Who would have thought a unitary superpower on Earth would accelerate a return to regionalism in place of globalization?
For all those who deem ‘Financial Innovation’ to be an oxymoron, that brilliant invention the credit card springs to mind. It probably would never have made sense to a focus group, but from humble beginnings as a monthly account with the Diners Club enabling restaurateurs to welcome guests cashlessly, it is difficult nowadays to envisage life without MasterCard or Visa.
Being empowered to shop around the world thanks to a bit of embossed plastic is a cornerstone of modern globalization for travellers and online shoppers alike. Frustrated by the Crimean referendum, President Obama imposed sanctions against Russian financial institutions in an effort to squeeze Russia out of the global market, forcing US card services halt some of their operations in Russia.
Sanctions remain a blunt and questionable instrument for resolving any dispute. However, given the prancing pouts passing for American government, sanctions exemplify the economic illiteracy which dogs the Obama Presidency.
For those who have never outgrown protest slogan logic, insta-sanctions are the first resort on the road to impasse, stasis and political failure. After all a zillion ‘Free Nelson Mandela’ T-shirts made little impact on South Africa. Rather it was the brave move of Margaret Thatcher to engage with the apartheid leaderships (she appreciated how sanctions hurt the poor not the plutocrats) which helped bring a change in South African government (as Mandela himself noted on his first visit abroad upon release, visiting Thatcher at 10 Downing Street).
However, for those who want to pout about problems rather than resolve them, the US President has uniquely undermined globalization. Faced with a lack of payment systems, Russia looks likely to create its own standard. Will it rival Visa or MasterCard worldwide? That’s not the point.
New digital networks are faster, cheaper and more efficient than the legacy systems. Thus thanks to Obama’s ‘progressive’ sanctions fetish, Russia can deliver an innate national advantage, optimizing cheaper, faster technology to deliver speedier solutions to Russian citizens and merchants, which ought to enable even micropayments which the American legacy cards cannot manage due to their less flexible, analogue architecture.
Those who don’t believe a Russian solution can be more flexible than American plastic ought to recall that recently, in order to attract more Western investors, the Moscow Exchange had to change its settlement period from same day (T+0) to a two day window (T+2) because the Western banking system can’t cope with a real time world!
America is still playing the analogue globalization 1.0 playbook while we have moved into a digital world. In this sense Obama’s Camelot has not progressed from JFK’s 50 years ago.
Today’s world is driven by a completely different undercurrent of growth and development than the mega corporate agenda beholden to US government and indeed the EU. Rather, the power of progress is with smaller units, thanks to nanotechnology, 3D printing and the inherent power of digital to produce faster and cheaper than ever before. This undermines the strength of the big bloc and allows solutions to be created at a smaller level.
So now Russia can develop a digital card payment system and if the US doesn’t want to partake, then Russia can easily interface with similar national systems in China and dozens of other nations.
Not only has President Obama misunderstood the direction of world development, the US is deliberately exposing itself to global obsolescence. America is free to trade (or not) globally, but its strength in withholding access to products is increasingly eroded by the ability for smaller blocs to achieve remarkable scale rapidly.
Welcome to the digital world, where small is beautiful and regions can achieve scale through cooperation within months which previously took decades in the analogue era. Inclusive globalization is clearly under threat.
A global economic dimension exists alongside the singularly national while America seems keener on being a military power than delivering peace through trade. The US is therefore fragmenting the globalization ethos. As a result, future prosperity may be more the remit of new regional power groupings: marking the ongoing pivot to the high growth east, at a time when trade agreements are increasingly Trans-Atlantic, Trans-Pacific or similarly regional.
Making globalization work in an era of over 190 disparate nations is just too hard: particularly when the US and EU have wasted their energies on a flawed imperial push instead of just concentrating on economic growth through free trade.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.