January 30, 2018

World Economic Forum in Davos in the Context of Prospects and Problems of Globalization of the World Economy

As part of the formation of a new bipolar system of international relations headed by the United States and China, the development of the situation in the world remains complex and controversial, which has a direct impact on the state of the global economy. All this has been fully reflected during the World Economic Forum in Davos on January 23–26, 2018, which was held under the theme Creating a Shared Future in a Fractured World”.

In fact, the Forum's theme became the quintessence of the content of modern processes in the world economy, which, on the one hand, are determined by the restoration of its growth, and on the other, by the growing isolationism and protectionism in economic relations between different countries. Thus, according to the International Monetary Fund, in 2017 the world economy grew by about 3 %, and in 2018 and 2019, its growth rate may increase to 3.9 %, which will be the highest since 2010. At the same time, according to the report of the United Nations Conference on Trade and Development, global direct investments in the world last year fell by 16 % (by 1.5 trillion US dollars).

The reasons for the positive component of these trends are the steady growth of the leading world economies, including the USA, China, the European Union and Japan, as well as the volume of trade between them. In this regard, of key importance were the measures taken by leaderships of the mentioned powers for overcoming the consequences of the global economic crisis, building a strategic partnership between the United States and the People's Republic of China as the two most powerful countries in the world, as well as China's active policy to support the processes of world globalization, including within realization of the strategic initiative “The Belt and Road”.

At the same time, other factors of the global, regional and local levels also have a significant impact on the development of the world economy. Thus, D. Trump's strategic concept, “America First,” which provides for support for national producers, limits the possibility of external access to the US market, which causes an adequate response from America's partners. In addition, despite the deepening of the partnership between the United States and the PRC, they still have disagreements regarding world leadership and the imbalance in trade between the parties. In turn, this leads to the preservation of trade barriers between them.

Significant problems in deepening the processes of global globalization create an increase in the aggressiveness of foreign policy of individual countries, primarily Russia, North Korea and Iran. The consequence of this is the increased threat of new wars and armed conflicts, as well as the spread of the practice of imposing sanctions against violators of international rules of peaceful coexistence, which causes significant trade and investment losses.

Equally negative is the spread of euro-skeptic, left-wing, nationalist sentiments in the EU, caused by both, the complication of socio-economic problems in the European Union and the Russian Federation's actions to undermine the unity of the Western world. Manifestations of such problems have already been Great Britain's withdrawal from the EU and separatist riots in Spain. All this has already become the reason for the statements of international experts, including the founder and president of the World Economic Forum in Davos, Klaus Schwab, on the emergence of “a real danger of a collapse of our global systems”.

On the whole, the above-mentioned circumstances determined the composition of the main participants of the Davos Forum, as well as its agenda, which included discussion of a wide range of issues and problems related to the world's globalization and its consequences.

In the given context, indicative was the Forum's participants' decision to give the right to open it to the Prime Minister of India, N. Modi, who most expresses the position of the participants in world globalization processes. As on the one hand, he supports the development of such processes, but on the other — stands for the unconditional observance of the national interests of his country. It is this position that was expressed by him in speech at the Forum.

 

However, the most important was the participation in the event of the President of the USA D. Trump, who became the first American leader of such level who attended Davos Forum for almost twenty years. In fact, the purpose of his visit was to confirm the leadership of the United States in the world and America's leading role in the global economy, which was the key point of the US President's speech.

In this regard, he focused on the achievements of the USA, — “Now is the perfect time to bring your business, your jobs, and your investments to the United States”. According to D. Trump, the United States will always stand for him in the first place, but the slogan “America First” does not mean “America alone”. Thus, despite giving priority to the interests of the United States, D. Trump showed also that America's participation in the global system of international economic relations is important for him.

 

In turn, unlike in the previous year, President of the PRC Xi Jinping refused to attend the Davos Forum. The reason for this may be Beijing's negative reaction to the new US National Security Strategy, which identifies the People's Republic of China as one of the main sources of threats to US interests, as well as the disappointment of the Chinese side with the possibility of implementing a policy of supporting the world's globalization through the mechanisms of the Davos Forum.

At the same time, like the USA China has also used the Davos Forum to demonstrate its leading role in the world. Thus, speaking at the Forum, the representative of the People's Republic of China, a member of the Politburo of the Central Committee of the CPC, Liu He emphasized plans for the country becoming one of the world-class level centers of power, as determined by the 19th National Congress of the Communist Party of China. He also expressed the PRC leadership's intention to continue the comprehensive promotion of the policy to enhance the country's openness to the outside world, as well as to create a world community of common destiny for all mankind.

 

As always, the leaders of the leading EU countries took an active position at the Forum and called for the strengthening of European Union's unity, as well as for attaching more importance to Europe's role as an independent center of power along with the United States, China, India and Russia. At this, they demonstrated the desire to reduce Europe's dependence on the United States, which actually was the answer to selfish aspects of D. Trump's policy.

Thus, according to Federal Chancellor of the FRG A. Merkel's statement, Europe must rely on its own forces in resolving key problems and overcoming the challenges facing it. In this regard, she called on the members of the European Union to focus on ensuring common security and preventing global and regional conflicts, strengthening the European economy in the context of the increased competition on world markets, and countering the internal and external challenges to the EU's unity. However, A. Merkel warned against protectionism and isolationism, which, from her point of view, could only lead to an increase in the barriers to the development of the European Union.

Similar views were also expressed by President of France E. Macron. In his speech, he put forward a proposal to develop a joint strategy to strengthen the European Union and its positions in the world, including as an alternative to the influence of the United States and China. According to E. Macron, on the one hand, this will prevent the “fragmentation” of Europe and victory of nationalists and extremists, and on the other — will ensure the “fairness” of the processes of world globalization. At the same time, the President of France supported the concept of “Multi-speed Europe”, which allows the possibility of more independent development of European countries.

A slightly different was the speech by Prime Minister of the UK T. May, who was mainly concerned with technological progress and its positive impact on the world economy. In such a way, T. May actually distanced Great Britain from European problems after the country's withdrawal from the EU. At the same time, according to her, despite Brexit, Britain remains a strong supporter of world trade and will continue to actively cooperate with other countries within the framework of bilateral agreements.

 

Despite Russia's being interested in expanding its international ties, like China, it has lowered the level of its presence at the Davos Forum. While last year Russia was represented in Davos by First Deputy Prime Minister I. Shuvalov, this year it was represented by Vice Prime Minister A. Dvorkovich. At this, a possibility of President V. Putin's participation in the Forum was not even considered. This confirms the failure of Moscow's hopes for changes in the USA and EU's policy towards the Russian Federation. Evidence of this fact was the next step of the United States to extend sanctions against Russia, which was taken on January 26, 2018 — exactly during the Davos Forum.

At the same time, Russia also tried to use the Forum as an international platform to demonstrate the “rise” of the world's role and power of the country. Contrary to obvious facts, in the speeches of the Russian representatives, there was the “growth” of GDP in Russia almost at the level of world economic growth, “restoration” of the country's reserve funds, “increase” in foreign investments (including US and European ones) in the Russian economy despite Western sanctions, as well as “technological breakthroughs”, achieved in a number of important areas.

The traditional emphasis was placed on the “futility” and “negative character” of sanctions against Russia, which on the one hand allegedly “have no consequences for the Russian economy”, but on the other “undermine international trade” and “threaten with the military conflict in Europe”.

 

General issues of globalization of the world economy were also raised in the speeches of leaders and representatives of other countries and leaders of international organizations, including the UN, the EU, the International Monetary Fund, the World Bank, Greenpeace, etc. In general, the participants of the discussion gave positive assessments to the prospects for the development of the world economy, although they recognized the significant threats to stability in the world due to different conflicts. First of all, among the sources of such threats were mentioned Russia, North Korea, Syria and Somalia. In particular, speaking at the Forum, former US Secretary of Defense A. Carter pointed out the reality of the war scenario with Russia and urged the Pentagon to prepare detailed plans for such a possibility.

 

The World Economic Forum in Davos was important for Ukraine, which was able to once again demonstrate its position in the conflict with Russia to the world community, as well as to show the country's achievements in strengthening its Armed Forces and conducting internal reforms.

Besides, within the framework of President of Ukraine P. Poroshenko's meetings with US Secretary of State R. Tillerson, President of Poland A. Duda, President of Lithuania D. Gribauskaitė and other politicians, as well as the IMF Managing Director, Christine Lagarde, the joint actions were agreed upon in a number key spheres for our state.

Thus, the USA expressed its firm readiness to continue to assist Ukraine in military-political and military-technical spheres. Representatives of international financial institutions confirmed plans to further support Ukraine in conducting a reform course in order to ensure sustainable economic growth of the Ukrainian state.

 

So, the World Economic Forum in Davos showed the positive attitude of most leading countries of the world and international organizations to the process of globalization of the world economy. This opens up favorable prospects for world economic growth.

At the same time, most countries prefer their own interests over the common interests of mankind. This creates preconditions for preservation of the existing and emergence of new international contradictions and conflicts. Thus, at the global level, such contradictions and problems will remain in the relations between the USA and the PRC and the EU, despite the strategic goals of the parties to deepen the partnership between them.

We also should expect the continuation of the USA and Europe's pressure on Russia and, accordingly, an increase in the confrontation between them. At this, such actions by the United States and the EU will become more and more systematic and purposeful in terms of moving from political rhetoric at various international levels to practical steps to introduce really effective sanctions against Russia.

In particular, within the framework of this approach, on January 29, 2018, the US Department of the Treasury submitted to the Congress the so-called “Kremlin Report”, which includes a list of businessmen and officials close to V. Putin, to take appropriate sanction decisions (in accordance with the Law “On Countering America's Adversaries Through Sanctions Act”). In addition, a new draft law “Defending Elections from Threats by Establishing Redlines Act” (DETER) was submitted for consideration by the US Congress. The document contains a list of penalties against any country engaged in interference in a United States elections. One of the sections of the draft law directly concerns Russia and provides for the extension of sanctions against it.

The USA's, the EU's, and international financial organizations' support to Ukraine will be continued, which will help strengthen our country and deepen its integration into the world economy. Despite Russia's and its divisors' in other countries statements about the “the world's fatigue from Ukraine” and “the reduction of the relevance of the Ukrainian issue”, our state remains the focus of attention of both the United States and Europe and the leading international organizations. Thus, according to UN Secretary General A. Guterres, the settlement of the situation around Ukraine will become one of the priorities of the United Nations in 2018.


 

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