When elephants fight, what are we to do?
There is an African saying — when elephants fight, the grass gets trampled. The weak get hurt every time the powerful fight. They never asked for the conflict in the first place.
Coming back from the Emerging Markets Forum in Paris last month, and observing the annual corporate lovefest in Davos (World Economic Forum), it became obvious that the rift between the superpowers is widening by the minute with the Russia-Ukraine war.
Much of the “dialogue of the deaf” between the warring elephants is due to the fact that during the pandemic, leaders and their key advisers have socially distanced themselves into their own bubbles, not getting good feedback on what is really happening on the ground. This is why big misjudgments are being made, and will still be made.
Pre-pandemic “back channels” have virtually disappeared. These are low-key meetings between top advisers and key rivals who can talk freely with each other and get good readings on what areas of compromises and avenues of negotiations are possible. Away from TV cameras and paparazzi, one could have serious discussions without being trapped by the need to repeat simplistic “you evil-me good” sound bites for the home market.
The big picture looks messy but it is clear to anyone who takes a long historical view that paying good attention to how individual decisions or accidental events can change the course of history.
With Europe and Russia totally preoccupied with Ukraine, and the United States riven by domestic politics, high inflation, and random shootings, plus China struggling with Omicron, JPMorgan chair Jamie Dimon has warned that we must brace for an economic “hurricane.”
Since large elephants (big countries and large corporations) will somehow survive this hurricane, what are we, the small fry, going to do to avoid being someone’s lunch?
The maxim that all politics is local remains true even in a globalized world. The global timetable is always set by local electoral timetable, whether the votes are free or not. Without a clear win on Ukraine (creating Biden as war-winning president), the Democratic Party is likely to lose its slim majority in the US Senate and probably in the House by the November midterm elections. Consequently, the Biden administration may become a lame duck for the next two years to 2024, hurt by high inflation and continued domestic squabbling. Since leading Republican presidential candidates are even more hawkish than Democrats on China, no serious reset of US-China policies is likely for the next six years.
Over the same time frame, the European economy (the third most powerful economic grouping) will still be plagued by the war in Ukraine or post-war rebuilding, estimated to cost at least $600 billion, rising with every day that it continues.
In short, with elephants still preoccupied with war or prewar in the next six years, the priorities for dealing with urgent global issues, such as climate warming, global debt distress, international monetary reforms, etc., will be low. The rest of us, namely the business sector and billions in the emerging markets, will all have to make our own contingency plans.
Business leaders use the Davos forum to shape their medium- to long-term strategies, which was why a big debate there was on whether there will be deglobalization and decoupling. My view is that the global reset is actually toward glocalization—simultaneous reconfiguration of global supply chains and more local efforts at resilience on food, energy, water, and essential infrastructures such as internet and payment flows. Weaponization of finance and media has shaken all policymakers to the core. Both the internet and money payments can be switched off at will. No small country wants to be so vulnerable to the whims of big powers.
Given such complex circumstances, corporate captains will realistically want to hedge their bets by retaining their supply chains in countries where domestic markets matter, but ensuring that they are fully diversified in terms of supply and revenue sources. Such collective self-preservation must mean that costs and inflation will go up, adding to global woes. In the end, consumers pay.
What should the small people (local communities) do in such circumstances? Surprisingly, during the pandemic, localization of food production and distribution turned out to be much more resilient than expected. Local food producers and markets create more jobs, more food, and domestic value-added than relying on global supply chains. Local communities are rediscovering that they can help themselves and not be overreliant on dysfunctional governments.
In sum, global fragility arose because there was a seismic shift toward interconnectivity and concentration in big bottlenecks that could fail because of big power conflict. But global resilience occurs when the masses are strong and resilient, rather than overdependent on fragile supply chains or miserly aid from big powers. The systemic whole cannot be strong when the bottom masses are weak. Trade is still better than aid, but if the strong will not look out for the weak, they must look out for themselves.
One should reflect that the grass survived long after warring dinosaurs disappeared. Food for thought, especially in times of scarcity and war. Asia News Network
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Andrew Sheng is a former chair of the Hong Kong Securities and Futures Commission.
The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.
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