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Back to the future

The financial markets do not reflect the agreed truce between China and the US. Photo: Reuters

The financial markets do not reflect the agreed truce between China and the US. Photo: Reuters

Last week there was the G20 summit in Argentina which groups together the political leaders of the 19 most industrialised nations in the world plus the EU.

One needs to remember that the last time the G7 met – limited to the seven most industrialised nations – they could not agree on a common final communique. So, as host, Argentina, tried its best to arrive at a compromise and avoid another debacle and present to the rest of the world a semblance of unity.

So at the end of the meeting they did finally sign off an agreement which reaffirms a commitment to multilateral trade and a “rules-based international order”, but at the same time accepts that the World Trade Organisation needs an urgent reform. So far, nothing looks unusual. We have been there before where the world’s leaders do not agree about much and eventually find some sort of compromise.

However, this time it was not really like that. One would have thought that we have learnt something in the last 100 years. Yes, let us not forget the 100 years since the end of World War I. It is generally agreed that the peace terms imposed on Germany in 1918 were so unreasonable that it led to World War II.

After World War II we have enjoyed a period of peace in Europe, as European economic integration gathered momentum. Multilateral trade was very much considered as a way of maintaining that peace. That bug for multilateral trade caught on as governments all over the world generally agreed that trade was the source of economic prosperity. And this has been proven to be the case.

I fear we are moving back to the future

So what’s the problem one might ask? The G20 summit has just reaffirmed a commitment to multilateral trade. The reality is something different. When they agreed to a reform of the World Trade Organisation, the European Union had its own idea of what that reform should be like, which is different to that of China, which in turn is different to that of the US, which has nothing to do with that of the EU.

While the world’s most industrialised nations commit themselves to multilateral trade, they actually are very busy working on bilateral trade agreements. This is evidently the policy of the current US government, as it is also China’s. Brexit (when and if it happens) will force the UK to seek bilateral trade agreements.

In the meantime there is a trade war going on with the imposition of tariffs. Admittedly China and the US have agreed to a truce. However the financial markets have not really believed this, with the latest drop in the stock market indices.

Add to this the populist politics in a number of countries, including countries in the European Union, and I believe we have a recipe for a disaster. We are really trying to turn the clock back by a century. The continual jargon in world politics today is an aggressive one.

Going back to the G20 summit, the absence of any agreement and any commitment to the common good of this world is so evident in the final communique. The summit could not agree on the role of the International Monetary Fund, the final text of the communique did not reflect any progress on climate change, and migration and refugees got only a passing mention.

My belief is that the world’s political leaders have tried very hard at this G20 summit, and seem to be succeeding, in undoing all the good we have achieved since the end of World War II. I fear we are moving back to the future.

This is not good news for Malta. We have grown and continue to grow our economy on the basis of the free movement of goods, services, people and investment. The path that is being charted by the world’s political leaders will eventually set us back. This has nothing to do with what we do but with the evident of obsession around the world of seeking to assert one’s position at the expense of everyone else’s.

Peace and economic prosperity in the last decades were not built on this principle. This principle (of asserting one’s position at the expense of everyone else’s) does take us back a hundred years to the future.

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