Rarely in living memory has any calendar year started so engirdled by gridlocks, predicting even more cut-throat policy actions. The world's two largest economies have locked horns over asymmetric trade opportunities; the third largest, Japan, by dismantling age-old restrictions on immigration to permit residency, particularly to Asians, may be opening the very sluice-gates to the very populism rocking West Europe. Germany, the fourth largest economy, is poised to face reverberations of that populism now that the stabilising Chancellor Angela Merkel, the country's "Mutter" (Mother), has announced her retirement (in part, because of that growing populist surge), while India, which just overtook France as the fifth largest economy, faces a decisive election in which any success for the anti-populist tide may, in fact, destabilise the country's giant economic strides as much as the populist-driven social restlessness have. Adding India's colonising country, Great Britain, the next largest economy, to that list, only accentuates how deep a hole 2019 begins with, but also suggests why the collective malaise will not ease much.
Beginning with Britain, the Brexit crisis is only going from bad to worse. Prime Minister Theresa May earned the dubious distinction of having among her accomplishments the largest recorded parliamentary defeat, at least in a century. Though she survived a no-confidence vote, how close that was reveals how divided, thus economically deflated, her country is. Worse may be in store: without an unusually compassionate European Union gesture in the two-odd months before Britain leaves the continent (March 29), a "no-deal" exit would ramp up the pay-back bill (already estimated at over $37 billion) with even larger adjustment costs. With no tangible compensating deals in sight, the Labour Party, already smelling "blood", may be ready to go for the proverbial "kill." Economic relations would shrink everywhere: with the European Union, to begin with; the United States has already sounded out its reluctance towards any special arrangements; and Japan's Shinzo Abe may have spoken for the rest of the world during his London visit this month: European economic relations demand more priority than those with Britain.
The European Union (EU) will not look the same in the mirror. Previous cases of asymmetrical member responses to common policies were papered over, demonstrating, nonetheless, the ingenious and innovative capacities at diplomatic negotiations: one of the world's most inefficient decision-making arena, the Common Agricultural Policy, was sustained regardless of bitter opposition (with Britain among those most stridently so); space was created for those EU members not instantly keen on adopting the Euro; and the devil of them all, the Schengen free-pass across national borders, could not become as comprehensive in its coverage as its advocates would have liked. Yet, Brexit set a precedent: it not just opened the exit-door, but also opened it at a time when populist governments within the Union (as in particularly Poland, but also affecting one of the original members, Italy, and another German neighbour, Austria), have openly begun using that exit possibility to extract EU concessions.
Europe's largest economy, Germany, stands at another crossroads. It was the 1950s German "economic miracle" under Konrad Adenauer that mollified French intransigence about European integration, couched as Charles de Gaulle's response was in full-blooded nationalism, and particularly so for farm policy. Yet, the seed he sowed of a Franco-Prussian fulcrum to a prosperous European future held on for more than half a century, producing some illustrious leadership pairs: Adenauer-de Gaulle; Helmut Schmidt-Valery Giscard d'Estaing; Helmut Kohl-François Mitterand; and Gerard Schröder-Jacques Chirac, and so forth. Populism today threatens future two-some leadership stability and solutions. Emmanuel Macros and Merkl sought sincerely to continue that streak (and even announced appropriate tools to do so), but just as she has found her boat rocked in Germany, Macron is almost engulfed in stalemate politics, not with the populists, but his own supporters, thus greening the grass for populist growth.
With the World Bank already lowering 2019 growth-rate forecasts even as early in the year as in January, the two giant-killers of the global economy have not yet been touched. China's downward spiral may be forgone (even though it may presently be a luxurious growth-rate for any other country right across the world), but it is now being matched by more below-the-belt policy actions. From Myanmar to Africa, investment-receiving countries are down on their knees pleading for Chinese concessions, but to which stoic Chinese responses have only added to the piling 2019 woes. Its signature trade-policy triumph is so threatened that China may not have any option but to make peace with the United States. Yet, no one can believe any such peace will restore the flourishing patterns from the past-quarter century, that is, from China's viewpoint. Both countries may loosen the stiffness of their posturing towards each other, but the eyeball-to-eyeball confrontation is here to stay. That means bilateral trade and investment will be merely second-best, depriving each of huge expansionary possibilities (at the world's peril).
We now come to the "grand-daddy" of the 2019 upheavals. Whether President Donald J. Trump's tariff-war caused the current global slide through his policy actions, or if they were the consequence of feeding too many global free-riders, the China-US tariff war may not be the ultimate jolt: the month-long, record-setting, US shut-down shows a policy-making recklessness of the highest order and lowest character, that is, retaliation. Too much has been said worldwide, even inside the United States, of the depravity of a democratically-elected leader to warrant much further attention. Yet, when the United States is set to lead the world into the Fourth Industrial Revolutions by unleashing its enormous Globalisation 4.0 capabilities, its shrinking from that role, trademarked by its president's absence in the Davos World Economic Forum summit, signals a drastic reordering of the global economic order, from a Pax Americana ballgame to a motley collection of other games: China has built its own global rubric, and the European Union, France, Germany, and the United Kingdom are out hounding new trade/economic arrangements. Yet, new players may fill the ballpark like never before. From Africa, Asia, and Latin America, they will also be making their global claims, so much so that even if the United States returns in full-blood, it would command a far smaller share of the net than ever before. That will hurt plenty before the global dust settles.
That is the troubling point about 2019: markets will remain open, but far more selectively than ever since World War II; and an acrimonious atmosphere only guarantees what no country wants, but to avoid being a victim, must engage in it more: retaliatory actions, from the casual to the nasty, from transnational grievances to expressing vindictiveness. We have come full circle, not just about May's historic parliamentary defeat, but from an age of mass production to the denial of mass consumption.
Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.
