The Volatile World Ahead

The Khmer Times, 23 January 2017

A new world order is unfolding quickly, underlined with high volatility, uncertainty and contradictions.
As the global economic system is stumbling and shaking, adaptive and transformative leadership becomes even more relevant in this unchartered world.
Professor Klaus Schwab, the founder and executive chairman of the World Economic Forum, has called for “a responsive and responsible leadership with a deeper commitment to inclusive development and equitable growth, both nationally and globally.
“It will also require collaboration across multiple interconnected systems, countries, areas of expertise and stakeholder groups with the aim of having a greater societal impact.”
Regional and global governance is one of the main issues according to the annual global risk report by the World Economic Forum. Global governance therefore needs deep reforms.
Economic inequality is the core global problem that needs to be addressed. One percent of the world’s population owns half of the global wealth, according to a report from Oxfam. Also, the world’s eight richest people own as much wealth as the poorest half of the world’s population.
“This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems,” the Oxfam report stresses.
The conventional wisdom is that in such a complex, interconnected and interdependent world, no country is able to succeed in pursuing isolationist and protectionist policy.
The populist wave against economic globalism has gained momentum from Europe to America, as evident in the Brexit votes and Donald Trump’s election victory.
The post-truth world, a divided world caused by emotional and populist politics, has unfortunately become the global trend. Lies and fake news are threatening the very foundations of democracy.
The world is calling for global leadership to stand up to protect the values and principles of inclusive, open and democratic global governance.
The world is surely going to face a rocky road ahead. The US and China are the two key actors in shaping and molding a new world order.
China appears to have taken the helm in defending economic globalization and is thriving to be the vanguard of a liberal economy order, while the US is doing the opposite.
Addressing world leaders at the annual World Economic Forum in Davos, Switzerland, Chinese President Xi Jinping stressed the necessity of building an open and inclusive global economic architecture.
“We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening up and saying no to protectionism,” said Mr. Xi.
“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,” he added.
A future trade war between the US and China would be a lose-lose scenario. A global economic recession may recur.
The US under President Trump will restructure the liberal economic order driven by the US over the last seven decades.
Mr. Trump has generated a wave of anti-globalization and an anti-establishment movement through pursuing far-right political ideology, protectionism and populist nationalism.
Mr. Trump’s “America First” ideology and his pledge to “Make America Great Again” has unnerved the international community and America’s allies. Such policies will only serve short-term interests.
In Mr. Trump’s rather radical and blunt inaugural speech, he promised to build a new era for the US by implementing “Buy American and Hire American.”
“Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families,” he said.
Mr. Trump’s policy inhibits flaws and skepticism. The annual report on global risks by the Euasia Group in 2017 predicts that the world is facing a “period of geopolitical regression” and entering “the most volatile political risk environment in the post-war period”.
Mr. Trump’s policies will lead to the end of “a 70-year geopolitical era of Pax Americana, one in which globalization and Americanization were tightly linked, and American hegemony in security, trade and the promotion of values provided guardrails for the global economy,” the report argues.
To what extent can Mr. Trump realize his policy? Some observers doubt he will remain in power for his four-year term.
The approval ratings before his swearing-in was only 40 percent, making Mr. Trump the least popular president in four decades. Former President Barack Obama’s approval rating before taking the oath in 2009 was 84 percent.
Women’s marches against Mr. Trump, who is accused of being “sexist” and against women’s rights and dignity, have been in full swing. The movement started in the US and spread all around the world, with the objective of raising awareness of women’s rights.

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