BusinessDay

The fracturing of economic globalisation: The emergence of new evidence

For decades now, the United States of America (USA) has led major economic order which poses conflicting interests with those of the non-western states, particularly China in far Asia and Russia in eastern Europe. The recent Russian invasion of Ukraine seems to mark the first major attempt at a new order in international politicking and social arrangement with a focus on stirring America’s age-long supremacy. Since World War II in 1950, both Russia (the largest gas supplier in Europe) and China (the world’s most industrious manufacturing superpower) have emerged stronger and formed a close alliance to present stern challenges to the US and its NATO allies differently from what was ever faced or imagined.

Individually, and collectively, Russia and China have ambitions that can only co-move to alter world economic supremacy which, for a long time, has been held by the US. The alliance between Russia and China is in an effort to reshape the global order to their advantage. This emerging alliance presents new evidence towards the fracturing of economic globalisation. The world seems more connected now than in the time of World War II owing largely to improvement in technological advancement, interest in shared prosperity and cultural diversity and development of more peace and conflict resolution agencies.

With the ongoing crisis in Ukraine and increasing economic sanctions imposed on the Russian government and allied entities, further deterioration in economic globalisation is reaching previously unimaginable proportions. The United States and its NATO allies are presently contending with various adversaries simultaneously to protect their economic and political interests. While the US and NATO have been pragmatic so far and refused the request by Ukraine to impose a no-fly zone, economic relations between Russia and US have been halted even when the US is aware of China’s political interest in Russia and the implication for global order. Regearing economic priorities, particularly in terms of military expenditure, strengthening economic ties with allies, diversification of global energy market and increasing militarisation are some of the options before the US and its allies. This will further fractionalise economic globalisation. The desire to recreate the soviet-era prominence and China’s interest in anti-democracy could explain the emergence of great power competition among Russia, China, and the United States.

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The emergence of the great power competition among Russia, China and the United States has seen countries take sides which further deteriorate gains recorded from economic globalisation. With more countries in the West confirming their solidarity with Ukraine amidst the Russian invasion, and China and Belarus most notably in the Russian camp, the growth in economic globalisation has taken a hit and therefore on the back foot. These stratifications in global security architecture take a dig at an effort to unite the world amidst growing socio, health, and economic challenges. At a time when the global effort is required to end the menace of the COVID-19 pandemic, it is disheartening to witness the beginning and the fractalisation of economic globalisation. Huge financial resources that are meant for creating conditions of shared prosperity are now being considered for improved military expenditure. Since the effect of war is long-lasting, the psychological effect will also be life-long. Efforts to establish a deep peaceful co-existence among the discontented parties will be very difficult and thus, does not help global economic globalisation. The disintegration of the global economic pact is costly on many fronts and diplomacy and negotiation remain the most pervasive option for continuous and shared prosperity.

The disintegration in the global unity was also evident from China’s increased militarisation operation in the South China Sea. Efforts have been made to establish a Chinese navy presence around the world with its anticipated first foothold on the Atlantic being hampered by the US pressure on Equatorial Guinea to rebuff Beijing’s advances. Equatorial Guinea will have to take a side in the global politicking and competition for global power which either way have huge consequences for their growth and advancement pursuance. The removal of Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has also created a disintegration that the world has enjoyed for such a long time. China’s effort in building a digital currency and payment system different from SWIFT will most likely see the emergence of campaigns to lure countries into their self-controlled global payment systems. The acceptance/rejection of members in different global payment systems attributable to superpowers will further fracture global unity and effort and shared prosperity. Even the energy market is in chaos as to who to trade with and who not to. Each of these superpowers has a critical resource endowment that forms the basis of their negotiation of interest. US ban on import of Russian oils and the anticipated Russian ban on the supply of gas to Europe might escalate the deglobalisation of the world economy.

Dr Ibrahim A. Adekunle is a lecturer at the Babcock Business School (BBS), Babcock University (BU), Ilishan-Remo, Ogun State, Nigeria.