Recently a delegation of the Chinese Association of Social Sciences (CASS) visited our University in Islamabad. The visitors were given a thorough briefing. During the Q & A session, a high ranking Chinese lady, well conversant in English language, wanted to know about our opinion on the new globalization? A colleague, who is an economics professor gave an impromptu presentation. He said that indeed a new Asian model was emerging and that the existing one based on the Bretton Wood institutions such as IMF and the World Bank was on its way out. The new system he said would eventually be replaced by the Asian Infrastructure Investment Bank (AIIB). This, however, may take time. In the interim smaller countries like Pakistan would still be going to IMF to get loans. If the old institutions knows that their members were preparing to join the new system, they would crush them by lending money on very high rates. Therefore, he recommended the new Asian economic model of globalization should not be based on harsh lending rates because that would devastate emerging economies. The new economic world order he suggested should be more humane, in order to allow poor countries to prosper. The point was well taken.
There is no denying the fact that we are witnessing a great change in global leadership. It may still take time before a complete change takes place because of a number of reasons i.e. the US is still militarily the most powerful country on earth and its technology and education and the system of governance is still vastly superior to all its immediate competitors such as China and Russia. However, the writing is clearly on the wall. The US is a retreating power. The ascension of Donald Trump to the White House hasn’t helped matters. He is vastly unpopular at home and is under investigation by federal agencies for his alleged collusion with Russia to manipulate the results of the presidential elections. Cracks are also appearing between the whites and non-whites. The rally by the white supremacists in Charlottesville, Virginia is a case in point. Abroad, the foreign policy challenges are not being addressed in a cogent and clearheaded manner. The showdown with North Korea, a poor country led by an unpredictable leader, does not behove a mighty country like the US. Trump’s response to Kim ICBM plans has spiked tensions. Threats such as “you’ll witness fire and fury of the kind that he has not witnessed before” and that all his “weapons are loaded and locked to fire” is a very dangerous trend of saber rattling that can endanger the international peace. The policy on Afghanistan remains unclear and Trump’s advisers have yet to give him policy options that would allow a face saving exit. All this is weakening the American hold on the global leadership. So we are seeing is the emergence of a new world order in which the global leadership would shift from North America and Europe to Asia.
It is a time of great circumspection. The new global leaders should not blindly follow the capitalist norms. The new world order should be based on ancient wisdom of the East. It should be based on integrating all nations of the world. The resources of the poor countries should not be exploited mercilessly by powerful nations without making them a stakeholder in the profits earned. The harsh lending system should be replaced by one that encourages the poor countries to not become entangled in a vicious debt trap. Instead they should be encouraged to stand on their own feet and through prudent economic policies build their economies that will help them integrate with the global economy seamlessly. This is not a Utopian model and it has all the chances of success.