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Page added on January 2, 2013
In 2013, the great global unraveling
The disparate prospects of each continent have little in common. To the extent that they can be linked by a single theme in 2013, however, it is the idea of the unraveling of the global economy and the political integration that supported it. After two decades of globalization, this year will see each of the big political theaters re-erecting barriers and focusing more on domestic repairs than on global expansion. The unraveling has its roots in longer-term trends, but it is set to step up in the next year.
There has been a remarkable stabilization within the euro zone since European Central Bank President Mario Draghi’s intervention in the summer of 2012. But even as the euro zone integrates, the politics and economics of the wider European Union are likely to diverge. In practice, the measures toward an integrated banking union, increased parliamentary accountability and more incentives for reform could go hand in hand with the de facto economic and political disintegration of the EU. Economically, as Sebastian Dullien argues in a paper, “Why the euro crisis threatens the EU single market,” there is a significant risk of a gradual unraveling of the EU’s single-market system. A full euro zone breakup would shatter the euro, while a great leap toward political union could see shrinkage of the single market, as countries such as the United Kingdom withdraw from the heart of Europe.
Even muddling through the crisis seems likely to diminish the depth of the single market. In recent months, banks in the euro zone have withdrawn from trans-border business. Even poorly-managed German companies are paying significantly less interest on capital than well-managed Spanish companies. These new barriers between euro zone members will lead to a renewed focus on domestic markets. For Europe, this means less competition, less growth and higher prices for consumers.
Europe’s economic unraveling will be matched by a new political geography. The continent is already seeing a reshuffling of its elite, as the traditional political forces in many countries – from Greece to Italy to Finland to Austria – find themselves besieged by an emerging anti-political class of populists from left and right. There is also a renegotiation of the relationship between the “core” and the “periphery” – with many EU member states, including larger nations such as the UK, Poland and Spain, deeply concerned that integration is forcing them to the periphery of the European project.
Most worrying is the fragmentation of the core itself, with possibly irreconcilable differences emerging between Paris and Berlin over the future shape of the EU polity.
The Middle East could also become divided like never before in 2013. In the past two years we have seen political action unite the Arab world with an “awakening” that has spread from capital to capital through social media, satellite television and the infectious promise of change. But the story of the year ahead will focus more on the splits.
Syria’s civil war is becoming the epicenter of a regional sectarian conflict, bringing the threat of wider destabilization. It has already sharpened sectarian tensions and reinvigorated dormant Sunni jihadi forces, putting Iran and its allies on the defensive and providing space for Kurdish ambitions. The febrile atmosphere in Kurdish areas is opening cracks between Ankara and its de facto allies Saudi Arabia and Qatar, and reverberations are spreading into northern Iraq.
A story with enormous global resonance is the growing tension between a strong Chinese society and a weak Chinese state, as it drives the new Asia apart. Many in the Chinese elite think their country needs to enter a new era of political and economic change. After Mao’s political revolution (China 1.0) and Deng Xiaoping’s economic revolution (China 2.0), they are calling for a major re-orientation toward a China 3.0.
Now that China’s populace is becoming increasingly affluent, how does the state deal with issues like growing inequality, the need to rebalance its economy and its increasing exposure to the global economy? How does the Communist Party retain stability in a time of unrest within Chinese society that includes half a billion “netizens” on the Web? And how does China take on the burden of being a Great Power as it develops interests in every continent on the planet?
In September, China’s 18th Party Congress anointed leaders whose views are more aligned with the past than the future. As the political system becomes more rigid and its foreign policy more aggressive, there is a risk of growing tension between China’s strengthening society and its weakening political system. These tensions are already having an impact on the wider Asian system.
Asia’s economic map has been redrawn over the past 15 years as increasing intra-regional trade, investment and supply chains have driven deep interdependence (all done largely without the United States). But tension and weakness in the Chinese state seem to be driving the nation to take ever more worrying steps toward neighbors such as Japan, the Philippines and Korea. Since 2010, a more aggressive China has increasingly threatened to pit the “economic Asia” that was uniting without the United States against a “security Asia” that is demanding an American pivot to balance against China’s rise.
All of the above are linked to the question of American leadership, or its absence. At the moment, America’s political class wonders whether there will be a deal made as Congress hurtles toward a fiscal cliff. But for the first time in decades, a dramatic question at the heart of the most powerful nation in the world is met outside with curiosity and concern rather than existential angst.
The fiscal cliff drama does not show America at its best – its law-makers seem divided and disconnected from economic reality. But there is an even more shocking development about the events on Capitol Hill: the fact that that the stakes for the rest of the world seem so low. It is a sobering reminder that – although no power has emerged to replace the United States– American leadership will not be able to stop the great unraveling. In fact, to the extent that America will continue to lead the world, it will be pioneering a focus on internal rebuilding rather than foreign adventures.
12 Comments on "In 2013, the great global unraveling"
BillT on Wed, 2nd Jan 2013 1:55 am
All to be taken with a grain of salt…considering the source is from the corporate elite. This is part of the ‘China is the new enemy’ propaganda war.
Remember, the buildup for Iraq? WMDs that were never found? 9/11 first blamed on Afghanistan, then Iraq, when it really was Israel and Saudi Arabia along with the CIA’s help.
2013 is going to be a very interesting year, leading up to even more exciting and eventful years to follow until the curtain comes down on the Empire.
Arthur on Wed, 2nd Jan 2013 11:13 am
Globalist institution Reuters announcing the unravelling of globalism, that is really news, thanks for your honesty Reuters. 1945-2012 had an inherent stability that was largely caused by economic growth, which was enabled by the availability of relatively cheap fossil fuel. Currently we are witnessing a stagnation of that development and likely a reverse in a couple of years. One of the major consequences will be that these enormous heaps of debt will at some point no longer be serviced. Defaults whereever you look. Expect diverse players like China and western pensioners to be very pissed off. Not to mention the entitlement crowd in the west. The fat channel flipping couch potato will exit from history. Americans will be faced with a choice: either fight wars in foreign lands for Washington for pennies on the dollar and a Soviet style police state at home or live a free Bonanza kind of life at home in a secessionist state. The good old Indians of former fame will be replaced by ‘diverse’ gangs, just to make sure life post crash will not be boring. In Europe similar clashes will take place between the locals and the invaders after the demise of the wellfare state. Expect trains rolling again, this time southwards. The UK will leave the EU, borders will be reinstalled, Moscow will insist on an alliance against China in return for continued deliveries of fuel and raw materials. Young people will no longer apply for a drivers licence. Cars will disappear, the tram will return. Divorce rates will drop as women decide to be married again with a man rather than the state, who abandoned here anyway.
Beery on Wed, 2nd Jan 2013 11:33 am
Arthur, your misogyny is showing.
ken nohe on Wed, 2nd Jan 2013 2:59 pm
We passed the Maya end of times, we passed the fiscal cliff, and we will keep on passing all the obstacles one by one, year after year. Yes our society is on the wrong tracks but the fall will be a long one. Those waiting for it will have little more chance than the early Christians with the final judgment.
Energy available per person reached it’s peak in the 1970s and since it has been going down. The relative “impoverishment” in terms of energy was first hidden by the borrowing society inaugurated by Reagan in 1980, then by massive hidden inflation. It cannot be anymore and consequently, our purchasing power is nosediving. But there is a long way to go. 2013 may be a bad year but most probably just as 2012 was. No massive explosion (or implosion) to expect, just less income, more bubbles, more debts. All this can still go on for a while. The “Titanic” is large; the music won’t stop yet.
Richard on Wed, 2nd Jan 2013 3:04 pm
Beery,
There will always be people who will think like that.
ken nohe on Wed, 2nd Jan 2013 3:06 pm
For those who understand German:
Terra Titanic
to “cheer up” kind of!
http://www.youtube.com/watch?v=YziHGlCFONo
Arthur on Wed, 2nd Jan 2013 4:57 pm
“Arthur, your misogyny is showing.”
Hmm, cannot remember having done a single person harm in my life, rather I call it realism. I notice that genocides, deportations, civil wars take place, without me having a hand in it.
Your ideological ‘humanitarianism’ on the cheap is only made possible because of the large number of kwh you can consume, unparalleled in history and the wealth that comes with it. Wait until that disappears and ‘enjoy’ the consequences. Paraphrasing chairman Mao: human rights come out of a barrel of oil (resulting in 150 virtual slaves). Without oil or any form of replacement, slavery is back within a week. Do you think I like that? Of course not, like you I prefer to have these 150 virtual slaves working for me until the end of my days. Not going to happen, unfortunately. Comfort yourself in selfdelusional moral superiority, I like to see reality as it is.
Newfie on Wed, 2nd Jan 2013 11:42 pm
The Roman Empire peaked in 180 AD. It took 300 years until it completely collapsed in 476. The American Empire will collapse a lot faster than that, but it won’t be instant. It isn’t going to collapse a year or two from now. Get real.
sparky on Thu, 3rd Jan 2013 1:25 am
.
Who got this “Misogyny” thing going ?
sound like some politicaly correct
highjacking of the word by rabid misandry addict .
Ah yes the Australian prime minister
to deflect attention from her own fail policies and mismanagements.
Typical femonazi ,criticize her acts and be berated for something else
BillT on Thu, 3rd Jan 2013 2:10 am
Newfie, It could collapse anytime. The Romans were not part of a global network of finance. They were in total charge of most everything. The US is NOT.
Then again, it may last a few more years, but the odds are changing daily and getting worse. There are too many ‘black swans’ flying around looking for a place to land.
Lampert Scratch on Thu, 3rd Jan 2013 4:34 am
And Newfie, how long did it take for the Soviet Union to collapse? That seemed pretty quick!
Arthur on Thu, 3rd Jan 2013 2:11 pm
http://www.amazon.com/Will-Soviet-Union-Survive-until/dp/B0006CPGLA
The demise of the USSR was announced by Amalrik in 1970 from within. It took another 2 decades for the collapse to materialize. In 1986 under Gorbatchov, it was even clear for the aparatsjiks that the system had outlived itself. The reason was not a war against China, as Amalrik predicted, but simply because communism does not work as an economical system (“The government pretends they pay us, we pretend that we work”). Capitalism works very well, certainly if there are enough resources available for economic expansion. But these days are coming to an end. What’s next? Return of aristocracy? Emperor? Religion? Questions, questions, questions…