According to IMF’s latest World Economic Outlook #WEO, growth in the US, the euro area, and developing and emerging Asia is set to moderate. http://ow.ly/5ZP930nnPvA #IMFBlog
It’s an established fact by now that the Eurozone economy is slowing down. The International Monetary Fund cuts down the relevant growth estimate for this year to 1.6% and 1.7% for 2020. This is far below the robust 2.4% of 2017. The German economy, the largest and the more competitive country of the club, is actually leading the way to stagnation or even recession. There is also widespread agreement about the cause of this unfavourable tendency. Most analysts, commentators and CEOs agree that trade wars and a strong drift to protectionism are culpable for this adverse trend.
True, anti-globalization rhetoric and practices seem to have become the name of the game in today’s world, with ‘America First’ and several nationalist Europeans leading the way. Populist politicians in developed western countries have taken this dangerous and sloppy path, but not without good reason. More than twenty years of free flow of goods, services and capital around the globe have left large parts of the citizenry in the developed world much worse off or unemployed and underemployed.
The ‘left behind’
The ‘left behind’ peoples have been easy victims and susceptible audiences to the extreme right wing and nationalist narrative, blaming immigration and immigrants for everything. Not a word about the inherent faults of the new era ‘casino capitalism’ and the successive crises it needs to keep depriving the many for the benefit of the very few. And the income distribution inequality goes on punishing the many. According to the latest Oxfam announcement “26 persons in 2018 owned so much wealth as 3.8 billion people who make up the poorest half of humanity”.
The established center-right and center-left political parties in Europe and the US didn’t do anything to change this devastating trend. Actually, in many ways the political elites favoured this dangerous discrepancy. The British Labor Party under Tony Blair and the German Socialist Party under Gerhard Schröder are the perfect examples of that. They embraced, favoured and actively promoted globalization and income inequality. Time passed by and blocked the ability of the political establishment to offer a viable response to the woes of growing parts of the population. There were some rare exceptions to this rule, but were treated badly by their own political parties.
Ostracising the realists
The American Senator Bernie Sanders was sidestepped by his Democratic Party establishment, despite being the one who could surely beat Donald Trump in the 2016 Presidential race. As for Jeremy Corbyn, he barely escaped the Labor Party’s Blairist ‘globalizing’ MPs. Corbyn owes his survival and subsequent rise to the opening of the party to hundreds of thousands of new members.
Now, after having revitalized the Labor Party with his anti-neoliberal policies, Corbyn leads the efforts to avoid a catastrophic no-deal Brexit. Unfortunately, in June 2016 the ‘left behind’ Brits fell victims to populist and weird politicians and voted to leave the European Union. For them, the EU was the hated globalization agent and at that point in time Corbyn couldn’t or wouldn’t do anything to reverse that.
Davos: The Holy Temple of globalization
But let’s turn to the ‘temple’ of globalist ideology and practice, situated in the small Alpine village of Davos. The Forum, established in 1971 remained for years a young entrepreneur and student winter direction.
It rose to global prominence only in the late 1980s, together with the advent of globalization and economic neo-liberalism. However, last week, even the Davos Forum founder, Klaus Schwab, the ‘pope’ of globalization and neo-liberalism, was forced to recognize that “now we have to take care of those who are left behind”.
Too little too late from Schwab
But is there time to effectively do that, or has the anti-globalization rhetoric been definitively appropriated by the extreme nationalist, anti-immigration right wing politicians? What Schwab said comes rather too late and what he means is too little. This year’s Davos was a phantasm of the glamorous past, with the super rich participants clamouring against trade wars and political populism.
Now, in the era of treacherous global uncertainties and risky confrontations, the most difficult cases are Britain and Germany. Both those countries have excelled in international markets during the past twenty years led by London’s City and German engineering respectively.
Britain: Defining chaos
However, in Britain the super high returns from the globalized financial industry have been restricted to one square mile in central London, the City. The famously picturesque and tranquil British countryside remains as far away from London as it is from New York. No wonder why the Londoners and the City banking Leviathans lead the ‘remain’ in the EU campaign.
In Germany, though, the export oriented mega champions in engineering, automotive, chemicals and other industries have distributed the gains from globalization more equitably. Still there are many ‘left behinds’ – much fewer than in Britain – who now vote for the anti-immigration, nationalist, far right almost Nazi AfD party.
Less so in Germany
So, in both countries the anti-globalization tendencies have created insurmountable problems. Of course, things are much more difficult in Britain, with the country being so divided as to have solidly frozen before the Brexit dilemma. In Germany, the stakes are not so high. The AfD party menaces the Christian Democrats, but the anti-immigration populists are much less stronger than in Britain. Unfortunately for the British ‘remainers’, the London financial giants do not vote.
Still, Germany is critically threatened by the ‘America First’ policies of Washington. That’s why last week Chancellor Angela Merkel found a convenient tribune to indirectly attack the American protectionism in the Davos platform. She addressed an appeal to all the leaders of the West, obviously though aiming at the US.
She asked the leaders to overcome their egotistic interests and “take care of the interests of others”. To say the least this plea sounds superfluous under the tough realities of the global power games. Germany critically depending on exports and already feeling the result of the American pressing may seem ready to give in to Washington’s demands. There are no favours in this game.
Merkel’s plea
So, there is not a chance that her call be answered positively. Germany will continue being hurt more and more by the Americans. On top of that, the costs for Berlin may rise further in case Britain leaves the EU without a deal.
Surely, things are not going to become easier for Merkel and her country. On the contrary, last year was much better than this one and the same is true for the years before.
Lost in the French province
This downward spiral for the Brits will prove to be worse than for the Germans. As for France, the country cannot avoid the European malaise. The ‘talented’ President Macron has definitively lost his glow and most of his compatriots actively and effectively disagree with his policies. His globalist intentions, hidden under the European skin of his much advertized EU reform, are now redundant.
In conclusion, Europe has entered in a long period of strained restructuring in every respect, political, economic and strategic. The forces driving this process are brutal and more or less blind. Surely, a dark tunnel is not far away and nobody can guess where, when and in what shape the train is to reemerge.
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