Economy

The Fraying Harmony in Europe: Is a Trade War Brewing?

Published

12 months ago

June 21, 2022

Britain cannot catch a break, can it! I honestly thought Brexit would be the highlight in Europe for decades to follow. Then, Russia invaded Ukraine, and my perspective shifted. The European leaders joined forces to deter Putin, and I was sure this was a lasting commitment. Even as the British Prime Minister Boris Johnson grappled with the ‘Partygate’ scandal, I was glad that Europe was finally embracing unity again – leaving behind the bittersweet Brexit fiasco. Yet the desperate attempts by the Tory regime – or rather Mr. Johnson and his intimate cohort – to regain its lost shinning in England are unfortunately sounding the knell for the European harmony.

Mr. Johnson barely survived the confidence vote a fortnight ago. However, the vote exposed his vulnerable position as a leader as 148 Conservative lawmakers (roughly 41%) rebelled against him on the secret ballot. The position of desperation is ostensibly out in the open as Mr. Johnson races to appeal to his avid supporters in the echelons of the Conservative party vis-à-vis the rightist Brexiteers. But how exactly? Apparently, via targeting the emblematic conservative issues – the immigration policy and the Northern Ireland Protocol.

The overhyped political drama apropos of transporting British asylum seekers to Rwanda – a former German colony in East Africa – is all but a ruse by the Tory loyalists. Sure, the illegal migrants risked their lives crossing the English Channel. But the policy to settle imperiled migrants in a remote African settlement is a far cry from the touted well-being of refugees. The policy got denounced by human rights groups, religious leaders, and the international press. Even the British royalty couldn’t condone the inhumane and unjust policy that clearly breached the international refugee agreements. Ms. Yvette Cooper – the Labour Party’s Shadow Home Secretary – stated: “This is not, and never has been, a serious policy.” I admit, it is not! Until recently as the European Court of Human Rights (UCHR) ordered to ground the flight bound to Rwanda at the last gasp. Ms. Priti Patel – the Conservative Home Secretary – vowed to schedule another flight by protesting: “We will not accept that we have no right to our borders.” What followed was a chorus of grievances concerning European intervention in British law. Conservatives railed about exiting the European Human Rights Pact (EHRP). And even Mr. Johnson alluded to the possibility of leaving the European Convention on Human Rights (ECHR).

The current pushback against the European Convention eerily hearkens back to the days leading to the referendum. However, this uncanny resemblance with the Brexit outcry in 2016 is not coincidental. The Conservatives need a facade to veil the fragile foundation exposed by the vote of confidence. By invoking memories of the Brexit, Mr. Johnson hopes to muster confidence in his leadership and redress his tarnished image. Why else would he threaten to leave the Convention, a political milestone of Winston Churchill that even he once endorsed: “Keep the European Convention; it is a fine thing. Get out of the European Union (EU),” he said back in 2016. It is nothing but a tactic to maintain the illusion of strength as, despite threatening to leave the ECHR, any actual policy action would require several months of deliberations. Not to mention amendments to Scottish, Welsh, and Irish legislation to detach from the Convention completely. While the ECHR is unrelated to the EU, a similar (but graver) situation is unraveling in Northern Ireland – a combined effect could destabilize the European concord.

The Brexit custom rules have weighed heavily in the political arena – especially between England and Northern Ireland. In order to preserve the Good Friday Agreement (GFA) – a covenant that ended decades of sectarian violence between the Nationalists and the Unionists – the Northern Ireland Protocol was inducted into the Brexit deal. Customs checks got placed in the Irish Sea on goods entering Northern Ireland from the rest of the UK. The arrangement got designed to avoid fencing a border between the North – a British constituent country – and the Republic of Ireland – a member of the EU. The Unionists – led by the Democratic Unionist Party (DUP) – have contended the protocol was the first step toward alienation from the Great Britain. Discussions between the British government and the European Commission rambled on to discuss ease of restrictions – only to end at an impasse. The European Commission refused to make changes to the protocol while British lawmakers railed against the inflexibility of the bloc. It could have continued indefinitely. However, the May elections in Ireland unprecedentedly shifted the power dynamics.

Sinn Féin (the Democratic Socialist Party) – a Nationalist counterpart to Unionists – trumped the DUP, becoming the largest party in the Assembly – the first time ever in the centurial existence of Northern Ireland. The power-sharing agreement, enshrined in the GFA, would still delegate equal powers to both ministers nominated by respective parties. However, an aberration stands as, while the DUP acknowledges defeat in the elections, the party has refused to designate a Deputy First Minster – a requisite counterpart to Sinn Féin’s First Minister – until its concerns regarding the protocol get duly addressed. Hence, the political paralyses in Northern Ireland could reignite violence between the British loyalists and the Irish nationalists if the Assembly fails to convene soon. Thus, Mr. Johnson is admittedly in a political limbo, racing against the clock to avoid another political failure. Though this time, his solution seems more of a colossal failure in the long run.

By all accounts, the Northern Ireland Protocol Bill (NIP Bill) published last week is a menacing legislation. The bill envisions a bifurcated trade route between the rest of the UK and Northern Ireland. According to the published document, Mr. Johnson envisages trade operation on two lanes: the Green lane for trade with Northern Ireland; the Red lane for goods intended for the Irish Republic (and the rest of the bloc). By definition, goods on the Green lane would undergo no checks and follow British standards, while cargoes via the Red lane would be subject to regular EU customs and regulations. Furthermore, the contentious legislation conveniently allows the British government the authority to determine tax and expenditure in Northern Ireland. The Tory regime insists on the “Doctrine of necessity” to breach an international agreement unilaterally. However, the political deadlock in Northern Ireland would not exactly resolve since the legislation would typically take a year to enact. On the contrary, the European landscape could bristle shortly if the EU retaliates.

The NIP bill proposes an end to the jurisdiction of the European Court of Justice (ECJ) relating to settlements of trade disputes. Combined with the recent threat to exit the ECHR, the UK is basically saying: We will disregard the international law to save face in domestic politics. And to add insult to injury, we also refuse to accept your authority in mutual trade disputes and human rights violations – all in the name of supposed national autonomy and peace. Naturally, neither the Democratic Unionists nor the EU is buying the absurd excuse. The DUP lawmakers clarified that they will “wait to see how the bill gets implemented before deciding on a power-sharing government.” Even forgoing the time needed to enact the bill, it is exceedingly unlikely that the legislation would survive in the House that nearly voted Mr. Johnson out of office. In the meantime, a trade war with the EU seems on cards.

Brussels recently alluded to potential retaliation as the European Commission recommenced legal proceedings against the UK – frozen during talks over the protocol since 2021. If the British government fails to respond within two months, the EU could drag the UK to the ECJ. “The bleeding mistrust in EU capitals,” according to an architect of the Northern Ireland Protocol, is sharply raising the specter of a trade war between the EU and Great Britain. While the infringement proceedings of the ECJ could take months, in the short term, the Trade and Cooperation Agreement (TCA) – the deal ensuring tariff-free and quota-free trade between Britain and the European bloc – is seriously threatened. In a hypothetical scenario, the EU could unilaterally scrape the whole (or certain parts) of the TCA to impose tariffs on British goods. The EU could further inflict considerable damage by restricting European waters to the UK – debilitating the lucrative fishing industry. Even UK could respond by pinching trade with the EU and closing English markets to European businesses. Consequently, trade barriers and economic hostilities would inevitably catapult the cost of living in Europe – especially during a period when inflation is already touching a multi-decade high; a global recession is nearing. Ultimately, the fallout would significantly destabilize the European economies and throw Britain into economic isolation.

The drama in Westminster has invited the ire of the Biden administration as a fracture in the Western alliance would ultimately bolster the Russian offensive. Record-high inflation has already made political decisions regarding Russian economic exclusion extremely tricky. A trade war would ineluctably make Europe more divided and ill-prepared to part from Russian energy supplies. Hence, Brussels is tapering its response to the UK plausibly to safeguard the European unison. However, the tensions would remain high as Mr. Johnson and Company would continue to take a hardline approach to please the Brexiteers and deflect criticism over their own failure and notoriety. Nonetheless, a lack of resolve in the following months would upend Britain’s role in international law, spook faith in the European bloc, and fissure the underlying trust that would ultimately favor the Russian rhetoric.

Up Next

Shanghai’s Lockdown and Its Dire Economic Impact

Don't Miss

Redefined Interdependence in the Age of “Business Ecosystems”

Syed Zain Abbas Rizvi

The author is a political and economic analyst. He focuses on geopolitical policymaking and international affairs. Syed has written extensively on fintech economy, foreign policy, and economic decision making of the Indo-Pacific and Asian region.

Comments

Economy

Brick By Brick, BRICS Now a New Bridge for a New World

Published

4 days ago

May 30, 2023

Naseem Javed

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.

Economy

Promoting Economic Security: Enhancing Stability and Well-being

Published

7 days ago

May 27, 2023

Ayesha Binat-E-Umar

The stability and well-being of people, communities, and countries are critically dependent on economic security. It covers a range of topics, such as access to necessities, work opportunities, stable incomes, and defense against economic shocks. The need of guaranteeing economic security has increased significantly in the modern world, which is characterized by technical developments, geopolitical shifts, and unexpected disasters. The importance of economic security is examined in this article, along with important tactics for promoting adaptability and preserving people’s quality of life.

The value of economic security to individuals, communities, and countries cannot be overstated. By fostering an atmosphere where people and families can achieve their basic needs without suffering undue stress, it promotes stability. Because of this stability, people can recuperate and start over after severe shocks like economic downturns, natural disasters, or health crises.

Furthermore, economic security contributes to social cohesion by reducing inequality and fostering inclusivity. When individuals feel economically secure, they are more likely to actively participate in society, contribute to their communities, and engage in productive endeavors. This sense of security leads to greater social harmony and a collective feeling of prosperity.

Moreover, economic security is vital for long-term sustainable development. It enables individuals and societies to invest in education, healthcare, infrastructure, and innovation. These investments drive economic growth, improve overall well-being, and create the foundation for a prosperous future. By ensuring economic security, countries can build resilient and sustainable economies that benefit their citizens and contribute to global progress.

To enhance economic security, several key strategies can be implemented. Firstly, governments and businesses should prioritize diversifying their economies by promoting sectors with growth potential and resilience. By reducing reliance on a single industry or market, countries can mitigate the impact of economic downturns and build a more robust and diversified economy.

Investing in education and skills development is another crucial strategy. Governments and organizations must focus on providing quality education, vocational training, and lifelong learning opportunities. Equipping individuals with the necessary tools and knowledge enables them to adapt to changing economic landscapes and remain competitive in the job market.

Strong social safety nets are necessary to protect people during times of economic upheaval. The most disadvantaged populations should be given priority in the design and implementation of comprehensive social welfare systems by the government. Creating a safety net for all citizens entails implementing programs for income support, healthcare coverage, and unemployment benefits.

Promoting entrepreneurship and innovation can create new opportunities for economic growth and job creation. Governments can support aspiring entrepreneurs by providing access to capital, mentorship programs, and favorable regulatory environments. Embracing technological advancements and fostering a culture of innovation further enhances economic security, particularly in an increasingly digital world.

International cooperation is essential since economic security is a global issue. Cooperation between nations is necessary to advance ethical business practices, lessen economic inequality, and improve financial stability. Initiating discourse, coordinating policy, and assisting nations in economic crises are all important functions of multilateral organizations.

Societies can improve their economic security and create a more secure and prosperous future by putting these strategies into practice: diversifying the economy, investing in education and skills, creating social safety nets, encouraging entrepreneurship and innovation, and fostering international cooperation.

Having economic security is crucial in a world that is uncertain and changing quickly. Governments, corporations, and individuals may all work together to create an environment that promotes economic security by putting a priority on stability, resilience, and inclusivity. We can create a more resilient and prosperous future for everybody through diversity, education, social safety nets, entrepreneurship, and international cooperation. By making investments in financial stability, we build a more just and sustainable world.

Economy

The Impact of Globalization on the South Asian Economy

Published

7 days ago

May 26, 2023

Karar Ali Shah

Globalization refers to the process by which economies, societies, and cultures from different countries become integrated with one another. The economies of the countries that make up South-East Asia, which include India, Pakistan, Bangladesh, Nepal, and Sri Lanka, have been significantly impacted by the spread of globalization in recent decades. The effects of globalization on the economies of South Asian countries have been mixed, with some positive and some negative results.

Positive Impacts of Globalization on the South Asian Economy

The expansion of South-East Asia’s trade and investment opportunities is one of the aspects of globalization that has had the most positive impact on the region’s economy. Because of its large consumer base, low labor costs, and strategic location, the region has become an attractive destination for foreign investors. As a consequence of this, the level of foreign direct investment (FDI) in South Asia has significantly increased, which has led to the development of new industries and the production of new jobs.

The expansion of the service industry in Sout-East Asia can also be attributed to the effects of globalization. South Asian countries have emerged as a hub for the outsourcing of services such as information technology (IT) and business process outsourcing as a result of the emergence of new technologies and the increased availability of skilled labor (BPO). As a direct consequence of this, the area has benefited from an increase in both the number of available jobs and the amount of money it brings.

Last but not least, globalization has facilitated greater cultural interaction and integration throughout South-East Asia. The region possesses a significant cultural legacy, and the advent of globalization has made it possible for South Asian music, films, and cuisine to become popular all over the world. This has not only contributed to a greater awareness of the region’s cultural heritage, but it has also opened up new doors for the travel and hospitality industry.

Negative Impacts of Globalization on the South-East Asian Economy

Even though there have been some positive effects, there have also been some negative effects that globalization has had on the South Asian economy. The widening gap between rich and poor is one of the most pressing problems that we face today. The advantages brought about by globalization have accrued almost entirely to a relatively small number of people, which has contributed to a widening income gap. As a consequence of this, social unrest and a wider gap in incomes have emerged.

Another significant obstacle that has been presented is the displacement of workers and traditional industries. Due to the effects of globalization, many smaller businesses have been forced to shut down, and their employees have been relocated to larger companies that are more productive. As a consequence of this, there has been an increase in unemployment as well as social unrest, particularly in rural areas.

Globalization has contributed to the deterioration of the environment in South Asia. The region has seen a growth in industries such as the textile industry, both of which have had a significant impact on the environment as a result of their expansion. The population’s health and well-being have suffered as a direct result of environmental degradation, which can be traced back to the increased consumption of natural resources and the improper disposal of waste produced by industrial processes.

Conclusion

The economy of the South-East Asian region has been affected in both positive and negative ways by the phenomenon of globalization. While it has resulted in the growth of industries and increased cultural exchange, it has also resulted in the displacement of workers and the widening of income inequality. While it has contributed to the growth of industries and increased cultural exchange, it has also resulted in the displacement of workers. In order to address these challenges, policy interventions that foster inclusive growth, protect the environment, and create new opportunities for the population will be required. By acting in this manner, countries in South Asia will be able to take advantage of globalization’s positive aspects while mitigating some of its more damaging effects.