The lingering COVID-19 scourge continues to devastate the global economy. Initial fears of an impending supply chain shock, arising from shuttered Chinese factories, have instead led to a moth-eaten global economy where rising supply is met with depreciating demand and vice versa. To make matter worse, COVID-19 relief funds – amounting to trillions of dollars in the West alone – have ended up benefiting the rich instead of the poor. Micro, Small, and Medium Enterprises (MSMEs), which were ostensibly prioritised for pandemic relief, are now bankrupting in their thousands each month.
The inevitable social backlash, as seen in riots and wantons acts of thuggery throughout the United States, was long anticipated by various studies. It will spread worldwide as economies wilt. In fact, COVID-19 has merely acted as an accelerant – and not the cause – ofour foundering global economy. Even fears over a “second wave” will not prevent mass demonstrations, riots and socioeconomic paralyses in our quixotic “future-proof” cities that are already trembling with the rage of many.
The “Great Reset” anticipated by the World Economic Forum (WEF) seems as certain as its myriad failed forecasts and panaceas. The “global governance” it desperately touts smacks of a Soviet Union with a Techno-Potemkin facade. Many who had lived behind the Iron Curtain may not feel too nostalgic about the long queues, restricted movements, pervasive surveillance and the Orwellian censoring of free speech that has returned behindthe stalking horse of a pandemic.
Governments grappling for solutions will sooner or later realize that globalization is a construct that failed. Part of the problem lies with questions over “who calls the shots” and “where are they called from”? It ignores the general caution of Maslow’s Hammer where conditioned biases lead to Sisyphean problem-solving through the same faulty framework.
Proponents of “global governance” face another problem: Every governance structure needs a functioning centre. Nations and supranational blocs (e.g. Brussels/EU) have capitals. Global governance, which remains a concept, has nothing of the sort. Its centre floats freely in the exclusivist ether of the transnational capitalist class (TCC) – pulled only by the fluidic forces of concentrated capital. Technocrats can be appointed to front TCC policies and organizations in order to serve their interests. At present rates, wealth fractionation will exacerbate further, straining societies in desperate need of socioeconomic stability.
Supply Chains and Governments
COVID-19 has exposed the myopia and fragility underlying our worldwide supply chains. Take the global healthcare ecosystem for instance. When COVID-19 struck, India – a traditional pharmaceutical powerhouse– was sourcing 70% of its active pharmaceutical ingredient (API) imports worth $2.4 billion from China. The figures appear worse for the US. According to a recent CFR blog, about 97% of all antibiotics in the US were sourced from China, on top of 80% of APIs used in local drug production. To make matters worse, both the US and India are engaged in a serious geopolitical logjam with China. Imagine the consequences of a full-scale trade war?
The levers of global supply chains are in the hands of the TCC rather than with governments. This is a direct consequence of widening global income gaps and a rapidly shrinking middle class. There is a very pecuniary reason why many billionaires are philanthropists who routinely muscle into traditional areas of taxpayer-funded social provisions such as healthcare, education and poverty alleviation. The source, means of productions and supply chains are controlled by and arbitrated between them. Globalization has produced a rigged market.
In the meantime, people all over the world, sans malcontents in need of a revolution, are bracing themselves for tough times ahead. If governments can trim themselves down through a right mix of priorities, citizens may likewise concede to tightening their belts over the near future. Sub-contracting an army of Internet censors and thought commissars is not a social priority; the provision of healthcare, education, jobs certainly is! Many jobs will inevitably be lost during this decade. However, the years ahead can be a real reset period where workers can be retrained for the industries of tomorrow.
The foremost order of business therefore should be in ensuring the integrity of critical supply chains. Elected officials cannot play dice with basic necessities like food, medicines, clothing, public transportation and the assorted nuts and bolts of daily societal functions. A repeat of faulty personal protection equipment (PPE) that swamped the world in the aftermath of the COVID-19 outbreak must be avoided. Supply chains should be shorter, less prone to exogenous risks and must be dictated by long-term strategic imperatives rather than economics. (For a rough analogy, it can be broadly argued that the Soviet Union had prevailed over Nazi Germany in WWII partly because its supply chains were internally-sourced for the most part).
If critical supplies cannot be sourced internally, they should be acquired from the “near-abroads” i.e. within the region. This in turn will promote regional stability in a highly-anticipated VUCA decade (2020-2030).†
The Role of Quadruple Helix Regionalism
Public policies should be re-modelled for its original purpose – to serve the public! For far too long, the rhetoric here has been drifting perilously away from reality. When it is not aggravating income inequality, globalization has exposed nations to exogenous risks at the expense of regional synergies. The COVID-19 saga, along with ham-fisted lockdowns, is one unintended consequence. The provision of basic necessities during this period became a government responsibility. Knee-jerk responses, without the benefit of pre-emptive risk foresight, lead to systemic socioeconomic etiolation.
To prevent contretemps like these in future, an alternate governance model is badly needed. It should include the citizen as a stakeholder in the national and regional policy processes. This can be effectuated through a net-centric quadruple helix model as shown in the figure below.
Governance Transition: Traditional-National vs Citizen-Technocrat Regional Models
With the citizen as an equal stakeholder along with the public and private sectors as well as the academia, policy formation and societal risks becomes a shared responsibility. Crowdsourced Delphi (E-Delphi) and foresight can be used to refine and execute publicly-generated ideas for a variety of national and regional needs.
Sooner or later, intelligence gathered for any quadruple helix-based issue within the PESTLE spectrum would necessitate the introduction of Big Data Analytics (BDA). Rising levels of governance-related complexities is inevitable but need not necessarily lead to runaway cul-de-sacs that typify the current global order. (Most global think tanks, for example, lack blogs or expert columns to tap into ideas from the public domain).
Various scalable governance models towards this end have already been conceptualized in anticipation of this VUCA decade. The author himself had formulated one for his doctoral thesis. Researchers linked to the Finland Futures Research Centre and Lithuania’s Kazimieras Simonavicius University have been working on regional innovation models underpinned by Big Data and foresight.
At the end of the day, the ideas are there in the public domain to see us through this turbulent decade. The public is there to generate those ideas and experts are available to refine and execute appropriate policies. Because of the need for scalability, next-gen governance models should be people- and region-centric.
Regions like Scandinavia and the Baltics (which the author collectively calls “SCANBALT”) and the Association of Southeast Asian Nations (ASEAN) – which had weathered the COVID-19 crisis remarkably well – are arguably better poised to handle the varied challenges ahead. The circumstances in various regions naturally differ. While SCANBALT has an enviable level of cultural cohesiveness and technological know-how, ASEAN can be the beneficiary of industries moving out of China. Eastern European nations may likely seek a sub-regional compact in order to avoid the discombobulations of its Western counterparts in the European Union.
But will governments, ossified by age-old bureaucratic traditions, be willing to tap into the synergies of people-centric regionalism?
†Maavak, M. (2021). Horizon 2020-2030: Will Emerging Risks Unravel our Global Systems? Accepted for publication. Salus Journal, Issue 1 2021.
Role of WTO in Regularization of International Trade
International trade is one of the main features of the globalized world and global economy. There it needs also a well-organized institutional mechanism to regulate it. World Trade Organization is an international organization established in 1995, whose main objective is to facilitate trade relations among its member countries for their mutual benefits. Currently 164 states are its members. The activities and works of WTO are performing by a Secretariate of about 700 staff located in Geneva, Switzerland, led by the Director General. English, Spanish and French are the official languages of World Trade Organization. The annual budget of WTO is about 180 million dollars.
Since its creation it is playing an important role in the regularization of international trade. It offers a forum and facilitation for negotiating trade agreements in order to reduce the barriers in the way of smooth international trade among member countries. Thus, the role of this organization is playing very important role in the regularization of international trade which is contributing to economic development and growth of member countries in this globalized world. The World Trade Organization also offers an institutional structure and legal framework for the execution and supervising of the international trade related agreements which are very helpful in regularization of international trade. It also settles disputes, disagreements and conflicts occurring during the interpretation and execution of the components of the international agreements related to international trade. During the past 60 years, the World Trade Organization and its predecessor organization the GATT (General Agreement on Tariffs and Trade) have assisted to establish a solid and flourishing global trade system, by this means helping to extraordinary international economic development.
The WTO is regularizing international trade more specifically through negotiating the decrease and finally elimination of barriers to trade among countries and try to make smoothly the working of the rules and principles governing the international trade e.g. tariffs, subsidies, product standards, and antidumping etc. It also administers and monitor the execution of the World Trade Organization’s determined guidelines for trade in services, goods as well as intellectual property rights related to international trade. It also monitors and review the member states international trade policies as well as make sure the transparency in bilateral and multilateral trade agreements. Likewise, it also solves disputes arising among members related to trade relations or related to the explanation of the provisions of the trade agreements. It also offers services to the governments of the developing states in the fields of capacity building of officers in matters related to international trade. WTO is also doing research on matters related to international trade and its related issues and collect data in order to find better solutions of the problems and obstacles in regularization of international trade. It is also trying to bring into the organization the 29 states who are yet not members of the organization aimed to assist and regulate their international trade according to the international standard.
One of the main barriers in way to international trade is disputes between the engaged parties. Since long this was a very critical issue limiting the trade among states. The WTO is playing very good and instrumental role in the solution of trade related disputes. Since the establishment of WTO in 1995 over 400 disputes related to trade have been brought by its member countries to WTO. The increasing number of bringing trade related disputes to WTO is showing the faith of member countries in the organization. Close trade relations have massive advantages but also create disputes and disagreements. With the increase of international trade, the possibility of its related disputes also increases. Previously, such problems and disagreements have caused in severe disputes. But at present, in the era of WTO the international trade related disputes are decreased because the member states have now dispute’s solution platform, and they are turning to the World Trade Organization to solve their trade related disagreements and disputes. Before the World War Second, there was not any such international organization or forum which could facilitate international trade and its related affairs, and there was also noany legal framework for solving trade related disputes among states of the word.
One of The World Trade Organization’s guiding principal is to continue the open boundaries for trade, ensure the Most Favoured Nation (MFN) status among member countries and stop discriminatory behaviour of members towards other member(s) and bring transparency in doing international trade. It is also assisting counties to open their indigenous markets to global trade, with justified exemptions or with suitable flexibilities, promote and support to durable growth, reduce trade deficit, decrease poverty, and promote economic stability. It is also working to integrate different international trade policies and principles. The member countries of WTO are also under the compulsion to bring their trade related disputes to this organization and avoid unilateral actions. WTO is the central pillar of the current international trade system.
Russia and France to strengthen economic cooperation
On April 29, Russian President Vladimir Putin held videoconference with leaders of several French companies-members of the Franco-Russian Chamber of Commerce and Industry (CCI France-Russia) to discuss some aspects of Russian-French trade, economic and investment cooperation, including the implementation of large joint projects as well as the prospects for collaborative work.
Putin noted that the Economic Council of the Franco-Russian Chamber of Commerce and Industry is still operational in spite of difficulties, and the late April meeting was the fourth time since 2016. From the historical records, France has been and remains a key economic partner for Russia, holding a high but not sufficiently high, 6th place among EU countries in the amount of accumulated investment in the Russian economy and 5th place in the volume of trade.
Despite a certain decline in mutual trade in 2020 (it went down by 14 percent compared to 2019) the ultimate figure is quite acceptable at $13 billion. French investment in Russia is hovering around $17 billion, while Russian investment in France is $3 billion.
Over 500 companies with French capital are operating in various sectors of the Russian economy. French business features especially prominently in the Russian fuel and energy complex, automobile manufacturing and, of course, the food industry. “It could have been more if the French regulatory and state authorities treated Russian businesses as Russia is treating French businesses. We appreciate that in a difficult economic environment, French companies operating in Russia have not reduced their activity,” Putin pointed out.
The Russian Government established the Foreign Investment Advisory Council, which includes six French companies. Further, there is an opportunity to discuss specific issues related to the economic and investment climate in Russia, and that opportunity is traditionally provided at the St Petersburg International Economic Forum, which will be held on June 2-5.
French companies are involved in the implementation of globally famous landmark projects, such as the construction of the Yamal LNG and Arctic LNG 2 facilities and the Nord Stream 2 gas pipeline project. This, Putin regrettably said “We are aware of and regret the amount of political speculation concerning the latter. I would like to point out once again that it is a purely economic project, it has nothing to do with present-day political considerations.”
Russia intends to increase assistance to the development of science and technology. Funds will be directed primarily to innovation sectors such as pharmaceuticals and biotechnology, nuclear and renewable energy, and the utilisation of carbon emissions.
“We are interested in involving foreign companies that would like to invest in Russia and in projects we consider high priority. In order to do this, we will continue to use preferential investment regimes and execute special investment contracts, as you know. A lot of French companies successfully use these tools on the Russian market. For example, more than one third of 45 special investment contracts have been signed with European, including French, partners,” he explained during the meeting.
He also mentioned continuous efforts to attract foreign companies to localise their production to state purchases and to implementing the National Development Projects, as well as existing opportunities for French businesses in special economic zones. Today there are 38 such zones created throughout the Russian Federation.
Russia pays particular attention to attracting high-quality foreign specialists. Their employment is being fast-tracked, and their families can now obtain indefinite residence permits. There is a plan to launch a special programme of ‘golden visas’ whereby to issue a residence permit in exchange for investment in the real economy, a practice is used in many other countries.
Taking his turn, Co-Chair of the CCI France-Russian Economic Council, Gennady Timchenko, noted that the pandemic has changed the world, people and business, and that French companies in Russia are responsible employers and socially responsible members of Russian society.
Despite the crisis and the geopolitical situation, a number of French companies have launched production in 2020–2021. Companies such as Saint-Gobain and Danone have renewed their investments. French companies have increased their export of products manufactured in Russia; they are investing in priority sectors of the Russian economy. For example, this year the French company Lidea is launching a plant called Tanais to produce seeds. Russia is dependent on the import of 30 to 60 percent of these seeds, according to various estimates.
Despite the current geopolitical conditions and information field, there are important signals for French business and the Russian side to strengthen economic cooperation, attract investment, and create partnerships on a new mutually beneficial basis.
Co-Chair of the CCI France-Russian Economic Council, Patrick Pouyanne, noted that the meeting has become an excellent tradition, the presence of 17 CEOs and deputy CEOs of French companies shows the importance of these joint meetings, and further reflect the deep interest of French business in Russia.
In addition, Patrick Pouyanne further offered some insights into Russia-French cooperation. By 2020, twenty members of the Economic Council invested a total of 1.65 trillion rubles, supporting 170,000 jobs. These companies have operated in Russia for decades and continue investing in the Russian economy despite the sanctions and the epidemic. These companies help France maintain its status as the second largest investor in Russia. In 2020, France invested over $1 billion in Russia despite the economic difficulties caused by the pandemic.
Concluding his remarks, Patrick Pouyanne stressed that the economic operators believe everyone will benefit if Russia, France and all of Europe are not divided or isolated. This is the challenge today. Indeed, diplomacy has to continue playing an important role in settling differences, and businesses are convinced that meetings like this create bridges between Russia and France to strengthen investment and economic cooperation.
Iran’s Economic Diplomacy through CPEC
U.S. sanctions against Iran are characterized by strategic flexibility and adaptability. They are designed to have maximum negative and deterrent effect on Iran’s military, economic and diplomatic growth. Tehran is exploring ways to counter these sanctions most probably by economic engagements with the regional countries. Iran’s perception of CPEC lends some credit to this argument.
Since the initiation of CPEC, the regional perception has already started to change as many countries have begun to see the project within the domain of their national interests. Iran has expressed its long-standing interests to join the CPEC viewing the corridor as a cornerstone for the country economic prosperity and regional connectivity.
Iran solely focuses more on the economic aspect of CPEC. Regional connectivity through CPEC can boost Iran’s stake in the global output. In 2015, on the sidelines of the United Nation General Assembly (UNGA) address, Iran’s President Hassan Rouhani expressed a desire to be the part of CPEC. He emphasized the importance of connectivity projects for the region. Iran’s initial reluctance to CPEC was transformative in nature and heavily came down with the unfolding of new geoeconomic realities.
Iran’s inclination for the CPEC project even becomes the part of official discourse. Iran’s ambassador to Pakistan Mehdi Monardost showed keen interest to participate in the CPEC and named it as one of the greatest projects in the history of the region. He envisioned a great boost to bilateral trade between Pakistan and Iran under the framework of this regional connectivity corridor. In 2017, Iran’s economy minister Ali Tayyebnia participated in the New Silk Road summit. He praised the New Silk Road concept for regional connectivity.
Iran’s economy is already clutched due to the international sanctions invoked by the Trump administration after pulling back from the Iranian Nuclear Agreement formally known as the Joint Comprehensive Plan of Action (JCPOA) in May 2018.Downplaying the perception of geopolitical competition between Gwadar and Chabahar, Iran higher officials negated the impression of competition falsely exaggerated by International and India media and insisted on the complementary nature of two ports.
In 2016,Iran and India signed an agreement for the development of Chabahar port and it was view as the counterweight to Gwadar port. Without explicitly mentioning India by name, Iran’s ambassador to Pakistan Syed Mohammad Ali Hoseeni defended the decision of his country to drop out India from the project in Chabahar by stating “when some foreign governments found reluctant in their relations with Iran and need other’s permission for even their normal interactions, for sure they would not be capable of planning and implementing such long-term cooperation contracts”.
The same rhetoric appears in the views of Chinese leadership. Brushing aside the allegations of Iran’s perceived resistance to CPEC and Gwadar port, Iran’s foreign minister Jawad Zarif dismissed the allegations and supported growth and development anywhere in Pakistan.
Chabahar is often seen as a rival to Gwadar port. However, Indian discourse has got an altogether different lease of life in the media compared to the Iranian one. Iran’s ambassador to Pakistan Mehdi honardoost utterly disregarded the narrative of competition of two ports. He invited both Pakistan and China to closely work in Chabahar port.
China considers Iran as an important country for its energy security, BRI and in the larger context of global competition with USA. China dual role both in Gwadar and Chabahar, according to the analysts, will likely reduce the impression of competition between two ports. Chinese stance on the Chabahar port also complement the Iran’s position on Chabahar. Chinese premier Le Keqiang rejected the notion that Chabahar port is in competition with the Gwadar. He is convinced with the idea that both ports have the potential to complement each other.
Tehran global status goes upward with the emerging financial and diplomatic backing of China. Beijing openly backs Tehran in the face of U.S. might. On March 26, 2021, China and Iran signed an agreement expressing a desire to increase cooperation and trade relations over the next 25 years. Wang Yi, Chinese foreign minister, said that USA should rescind the sanctions against Iran. The 25 years deal is considered as part of the Belt and Road Initiative (BRI). According to Tehran Times analysts Peyman Hassani and Ammar Hossein Arabpour, this deal is considered a relief to Iran’s gas and oil sector against USA sanctions.
USA sanctions forcefully bar the countries from purchasing oil from Iran. The US Department of Defense’s report notes that China Pakistan Economic Corridor (CPEC) focus on pipelines and port construction. Pakistan’s reluctance to follow the Iran-Pakistan gas pipeline which is stalled due to American pressure can be reviewed, too much sigh of relief for Tehran’s energy export.
Triangular relations of China, Pakistan and Iran will likely put Iran on the strong footing. Richard Caplan, a professor of international relations at the university of Oxford, notes, “The agreement which predates Biden, undercuts U.S. efforts to isolate Iran economically and, to some extent, diplomatically.
Diplomatic and economic isolation remain at the center of Iran’s foreign policy under the severe U.S. sanctions. Iran’s perceptions of CPEC revolves around the same fact that through regional engagements under CPEC and BRI, it can tackle its global problems to some extent.
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