An unsettled and messy world

Published: March 26, 2012

The writer is a former vice-president of the World Bank and a former caretaker finance minister of Pakistan

A number of analysts had predicted that Asia will rise quickly and become an economic powerhouse equal in strength and size to the world’s older economies sometime soon in the 21st century. They did not, however, think that the process of transition will be that messy. Analysts such as America’s Fareed Zakaria and Singapore’s Kishore Mahbubani who had labelled the twenty-first to be Asia’s century did not suggest that the West would step aside for reasons that were strictly not economic. They had based their analyses on simple arithmetic. Large Asian economies, they believed, would grow at rates about three times more than the likely rate of expansion of the mature nations of Western Europe, North America and Japan. This will inevitably close the gap between these two parts of the world.

Some of the more populous countries of the Asian continent will be large economies because of the sheer size of their populations. This was again simple arithmetic. When billion plus populations are multiplied by even modest per capita incomes they produce staggering results in terms of GDP sizes. It was this type of accounting that resulted in China overtaking Japan early in 2011, to become the world’s second largest economy after the United States. Some analysts and institutions believe — and among those that are of this view is the staid International Monetary Fund — that China will pass even the United States in terms of the size of its economy sometime in the next couple of decades. Before India’s economy began to stall, similar spectacular results were forecasted for that country. India was expected to become an economic superpower by the middle of the present century.

What was not expected when these projections were made was that the three leading economic powerhouses — America, Europe and Japan — would stumble for reasons other than economics. What we are seeing now are developments that will result in some messy adjustments. This will affect Asia in particular and within Asia the countries that have Muslim majorities. Leaving Japan aside which has been rocked by a series of natural disasters, I will focus today on the changes that are taking place in the United States and Europe.

Democracies work only when they have the ability to find the middle ground where holders of very different points can meet and find ways to reconcile their differences. This is not happening in the United States and Europe. In America, there are irreconcilable differences among those who believe in the right of the federal government to care for the citizenry as against those who are equally adamant that the constitution gave most of this task to the state governments. The fight over the bill enacted by Congress and signed into law by President Barack Obama to provide health care for all is being waged on the basis of these different interpretations of what the founding fathers meant when they created a political entity called the United States.

Then there is disagreement over what is generally referred to as ‘American exceptionalism’. This is the belief that God created America to bring a system of values — life, liberty and the pursuit of happiness — to the rest of the world. That could only be done by establishing political and economic systems that were patterned after those operating in the United States. They were described as liberal democracy and market capitalism. That Washington had the right to project its values and create the environment in different parts of the world so that American style institutions could be created was what motivated former president George W Bush, the born-again Christian, to wage war in Iraq. Barack Obama, the present White House occupant, is not a Bush-style missionary. He is much more inclined to let the world evolve in its own way as long as it does not threaten America. That was the crux of his message to the world of Islam at the 2009 address delivered at Cairo’s Al Azhar University and the reason for his desire to eventually pull out of Afghanistan.

Religion and its role in the American state has also become a contentious issue although the matter was settled quite clearly by what is called the constitution’s ‘establishment clause’. That America must proclaim itself to be Christian state with Christian values is now being pushed by the evangelical community in the country. While this segment of the population is not likely to get its way, it’s deeply held views will have consequence for America’s relations with the Muslim world.

The Europeans have their own set of problems, the most important of which is defining the political and economic meaning of the entity called the European Union. It is now clear that the Union’s expansion over the last decade was done in haste and countries that had not reached the stage of development comparable to that of the continent’s core were brought in prematurely as members. This has put the Union under tremendous economic strain which will have many consequences for the continent’s future. Of particular consequence for Europe’s future is the definition of the nation-state. Does the creation of the Union mean surrender of some aspects of national sovereignty to Brussels, the location of the central bureaucracy?

While the European Union may survive, it is unlikely that it will expand further. The Europeans are very unlikely to grant membership to Turkey which would mean that Ankara will refocus its energy towards the Muslim world. The Turks have emerged as major players in the Middle East and are taking active interest in such non-Arab Muslim states as Afghanistan and Pakistan.

The main conclusion to be drawn from this brief analysis is that as the West weakens economically, it will begin to rethink some of the issues that seemed to have been settled when there was enough growth in income to share widely its benefits. Since that is no longer the case, some of the old assumptions are no longer in play. This would mean an unsettled world in conflict for several years to come. Unfortunately, Pakistan may find itself at the centre of this messy period of adjustment.

Published in The Express Tribune, March 26th, 2012.

Reader Comments (8)

  • Arindom
    Mar 26, 2012 - 1:27AM

    Blockquote

    ….and are taking active interest in such non-Arab Muslim states as Afghanistan and Pakistan…..

    Blockquote

    I thought Pakistanis saw themselves as Arabs!

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  • BlackJack
    Mar 26, 2012 - 9:27AM

    Excellent points on the issues facing the European union in terms of its definition as a proper federation of nations against an economic bloc – this needs to be resolved for Europe to completely pull itself out of the current quagmire. On the evangelical Christian lobby in the US, it is amazing that Muslims (esp Pakistanis) should find the concept disconcerting – after all, secular states are an anathema for you guys. Third, these future Asian powerhouses (you seem ambivalent on India’s inclusion) are also linked to the global economy – and any downturn in their major markets like US and Europe will impact them as well. So if the West goes into decline faster than expected, it may cause a more rapid shift in, say military might (exacerbating tensions), but it will also negatively impact the speed with which nations like India, China and Indonesia can pull their (relatively) poor populations out of poverty.

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  • harkol
    Mar 26, 2012 - 9:46AM

    Pakistan will find itself in a messy world in a period of adjustment??!

    Pakistan has bigger fishes to fry other than messy world. It has bigger messy issues like Religious-terror to deal with, it has huge economic crisis to tackle, it also has to figure what it stands for as a nation.

    Pakistan’s troubles are nothing to do with the world economy. In fact, if it fixed its problems, it can emerge as a major economy (perhaps one of top 10), just because of its massive population. Pakistan has similar demographic advantages as in India, but its failure to settle on a system undermines its economy.

    If India-Pakistan can set aside their disagreements and focus on the growth & welfare of their people, in 30-40 years, a south-asia economic zone can rival ASEAN economies.

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  • Pollack
    Mar 26, 2012 - 10:14AM

    “That America must proclaim itself to be Christian state with Christian values is now being pushed by the evangelical community in the country.”

    The author seem to take a negative view of this but in the same breadth has no problems when countries with majority Islamic populations do the same. Does he think that christian societies are any worse than Islamic ones?

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  • mrk
    Mar 26, 2012 - 11:54AM

    It’s not some creative accounting – by GDP levels, China is likely to surpass the U.S. sometime in the next decade and become the largest economy in the world.

    In case of per capita income etc, United States would continue to be ahead of China in per capita terms though is not a leader in per capita income even today as several smaller nations have greater per capita incomes than the U.S.

    Bottomline is that size does matter and even in the case of U.S., it’s the size which makes it such a large economic power. Otherwise U.S. is not richer than other advanced nations such as Germany, Canada, australia etc. In fact, those nations have more refined systems and offer their citizens greater quality of life.

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  • Harry Stone
    Mar 27, 2012 - 2:01AM

    It is a bit difficult to think of Fareed Zakaria as an American given he is an Indian. His musings clearly indicate why the US requires it President to be native born.

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  • A Peshawary
    Mar 27, 2012 - 3:34PM

    A thought provocking short analysis. I hope Mr. Barki will spare sometime to for a detailed analysis on the same topic. In addition, I request his attetion to his last sentece in the article “This would mean an unsettled world in conflict for several years to come”, and enlighten us on this as well.

    Mr. Barki, accept my sincere gratitudes for providing us an opportunity to learn something about difficult and complex issue in plan and layman language.

    A Peshawary

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  • Harry Stone
    Mar 27, 2012 - 8:36PM

    Everyone seems to overlook the real possiblity that China could end up like the Soviet Union. There was great growth in the USSR at one time that lasted for decades and then their economy died because they could not invent or adapt. China is currently enjoying great growth but to date has only copied what the rest of the world has already developed. It has failed to invent anything. It remains a low cost producer but even this is at risk as the demands of their citizens for higher wages and a greater standard of living come into play.

    The idea that China will become an encomic powerhouse maybe premature.

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