other mistake is to assume this is an economic or an academic study, at best, like an Oscar Slap on sleepy rotundas occupied with endless printing of money across the Western economies. Instead, this is an entrepreneurial response for the entrepreneurial nations to awaken hidden entrepreneurial talents in up-skilling SMEs and re-skilling manufacturers at national levels.
Recommendations and warnings: No airline can survive with only Flight Engineers and Frequent Flyers stuffed inside the cockpits; that space is only reserved for highly trained pilots. Henceforth, across the world, any economic development of any size, shape, or authority may find other more suitable alternate paths of occupation if they still cannot demonstrate any levels of understanding, applicable skills, or mobilization mastery on the National Mobilization of Entrepreneurialism to up-skill exporters and re-skill manufactures and uplift national SME sector as the most prominent economic contributor of the nation. Study the biggest error of economic thinking
Underestimating the hidden powers of early thinking and starting a tiny unknown SME is a mistake of mindsets; here, entrepreneurialism like a saga unfolds, like a voluminous piece of literature but demanding literacy, understanding the job seeker mindsets and the ability to differentiate with entrepreneurial job creator mindset is already winning half the battle. Study the Mindset Hypotheses
Nations failing to realize the power of the billion SME rising in Asia and still unable to declare a national agenda of national mobilization of SMEs now must acquire an understanding of the 4B Factor: a billion displaced due to the pandemic, a billion replaced due to technology, a billion misplaced in wrong jobs now a billion on starvation watch. Furthermore, this 4 billion ever digitally connected mass of people ever in the history of humankind is now the most significant force of global opinion. Notice nations are already intoxicated with joy over the popularity of their national public opinion while having just an opposite international opinion on the world stage.
Recommendation; everyone is born an entrepreneur; our system chips away at this talent. Nevertheless, 10% to 50% high potential SMEs of any nation once are identified, classified, and digitized within 100 days. The uplifting digital platforms of up-skilling exporters and re-skilling manufacturers will result in 10% to 50% quadrupling their performance, productivity, and profitability. Imagine how much-regimented efforts will activate a positive national economic revolution based on real value creation, uplifting grassroots prosperity. How soon is a nation ready for a significant change? The rest is easy.
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