Globalisation has rapidly become the new buzzword driving isolationism and protectionism that has led to European citizens losing out to offshored jobs, reduced personal income, wealth and future prospects. And yet, the same ideology with its insatiable search for profits might just save the Middle East from catastrophe whilst securing a better deal for ordinary people back home.
I have been a harsh critic of globalisation for some years. Despite all the dramatic and important sounding jargon that promised so much, I always feared that a democratic upheaval of the so-called rules-based world order would develop because inequality was rising so fast.
Across the democratic West, one output of globalisation was privatisation – another promise that failed to reduce pricing, increase standards or raise the wealth or prospects of workers.
There is unequivocal evidence that the universal experience for most ordinary people was that both globalisation and its insidious offspring – privatisation – had not delivered. Indeed, for what is now a rapidly declining middle-class, the realisation that the next generation will achieve markedly less than their parents irks millions across continents, especially Europe. China may well have a rising middle class, but for Western workers that doesn’t help if your job was outsourced or your wages reduced by immigration. And it makes no difference if they are facts or not, which has been endlessly documented – public perception is all.
The result of all this turmoil is the rise of populist movements, social division and the growth of extreme political parties. Globalisation is being forced into retreat as isolationism and protectionism become new global buzzwords.
The truth is that as a result of globalisation, disposable income in Europe is declining and putting families at risk and people don’t like it.
In China, average household savings is nearly 38 percent of income. In Greece, it’s minus 17 percent, Portugal minus 2.3 percent, the UK minus 1.1 percent. Poland now has plus 1.1 percent, but inflation is currently 1.6 percent. Switzerland is where savings reach a lofty 18.7 percent, followed closely by Luxembourg. Other than Germany (9.6%), for all the rest, it’s a disaster when considering inflation.1
From the outside, the message is clear; you practically have to be a money laundering tax haven in Europe if you want citizens to enjoy some of the fruits of their labour. Something Britain has already threatened to be.
The ensuing political over-correction is a dangerous moment. Citizens of Italy, UK, France, Spain, Hungary, Poland and many others blame free trade, migration and mind-boggling accumulated wealth, for the battle-ground of political change.
Outsourcing crucial decisions and critical services to the very consulting firms and corporations who would most benefit financially was a stupid economic model that was destined to fail. Mostly, what we have witnessed in the last decade is the transfer of staggering wealth to the top while turning essential citizen needs into profit-making products by the industries that exploited them in the first place. And everyone knows it.
The result? – Trade wars, anti-immigration sentiment and citizen rage turning into protest on the streets or at the ballot box.
When US trade tariffs were raised by as much as 50 percent on 20,000 imported goods in 1930, the result was a retaliatory system that delivered a decline in world trade of 66 percent by 1934. The Great Depression was made worse by a protectionist stance. This was another dangerous moment that then significantly contributed to a global catastrophe five years later.
And yet, the case for globalisation can still be made on behalf of ordinary people.
One example is Iran.
Donald Trump has already created more than just a few disagreements with his allies in Europe. Having pulled out of climate change, trade and other deals, his withdrawal from the 2015 Iran nuclear is seen by European allies as little more than an utter betrayal of the first order. EU corporations have invested heavily in Iran given the large, mostly young population who are deprived of Western goods. This is a valuable new global market and it was the US that gave the go-ahead to invest in the first place.
The EU has had enough of Trump and American foreign policy and no longer considers it a ‘partner’ anymore. In truth, Europe has declared the USA an economic enemy.
EU corporations had invested so heavily that in 2017, trade with Iran jumped 55 percent from the year before with an expectation of the same again in just three years. America, by contrast, achieved less than 10 percent of that.2
Some European governments have already begun implementing measures for European and Iranian firms to bypass US law. France’s state-owned investment bank Bpifrance announced a plan to offer dedicated, euro-denominated export guarantees to Iranian buyers of French goods and services, avoiding any US links. Italian authorities also worked out a similar deal, when Rome and Tehran agreed on a framework credit agreement to fund investments in Iran worth up to €5 billion via the Italian state-owned holding Invitalia.
The most significant losers are, of course, to be French aviation giant Airbus, which already has booked orders from Iranian airlines for 100 aircraft for a total of $20.8 billion. In addition, French oil firm Total, which in association with the Chinese group CNPC has signed a full working agreement for a $5 billion investment to exploit Iran’s South Pars deposit. These deals are in excess of the $25 billion already being traded.
Other more drastic measures are also being considered. This is the replacement of its so-called 1996 Blocking Statute, which prohibited European companies from complying with US extraterritorial laws. Twenty years ago, when the Clinton administration threatened sanctions against European companies in the same Iran sanctions battle against Europe, the EU passed these blocking statutes giving companies cover to continue with business as usual. Clinton was forced to back down. The George W. Bush administration kept the sanctions on the go but did not enforce them out of concern of sparking another trade war with Europe.3
Many political commentators and columnists are predicting total chaos in the Middle East if the Iran deal eventually fails. It’s hard to imagine just how bad the region could become after Afghanistan, Iraq, Libya and Syria.
But this time, it’s not just about peace in the Middle East or Europe being torn apart by a migration crisis and the world order being ripped up for American geostrategic reasons. Just about everyone has had enough because globalisation, war, migration and lost trade have meant ordinary citizens continually losing out domestically.
In the case of Iran, globalisation is riding along like a lone knight in shining armour as the defender of peace, trade and new transnational relations precisely because it would achieve the opposite. It will create new jobs, new money, new wealth, less chance of a new migration crisis and greater stability both in Iran and back home. Greed seems to have more than one face of the coin. Now, who would have ever thought that recently?
Feature image: Trump has threatened to withdraw from the nuclear deal on or before May 12 if his demands are not met [Reuters]
About the Author
Graham Vanbergen’s business career culminated in a Board position in one of Britain’s largest property portfolio’s owned by one of the world’s largest financial institutions. Today, he is the founder and contributing editor of TruePublica.org.uk and NewsPublica and writes for a number of renowned news and political outlets
References
1.companies.https://data.oecd.org/hha/household-savings.htm#indicator-chart
2.https://www.statista.com/chart/13783/iran-deal_-the-eu-has-the-most-to-lose/
3.http://truepublica.org.uk/eu/iran-trump-the-old-empire-strikes-back/
