The Globalisation of the Crisis and the Geopolitical Shift

By Tiberio Graziani, President of IsAG, Director of “Geopolitica”

Five years after the explosion of the financial-economic crisis, and despite numerous analyses and studies produced, and the suggestions made, the leadership of the countries involved still have not managed to bring a satisfactory solution into play, to either contain or overcome it. Since the particularity of this epochal crisis which lays bare the contradictions of the neo-laissez-faire system - is to also be found in its relationship with ongoing global geopolitical change, the stalemate in which economic-financial policymakers struggle, constitutes a particular expression of the tension that exists between the supporters of the old unipolar order and the push towards the multipolar evolution of the international scenario.

From globalisation of markets to globalisation of the crisis

Following the geopolitical earthquake caused by the collapse of the USSR, the process of financialization of the global economy [1] has seen a remarkable acceleration, becoming a structural element of market globalisation in just a few years. In geoeconomic terms, that new phenomenon has accompanied the bid for worldwide imposition of the US-led western system [2]. In particular, it has strongly characterized the so-called “unipolar moment” [3].

After an initial success, which benefited the economies and financial circles (banks, credit and insurance institutions) of advanced industrialized nations, significantly marked by a high and widespread development of the services sector, the globalisation of markets and the interrelated financialization of the economy suffered a serious crisis in 2007 and 2008, with devastating effects for some areas of the globe. This crisis laid bare the deep contradictions of neoliberalism, already discussed by many authors, including the geoeconomist and geostrategist Luttwak [4] and the controversial US businessman and financier George Soros [5]. The crisis fully manifested in its most pernicious and characteristic traits in the US, that is to say, in the centre of the Western geopolitical system, then radiated into its peripheral areas (Europe and Japan), and then spread to the rest of the planet.

As we know, the crisis hit some southern European countries, which already had specific structural weaknesses, both political and economic, with a vengeance. The limited or non-ability of these countries (Greece, Italy, Portugal, Spain) to react to the fatal U.S. contagion is to be identified not only in their systemic weaknesses, but also in their diminished capacity to intervene in the monetary and financial areas; this limiting factor is a direct consequence of their lack of monetary sovereignty, which originated, as noted, with their accession to the Eurozone, and their reduced bargaining power in the European and Euro-Atlantic arenas.

The dissipation of the crisis and the new geopolitical aggregates

From a distance of five years of its explosion and from the start of its propagation into other geoeconomic areas, the crisis hasn’t ended yet. Very likely the process of globalization of the crisis seems destined to remain incomplete and, therefore, mostly confined within the scope of the Western geopolitical system, owing to the dynamics introduced by the presence of the new actors that have appeared on the world stage.

During this short period of time, countries that were until recently emerging, such as Brazil, Russia, India, China and South Africa (BRICS) have gained ever increasing world importance, polarizing the economic, financial and political interest of other nations in various quadrants of the planet. Furthermore, if the BRICS have not exactly established in a certain way and on a global scale a climate conducive to the formation of other new groups, such as the Eurasian Customs Union and UNASUR, they have at least helped to create full awareness of the geopolitical change underway among the ruling classes of the major Eurasian countries (China, India, Kazakhstan, Russia) and Latin America (Brazil, Argentina, Venezuela, Chile). The spread of the new “multipolarist” thinking has generated some innovative initiatives, destined to play a decisive role in the configuration of the new world order, both in terms of novel alliances and unusual strategic partnerships (some of which are already state of the art), as well as in the economic-financial landscape. It is in this context that proposals and initiatives arising outside of the usual forums (G8 or G20) or international decision-making centres (World Bank, International Monetary Fund) must be recorded and evaluated; for example, the establishment of a BRICS Bank, oriented (for now) at co-financing of major infrastructure projects for the modernization of about one third of the entire planet. On the other hand, “Western” attempts at keeping world primacy in the particular phase of the financial and political crisis must be analyzed in this same context.

Among the efforts of the Western system, designed to overcome the crisis through its globalization and dissipation in other geoeconomic  quadrants, there are at least two of particular interest to the analyst, that have already been proposed or replicated on the initiative of the US, both as centre of the “West’s” decision-making and above all because it is insistent on two strategic areas for Washington’s economic and geopolitical projection. These regard Europe and the Pacific, and the constitution of a great transatlantic market, the Transatlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP).

The bilateral option and the “neo multipolar multilateralism” for overcoming the crisis

The geopolitical change under way, that is to say, the transition from uni- to multipolar, seems to be proceeding towards the stabilization of the new actors, in both their individual national dimensions and in their aggregations.

This consolidation provides countries peripheral to the Western system, which most suffer the effects of the economic, monetary and financial crisis, the opportunity to start new ways of cooperation with future leading actors of the new multipolar order.

Peripheral countries, including Italy, must first prioritise the bilateral option, with the aim of regaining an international “physiognomy” that enables them to increase their own degree of freedom in the international arena and, therefore, gain greater bargaining power. With the progress of the geopolitical shift towards new and different poles of aggregation, the method of the bilateral option, however, must fit within the framework of what we can define as of now, with the novel phrase, as the “neo multipolar multilateralism”.

Notes

[1] Thomas I. Palley, Financialization: What It Is and Why It Matters, Working paper, The Levy Economics Institute, Annandale-on-Hudson, NY, USA, 2007
[2] For the French economist Jacques Sapir, “So-called globalisation is really a combination of two processes. The first is the global extension of capitalism – in its industrial form – toward areas it had not previously touched. The second, largely due to implementation of US policy, corresponds to a voluntary policy of commercial and financial opening.” (Jacques Sapir, Le nouveau XXI siécle, Paris, 2008, pp. 63-64). In other words, the role of the process of globalisation has been to accompany and support US strategy for world dominance during its “unipolar moment”.
[3] Charles Krauthammer, Unipolar moment, Foreign Affairs, Vol. 70, No. 1, 1990/1991, pp 22-33.
[4] Edward N. Luttwak, Turbo-Capitalism: Winners And Losers In The Global Economy, Harper, 1999.
[5] George Soros, The Bubble of American Supremacy: The Costs of Bush's War in Iraq, Public Affairs, 2004.


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