Dancing with elephants: Why regionalism is the new globalism for NZ

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Even before coronavirus, global political power was in the middle of seismic shifts. So how will things look after we emerge from the pandemic? JOHN McCRONE reports. Whats happening out there? Once the massive dislocations of coronavirus have worked their way through the worlds political and economic system, how will the map have changed? New Zealand certainly knew where it stood before Covid-19. We were the tiny nation dancing at the feet of geopolitical elephants. America, China, Europe, whoever. But we also felt the world order was trending in our favour. As a country, we could ride the globalisation bandwagon that seemingly inevitable historical trajectory based on free trade, open borders, the desire for human rights and democracy, a belief in sound technocratic solutions to all problems. READ MORE: * Missing In Action: the lack of a globally co-ordinated response to Covid-19 * Coronavirus reignites debate on 'the good and the bad' of globalisation * US President Donald Trump has changed the way the world operates * Caught between China and the US: The Kiwi place in a newly confrontational world There was a world government forming which bridged all nations. The United Nations, World Trade Organisation, International Monetary Fund (IMF), G20. Within this legalistic framework, we could be everybodys friend. Yet through the Covid-19 crisis, the internationalist response has been conspicuous by its absence. Instead of being a coming-together moment, it has felt more like every country for itself. And according to the geopolitical pundits, the specialists in the long-term view, really that should be no great surprise. Experts like Texas-based Peter Zeihan, author of Disunited Nations , say coronavirus hit right when globalisation as a project was already headed out the door. The pandemic is only going to reinforce big changes that were well under way. The Trumpian shift in United States foreign policy is not a one-man aberration, he says. The US is in the middle of turning its back on the globalised trade and security system it created as its bulwark against communism after World War II. The US always talks about isolationism. Now it will do it, says Zeihan. But that is not the end of the story, add others. What will follow is a division of the world into a tripolar system organised around three regional power collectives Asia, North America and Europe. No top dog superpowers but rather integrated geographic spheres of influence, each with its own distinctive way of doing things. Globalisation wont be dead. However, rather than being the kind of deal where 193 nations meet in a general assembly to vote on big stuff like climate change and social justice, action will emerge out of more local self-interest. Kiwi academics like Otago University professor of international relations Robert Patman say coronavirus has to be a time when the world finds what is working, what is failing. That must accelerate political change. And for New Zealand, it does feel like an opportunity, says Patman. We just need a clear view how the current mess of tensions is going to play out. BRIBING UP AN ALLIANCE The big question ahead of the pandemic was whether Trump just didnt get globalisation. Could we expect US leaders to be back to pushing trade deals and international institutions the minute he is gone? But Zeihan, a zippy sound-bite presenter who was analysis chief for Stratfor, the self-styled CIA for corporate America (and a former Asian Studies researcher at Otago University), argues no. Zeihan says Trump is merely giving voice to a widely held belief the US can now do better as a nation going its own way. Zeihan says the nub of it for him is the US always was the Accidental Superpower the title of an earlier book. Until WW2, the world was run by a set of colonial empires. The UK, US, Germany, France, Soviet Union and Japan. All were economically reduced by war except the US. That left the US in charge. But also with an impoverished world that was ripe for a creeping takeover by communism. Zeihan says the US had to use its economic clout to drag together a new world order. And so todays free trade-based globalisation project was born. The US bribed up an alliance to fight the Cold War. Zeihan says it seemed a generous move but like all good geopolitics it was an act of calculated self-interest. A set of international institutions, such as the UN and IMF, were established. A world government. Albeit one where the US retained veto power. The Bretton Woods conference made the US dollar the stabilising world currency, while the US Marshall Plan dished out the investment to rebuild the major powers. The US opened its borders to imports so even defeated foes like Germany and Japan could grow their economies fast. Zeihan says the game was to tie everyone into a shared global market and thus prevent them lapsing back into their old empire-building ways. [The US said] were going to try something new this time. Instead of everyone having an imperial sequestered network, everything is going to be pooled. And that is how it went. With the US providing the finance and the navy, the free world economy grew so fast the Soviet threat crumbled. In 1989, the Berlin Wall fell and the Cold War was suddenly over. Great news, says Zeihan. But at that point the US should have reassessed its strategic position. In the 1990s, it ought to have asked what more it hoped to get out of being the world police force and guarantor of global government. Yet the US then suffered a string of weak presidents. Clinton, George W Bush, even Obama. There was never that reset moment. Instead, the US bumbled its way through a series of increasingly ham-fisted efforts at keeping the existing geopolitical map locked in place. In particular, all the Middle East wars meant to maintain the flow of oil on which free world prosperity depended. Zeihan says the US became entangled in an enterprise of idealistic internationalism which was producing diminishing returns. It felt it was carrying the tab for a world trade system that free-loaders like China and even Nato Europe could take for granted. And now, with President Trump as the ultimate spokesperson for mercantile self-interest, the US can finally make that Cold War reset and pull out of the globalist project it created. NORTH AMERICAN ADVANTAGE The US has all the advantages it needs to go it alone. Zeihan say it starts with owning the worlds best chunk of geography the largest expanse of good agricultural land with an ideal range of growing climates. The US's continentally isolated location means it has never had to fear invasion. The US has huge demographic power too. A population of 330 million that isnt greying dramatically like rivals such as Germany, Japan, China and Russia. The final piece of the puzzle has been the US's shale oil and gas revolution. Fracking. It came out of nowhere starting in about 2010, Zeihan says, and fracking techniques have advanced to the point where the US now boasts of being energy independent. The US no longer needs to have its expensive military keeping world shipping lanes open and Gulf oil moving. Just last year, Trump tweeted that China got 91 per cent of its oil, and Japan 62 per cent, from the Middle East. So why are we protecting the shipping lanes for other countries (many years) for zero compensation? Zeihan says while the presidents stats are not quite accurate, this sentiment is one many US strategists share. Thus, in a way the rest of the world generally seems to have missed, the US is in the happy position of being able to pull back inside its own self-contained economic sphere and continue to do quite nicely, thank-you, Zeihan says. The defence wind-back is already under way. America right now has fewer troops stationed abroad than at any time since the 1920s. Likewise, the US has also got a new trade geography in place. Zeihan says the one of the few adults in the room to have survived in the Trump administration is Robert Lighthizer, the US Trade Representative. An economic hawk from the Reagan era, Lighthizer has pulled off a rapid-fire series of trade rewrites with the USs key partners. All on US terms. Zeihan says getting Mexico and Canada tied into a new version of the North American Free Trade Agreement (NAFTA) the United States-Mexico-Canada Agreement (USMCA) was the priority. Lighthizers plan has been to create a co-prosperity alliance in which Canada contributes its abundant natural resources, and Mexico its cheap factory labour, in exchange for retaining access to the USs huge domestic market. With the pandemic fuelling talk about bringing the supply lines back home, Zeihan says this regional contraction a North American integration only makes more sense now. Lighthizer has cut similar bilateral trade deals with Japan and South Korea. The UK may be a fifth. But beyond that, says Zeihan, the US has the bulk of its trade sewn up and doesnt need to care. Its dealings with other nations can become purely transactional. Countries can buy a trade or security arrangement with the US, but nothing is going to be given away as has been the case in the past. Globalisation was a post-war strategy which served a purpose. Now the US is ready to turn the page, Zeihan says. A TRIPOLAR FUTURE This seems bleak news for New Zealand which has played the globalisation game so well. We have been the first aboard every free-trade deal going. We have tried to be the model global citizen on issues like climate change and human rights. In 2015, when co-ordinated world governance felt at its height, New Zealand made it to the UN Security Council for a two-year stint. In 2016, former prime minister Helen Clark looked in the running for the UN Secretary-General job . Is the US really about to pull the rug out from under all that? It is one view. But the reality is much more complicated, say other world watchers. Yes, the US-dominated version of globalisation the one that had become focused on free trade purism and neo-liberal market theories may be under threat. But a different more worldly form of globalisation may arise faster now to replace it. Parag Khanna , a Singapore-based international relations expert and author of 2019s The Future is Asian, says the argument the US will turn inwards to focus on developing a North American economic system is correct. However, that same geographic determinism will apply to Asia and Europe as well. A shift towards regionalism is simply a more natural state of affairs now the worldwide threat of the Cold War is past, Khanna says. Europe was the first to regionalise a response to the shattering impact of WW2. The European Union has evolved to become a borderless common market with a shared currency, a central bank, a parliament, 27 member states, a population of half a billion, and 20 per cent of world trade. Khanna says friction still exists. But so does a strong sense of European destiny and the ability to act in the world as a community of shared interests. That leaves Asia as the third natural region to get its act together and evolve into its own coherent geographic system. Khanna says Asia which historically includes the Middle East has been left fragmented, first by centuries of European colonisation, then by 40 years of Cold War. But it is a region of 5b people, only 1.5b of them ethnic Chinese, he says. And it has been knitting itself together through repeated waves of investment and trade. Japan modernised in the 1950s and then invested in its nearest neighbours. That sparked the 1980s Asian Tiger economies of South Korea, Taiwan, Hong Kong and Singapore. They in turn joined Japan to become the principal investors in a modernising China through the 1990s and 2000s. However, Khanna says it isnt stopping there. Now comes the Southeast Asia wave countries like India, Vietnam, Malaysia, Indonesia, Thailand and the Philippines. Khanna says the West is obsessed by the threat of China as the replacement world superpower our next boss. But Southeast Asias 2.5b people beats China for population and its GDP is set to match China by the end of the decade. The better way to think about it is China is going to become eventually just the major cog in a more general Asian system. So the world will be left divided into three major communities of interest, Khanna says. A tripolar balancing act. And each superpower region will have its own political style. He says Asia has a long history of multipolar power-sharing empires rubbing up alongside each other. It has always tolerated many religions, many ethnicities. Even China is used to a tradition of multilateral arrangements. Thus expect a more pragmatic and less ideological approach as Asia builds its own version of a geographic union, says Khanna. The Asian approach to integration involves building complementarities and deferring dangerous issues. Fundamentally, Asians seek not conquest but respect. GLOBALISATION 2.0 Maybe it should be dubbed Globalisation 2.0? After a first version dominated by US priorities, the pandemic offers the chance of a reset that reflects a world greatly changed. Otagos Patman believes it ridiculous some have declared globalisation dead as if the world has a choice. Globalisation isnt a project, says Patman An act of agency that has been created by states and so can be dissolved by states. Instead it is a structural change which started in the 1980s, brought about by communications and digital technology. The physical fact of a new international information flow. Youre not going to put that genie back in the bottle. People are not going to stop using mobile phones. If anything, Covid-19 will accelerate the trend towards digitisation. So Patman says while some have argued the pandemic will return the world to a more nationalistic and protectionist politics, the leaders of that move the Trumps, Johnsons, and Bolsonaros are also clearly the ones most struggling to cope with events. The populist challenges to the international rules-based order are very strong. But I dont think theyre going to succeed because they cant actually deliver on the promises they make. Professor Alex Tan, head of political science at Canterbury University, agrees. The reality is globalisation is maturing, he says. The regionalisation phenomenon trade and culture connected neighbourhoods is part of it. But so is the fact the world is increasingly open to a flow of ideas. Tan says a globalised order began as two layers. A free trade layer built on top of a world security and stability layer. Now it is building a further connecting layer which is about political thought leadership. And while this does depend on formal institutions like the UN, it has more the open characteristics of social media. Meaning a country like New Zealand can be an influencer. Tan says big nations can no longer rely just on their economic and military clout to set the direction these days. They must convince. And I cant see an authoritarian China leading things because you have to be willing to buy into Chinas ideas. Instead it has become a world where small and middle sized countries can have as much of a voice as the big ones. This is why the pandemic offers the opportunity of a transition, Tan says. It is easy to see whose political systems have responded the best. And it has been countries like Singapore, Taiwan and New Zealand, that are strong on social cohesion and technocratic planning. Patman says this is indeed the new face of globalisation. Jacinda Arderns Christchurch Call after the mosque shootings was a remarkable example , he says. New Zealand and France teaming up to lead world action against online extremism. Now New Zealands wellbeing budgets and coronavirus success are also ideas being noticed. Patman says we might still be dancing at the feet of elephants. But globalisation means that thought entrepreneurship is beginning to come from all directions. And the political failures by China and the US during the pandemic are going to speed up that influencer shift as well. Middle and small powers have to develop a voice. They have to stand up and start articulating what works for them. Because they are the majority, says Patman. So coronavirus will affect geopolitics. And globalisation as a project could look very different as a result. But the pundits seem optimistic that its trajectory continues. And being based on more intimate networks of connection both geographic and ideological it should be a more robust version of what went before.