Globalization can take on geopolitics

It seemed that geopolitics was going to stop globalization. We believed it that way, and many observers are committed to it. Yes, it can transform it, but for the moment it is globalization that has the upper hand, due to its own dynamics and because various geopolitical interests use it for their own benefit. The United States, which wants to prevent having a competitor at its level, intends to stop China’s technological development. However, it is finding other channels for its supply chains, and knows how to use its assets, such as its dominance of the market for essential rare earths or batteries for electric cars or American drones for Ukraine, among others. On the other hand, Washington, with Biden, and its European allies, has proposed to suffocate Russia after the start of the invasion of Ukraine with a plethora of sanctions. They have an effect, but Moscow has found new avenues for its imports and exports.

Nothing has set back globalization, as we understand it in this historical phase, an invention from which the West believed it would benefit and, through ignorance, transform China towards greater liberalism, not only economic but also political. Neither the 9/11 attacks in 2001, the financial crisis that began in 2008, the general lockdowns against Covid, the Russian invasion of Ukraine, nor the Middle East war have undermined globalization. Momentarily yes, and then it rebounds. “Supply chains have continued to encircle the world, while digital technology has paved the way for new forms of globalization,” the report says. Financial Times. Latest DHL Global Connectivity Indexthe logistics company, predicts that the proportion of world production traded internationally, after a record in 2022, and some stagnation in 2023, is accelerating again in 2024. Meanwhile, the globalization of information flows continues to grow since two decades ago. “The latest results from the DHL Report unequivocally disprove the notion that globalization is reversing course,” said John Pearson, CEO of DHL Express. The three most globalized economies are Singapore, the Netherlands and Ireland. Deglobalization has turned out, for the moment, to be nothing more than a conjecture.

Globalization has changed the world, and like Richard Dawkins’ “selfish gene,” it tends to perpetuate itself, to multiply itself. The large and not so large companies that are its base continue to promote it, despite the economic nationalisms that have emerged.

The Cold War schemes between the West and a Soviet Union that did not participate in the world economy are no longer valid. The West does not command or weigh as before. The global economy covers everything, although it has partly become regionalized, with regional trade strengthening over the global one. Today’s world is neither bipolar nor unipolar. It is not multipolar, but flexipolar. There are no permanent alignments, but some can be with one great power for some things, and with another for others, according to their interests. Strategic autonomy, interdependence, variable alliances and diversification define the new situation, with some countries acting as “connectors”. But not Europe.

Perhaps the best examples of flexipolarity, to name three important ones, are India, Turkey (a NATO member and observer at BRICS meetings) and Saudi Arabia. With the West for some things, with the BRICS for others. What do they put economic sanctions on Russia? For Moscow imports much of what it needs for its war effort, including those quoted chipsthrough those connector countries, most especially India. Secretly, of course. Or not so secret because it also imports through third parties what it does not need like Western luxury brands, making them somewhat more expensive. It exports gas and oil, sometimes on a regular basis (for example, to Spain), or through an important “shadow fleet”, that is, without the usual insurance and shipping companies, which has increased by 70%. That the West imposes tariffs on China’s exports? Well, it is dedicated to opening factories around the world from which to export more freely. It knows how to use the levers of globalization, a concept defended by the current Chinese leadership, starting with its president Xi Jinping. Today, despite technological sanctions, it is cheaper to rent a chip advanced NVIDIA in China than in the US. Things about globalization.

In the West, the tone is rising against the gigantic Chinese surpluses. Even the EU has decided, while negotiating, to put tariffs on Chinese electric cars subsidized by its State. Teslas are manufactured in China and although Russia is going through difficulties, China is also concerned about this trade war.

A similar situation occurred before the First World War, when, as I remembered recently Christine Lagarde, president of the European Central Bank, John Maynard Keynes wrote that “the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products from all over the earth, in whatever quantity seemed convenient, and wait reasonably prompt delivery at your doorstep […]. I considered this state of affairs as normal, safe and permanent.” What happened happened. Again in the 20s of the last century, and it ended as it ended. “If we go back a century, until the 1920s, the world economy was going through a series of transformations. These changes occurred in different directions, representing both setbacks and advances. They fundamentally changed the structure of the economy,” warns Lagarde.

There are signs of fragmentation of globalization. Its regionalization goes in this direction. An example is the one pointed out in a report Hinrich Foundation: The essential geography of undersea cables is separating into two spheres of influence, the American and the Chinese. And these cables are essential to maintain a single internet – one of the bases of this globalization – although with various national firewalls, such as the Chinese one. Another is the creation of an alternative financial system to the Western one by the BRICS.

Just because the conjecture has not been proven or materialized does not mean that deglobalization cannot occur in the not-so-distant future. Economic nationalism is gaining ground, from China or Indonesia, to the United States, with Trump or Harris (we may not know who for weeks), with a Europe off the hook, as they say Draghi Report and Lagarde herself. And with ongoing wars over which control can be lost. Back to the Twenties? Careful. But at the moment globalization is not going backwards.