The world order is changing, is Canada ready? | Comment
By Dave Wilkins
The headlines are filled with seemingly endless tough news lately: the war in Ukraine, the fallout from COVID, an energy crisis, mounting economic concerns, and more. Now look below the surface and see a fundamental change taking place – a change in the world order.
Decades of offshoring manufacturing and resource development to reduce costs, increase profits and reduce domestic the pollution has led to a heavy reliance on Chinese and Russian exports. Combined with their decade of belt and road investments, China has become the world’s largest exporter countries, putting their economy on the right track overtake the US economy by 2030. Russia is the world’s largest exporter of energy (supplying almost one-fifth of global energy imports), fertilizer & wheat, giving them outsized influence in global energy and food markets.
In energy, as the West eschews fossil fuels, China and Russia are systematically expanding their global reach, filling American voids, including major investments in the Middle East. East, Africaand Latin America. In farming, western country switch from natural gas-based fertilizers to expensive organic alternatives. The timing couldn’t be worse, with soaring food prices and rising food safety concerns. You just have to ask Sri Lanka how it worked.
Botched EU energy policies opened the door to Putin’s invasion, but that was his fear Ukraine’s potential NATO membership, putting a US-backed country on its 2,300 km border which ultimately sparked the invasion. Beijing undoubtedly understands this and fully supports Russia, knowing that it will benefit the most as Russia moves further into its orbit, strengthen their long-term energy and raw materials security.
It’s not just China that continues to buy Russian exports, so do many other developing countries, including India, Brazil, Mexico& Indonesia, many make them skyrocket discounts at high world prices. Less than 15% of the world’s population is in countries that have imposed sanctions on Russia and none are developing countries. They watch Ukraine receive seemingly unwavering support as many other conflicts and tragedies go unrecognized or overlooked. The UN recently reported over 100 million people are displaced worldwide and 193 million people face a food crisis or worse. It’s a similar story for energy too, where half the world remains energy poor. Yet developing countries are under pressure to reduce their emissions, despite Western financial support falling short of their relatively minor commitments to help them.
Then at last At the G7 meeting, we saw the US-led $600 billion “Global Infrastructure and Investment Partnership” announcement, presented as a counter to the Chinese Belt & Road initiative. His emphasis on ‘climate/green energy, gender equity, global health and digital infrastructuree’ reads like President Biden’s (failed) multi-trillion dollar Building back better to plan. This certainly does not seem to correspond to the main priorities of developing countries today.
Today we see EU countries introducing emergency measures, including increased coal-fired power generation, to facilitate their growing energy crisis and extreme plans if russian gas is cut off entirely. From the United States, a push for a energy price cap in Russia and calls for OPEC to increase production signal growing desperation as sanctions fail to deter Russia, just like past sanctions that failed. Such tactics won’t change OPEC’s decisions neither, and a price cap would likely backfire, triggering further Russian retaliation and driving up energy and food prices even further.
NATO’s escalation of heavy weapons for Ukraine has also failed to halt Russian military advances. So why does it continue? Clearly, Western leaders see Putin’s Russia as a growing threat to the liberal world order, making it a Western country. proxy war with Russia. And so on, with increasing loss of life, escalation risks, growing energy and food crises, and economic damage reaching into the trillions of dollars.
Today, governments are faced with slowing economies, register a debt, and rising interest rates, as decades of accommodative monetary policy, money printing and high deficits return. The Bank for International Settlements (pdf.) puts it this way: “The most urgent task in monetary policy is to restore low and stable inflation while limiting the cost to economic activity as much as possible and preserving financial stability…there is a need to sustainably rebuild monetary and fiscal reserves”. War makes this impossible to achieve.
Developing countries are not blind, they see failures, disparities and hypocrisy and suffer the weight of the economic fallout from the war, thus their distrust of the West grows, despite the colonial history. Small surprise then when they put their own interest first, as was still the case during a recent meeting of G20 diplomats.
The war must end and a compromise settlement is the only way to achieve this. Western leaders, our PM includedas well as the Western media don’t seem to see this, but public support may be declining.
For decades, the West ignored the Chinese and Russian movements while failing to see how the world order was changing. Now that China has risen to challenge US global leadership, along with much of the developing world, a change of course is long overdue. This will require thoughtful and rational long-term planning, not knee-jerk reactions. This should include mending divisions, serious fiscal and monetary discipline, and smarter trade, energy, military and foreign policies, including achieving a sustainable balance between climate and energy security. It must also intelligently provide more support to developing countries, but not by tying it to our priorities, our values or our governance.
Is Canada ready for this new reality? Considering our delay economic outlook, confused policies and weak leadership, the simple answer is no. Canada is blessed with abundant natural resources, bordering the United States, coastlines on three oceans, and a peaceful, highly educated population. Unleashing our full potential to meet new challenges in this changing and more dangerous world requires a new Canadian vision and dynamic new national leadership.
Muskoka has a voice in this, so let’s make sure it’s heard.
Dave Wilkin is a professional engineer, with a master’s degree in electrical engineering from the University of Toronto. His career spans over 40 years in information technology, banking and energy. He is currently co-owner of a small energy consulting firm and lives in Huntsville, Ontario.
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