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Forum => Kenya Discussion => Topic started by: Nowayhaha on April 15, 2023, 12:44:19 AM
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https://www.rt.com/news/574769-larry-summers-sees-us-losing-influence/
Globalization and the American-led financial order are giving way to a more fragmented world economy in which other powers are aligning in trading blocs that diminish Washington’s global influence, former US Treasury Secretary Larry Summers has claimed.
“There’s a growing acceptance of fragmentation, and – maybe even more troubling – I think there’s a growing sense that ours may not be the best fragment to be associated with,” Summers said on Friday in a Bloomberg News interview. He made his comments following a week of World Bank and International Monetary Fund meetings in which finance chiefs reportedly discussed efforts to “reshape supply chains away from China and other strategic competitors.”
Summers, a former World Bank chief economist who was an adviser to President Barack Obama and served as treasury secretary under Bill Clinton, suggested that US tactics have alienated some governments. “Somebody from a developing country said to me, ‘What we get from China is an airport. What we get from the United States is a lecture. We like your values better than we like theirs, but we like airports more than we like lectures.’”
Multipolar world risks new Cold War – IMF chief READ MORE Multipolar world risks new Cold War – IMF chief
The emergence of competing economic blocs has accelerated amid the Russia-Ukraine conflict and the US-led sanctions campaign against Moscow. As financial officials of the US and its allies gathered in Washington, Brazilian President Lula da Silva was making a state visit to China and calling for developing nations to move away from the US dollar. China brokered last month’s normalization of relations between Saudi Arabia and Iran, while Russia, the Saudis and OPEC announced a cut to their oil-production quotas, portending more inflation struggles in the West.
“We are on the right side of history – with our commitment to democracy, with our resistance to aggression in Russia,” Summers said. “But it’s looking a bit lonely on the right side of history, as those who seem much less on the right side of history are increasingly banding together in a whole range of structures.”
Policy makers face a bigger challenge than the normal World Bank-IMF issues like debt relief and promoting sustainable development, Summers said. What’s at stake, he added, is “what the broad structure of the system is going to be.”
READ MORE: Brazil calls for 'move away' from dollar
The current system – born out of the 1944 Bretton Woods Agreement that pegged other currencies to the US dollar, which was then linked to gold – is under threat, Summers said. “If the Bretton Woods system is not delivering strongly around the world, there are going to be serious challenges and proposed alternatives.
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https://www.rt.com/news/574767-imf-georgieva-multipolar-cold-war/
Allowing the global economy to split into self-sufficient trade blocs could trigger another Cold War, International Monetary Fund managing director Kristalina Georgieva warned. She was speaking at a press conference at the IMF and World Bank’s Spring Meeting on Thursday.
Acknowledging that recent events like the coronavirus pandemic and the conflict in Ukraine had exposed the flaws in globalization and highlighted the importance of controlling critical supply chains, she argued governments must not turn too far inwards to secure their economies.
“The question is, can we be more determined to enhance security of supplies but not push the world that far that we are into a second Cold War?” Georgieva asked, insisting, “I believe it is possible.”
US national debt to skyrocket – IMF READ MORE US national debt to skyrocket – IMF
“If we fail to be more rational, then people everywhere would be worse off,” she added while calling for “a bit more cool-headedness.”
The G7 countries released a statement on Wednesday emphasizing the importance of “enhancing supply chain resilience,” and promising to work together with low and middle income countries. The missive was widely understood to be an expression of the group’s common desire to form a new supply chain that does not rely so heavily on China.
“The long-term cost of trade fragmentation could be as high as 7% of global GDP,” or 12% with the addition of “technological decoupling,” Georgieva claimed during her opening remarks at the meeting, urging her colleagues to “step up international cooperation” to preserve capital flows - especially foreign investment.
An IMF working paper discussed at the conference argued that allowing the global economy to separate into the US-led “democratic” West on one side and China, Russia, and other US rivals on the other, would be catastrophic for smaller nations.
Concerns are already rising about China laying undersea communications cables after being shut out of the construction of a new branch of the existing international network, with some experts fearing the result will be two internets.
French President Emmanuel Macron also plans to host a summit about building a “new financial framework,” his finance minister Bruno Le Maire told reporters, advising against total decoupling from China. The announcement came after Macon’s call for the EU to strive for “strategic autonomy” from the US was well received by several EU members.
The conflict in Ukraine has drained European coffers and weapons stockpiles, both through direct aid to Kiev and through the increased cost of replacing embargoed Russian energy with more expensive alternatives like the US’ liquefied natural gas.
Meanwhile, the BRICS countries are discussing issuing a common currency, much to the chagrin of Washington, which relies on the dollar’s status as world reserve currency to keep its value high amid near-record inflation and hitherto-unseen levels of money-printing.