Wed | Aug 23, 2017

Martin Henry | Davos disasters descending

Published:Sunday | February 5, 2017 | 2:00 AM
Martin Henry

For the last dozen years, the World Economic Forum (WEF) has been scaring the world with its annual Global Risks Report.

The brightest, biggest spot at the WEF last month was the arrival of President Xi Jinping, the first Chinese leader to attend the event, to offer his country for world leadership for sustaining "globalisation".

Quoting Dickens' famous best-of-times, worst-of-times line, Xi Jinping opened up, saying: "Today, we also live in a world of contradictions. On the one hand, with growing material wealth and advances in science and technology, human civilisation has developed as never before. On the other hand, frequent regional conflicts, global challenges like terrorism and refugees, as well as poverty, unemployment and widening income gap have all added to the uncertainties of the world.

"Many people feel bewildered and wonder: What has gone wrong with the world?" But "economic globalisation is not the source of the chaos in the world", its new defender declared.

Then his sound bite that went viral: "Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war."

China will not, of course, emerge as world leader as so many are hoping and predicting, and as its Maximum Leader seems to be positioning. People are breathlessly tracking when the Chinese economy surpasses the US economy in GDP.

The US National Public Radio quickly carried a cross-media digest and analysis of Xi's stellar performance at the WEF opening plenary. The NPR story, among other things, said: "While the speech was well-received by the crowd at Davos, according to The Guardian, there's also a healthy dose of scepticism about China's actual commitment to global free trade - let alone concerns over human rights or censorship."

 

GREAT DEFENDER

 

In The Wall Street Journal, before Xi's speech, Andrew Browne anticipated that Xi would present himself as "globalisation's great defender". But he wrote that Xi's vision of globalisation is different than the cosmopolitan vision of many Davos attendees. Xi values national, race-based identity over multiculturalism and "insists on absolute state sovereignty", Browne writes.

Browne argues that Xi's plan to invest in global trade infrastructure is intended not "so much to collapse national boundaries as to pull neighboring countries into China's geopolitical orbit".

When it is not Japan, China holds the largest stash of US dollars as reserve currency, now at around US$3 trillion, down from US$3.5 trillion a year ago, and bringing the reserves to the lowest level since February 2011 as the central bank sells foreign currency to slow the renminbi's depreciation.

Never mind that America has twice as many aircraft carriers as the whole of the rest of the world combined, the US dollar is the world's reserve currency and benchmark of monetary value.

China, with its history of isolationism, is culturally unsuitable to lead the rest of the world. Not to mention that the USA is the keeper of the world's lingua franca, the common language, English, backed by the soft power of globalised American culture.

But China's greatest weakness is the impossible contradiction of building a free-market globalised economy on the platform of a communist political system. The irreconcilable contradiction will be China's great undoing. All the other communist systems felt that preserving their political system necessitated closing off their economy and people from open-world engagement. Chinese exceptionalism to this survival principle for communism is historical fantasy, a situation that will soon play out before our very eyes.

For American containment, many were hoping that the European Union would have been a significant counterweight, especially after the demise of the hollow Soviet Union. Through NATO, America has been the Great Guarantor of European defence since the Second World War. Hardly a condition for the loose confederation of European states to achieve Great Power status. Now, Brexit is more than likely to trigger other exits out of a fragile union facing increasing hostility from growing segments of various national populations.

Here's the WEF in its Introduction to the Global Risks Report: "The past year will be remembered for dramatic political results that broke with consensus expectations. Brexit, the surprise election victory of Donald Trump, the ongoing refugee crisis, increasing geopolitical tensions and the continued threat of terrorism all left their stamp on 2016."

Consensus expectations? It is this kind of one-eyed arrogance that has left the world's intellectual elite blindsided. A clear majority of the British population voted for Brexit. And, under the American electoral system, enough voters supported Donald Trump for him to gain the presidency. These voters were not in any consensus with the imposed expectations of ruling elites and intellectual elites. They rebelled against a world order that they did not think served their interests.

For the 2017 WEF report, some 750 experts assessed 30 global risks, as well as 13 underlying trends that could amplify them or alter the interconnections between them.

 

BIGGEST RISKS

 

What are the top 10 risks for the next 10 years? The WEF experts named as number 1 extreme weather events. In second place is large-scale involuntary migration. Third were natural disasters. There followed: terrorist attacks, data fraud, cyber attacks, illicit trade, man-made environmental disasters, interstate conflict, and failure of national governments.

I don't see how the WEF experts can leave out the chronic risk of global financial meltdown as a meta-risk of which the financial crisis of 2008 gave some inkling and which remains a clear and present danger. Unless it is number 11!

The Risks Report draws up elaborate interconnections maps. But computer-aided mapping is not control. Or even effective prediction! The brightest and the best forecasters didn't even see the 2008 financial crisis coming! Or Brexit and the Trump election, for that matter!

The most important risks interconnections are identified to be unemployment and underemployment linked to profound social instability, large-scale involuntary migration coupled with state crisis and collapse, failure of climate change mitigation and adaptation running with water crises, failure of national governance tied as well to profound social instability, and interstate conflict with regional consequences triggering large-scale involuntary migration.

The WEF is not only about the diagnosis of global risks. It is committed to "improving the state of the world" by bringing influential people from all walks of life together to examine the state of the world with the best available data and to find solutions. The diagnostics are grim and many of the risks have already passed tipping point. The world is in for a rough ride.

Despite the Trump presidency and its promised turning inwards for America First, the United States is poised to retain the role of world leader that has been thrust upon it. The Davos disasters descending upon humankind, more than anything else, will drive the desire for and accommodation of some central global authority.

America is hated for projecting power beyond the border and will be equally hated for retreating behind the border. But Trump, notwithstanding, it cannot avoid the burden of history in a world confronted with Davos disasters and more.

- Martin Henry is a university administrator. Email feedback to columns@gleanerjm.com and medhen@gmail.com.