By DARLINGTON CHILUBA
ONE of the most recognisable words to enter mainstream language in the late 1970s, 80s and the 90s is the word Globalisation, which means a system of deliberate integration, harmonisation and convergence that does not necessarily need to be global (Braithwaite and Drahos 2000:8).
This definition is preferred here because not all countries willingly participated or benefitted from the globalisation agenda. Further, this definition allows us to focus on only two observations out of the wider discussion around globalisation.
As an ideology, globalisation belongs to a strand of capitalism referred to as neoliberal institutionalism. This basically entails balancing self-interest such as profit motivation, on one hand, and social welfare on the other.
This strand of capitalism embodies the idea of free trade and global harmony through complex integration so that isolation and war become costlier in real terms than peace. In other words, the benefits of trade and economic integration are expected to act as a deterrence to war because of its destructive impact on commerce and peace or life in general.
The European Union (EU) remains one of the foremost examples of complex economic integration that is meant to be beneficial among its members, as espoused by globalisation. Member states have to conform to its rules including giving up their national currencies and some privilege of policy making.
The last point is partly why the British public voted to leave the EU because they reasoned that it would be better if policies affecting them were made in their own parliament in London than at the EU headquarters in Brussels.
In Africa as well, the idea of collapsing borders and adopting a single currency led to the hesitation by some countries concerning an African Union (AU) with a single currency, passport and parliament for the continent.
This leads to the first observation that some nations inevitably view globalisation as a possible affront to sovereignty and the relevance of geographic borders; displeased that decisions affecting their domestic economy are made abroad.
This is partly why institutions like the International Monetary Fund (IMF) are viewed with suspicion because they appear inclined to serve the interests of their founding members than the interests of borrowing nations.
Countries that have gone through Structural Adjustment Programmes (SAPs) can attest to the strain of re-aligning domestic economies to compete at global levels.
Zambia went through SAPs including the Heavily Indebted Poor Countries (HIPC) plan in the 1990s at great strain but inarguably won some long-term benefits. Debt under the 1999-2000 HIPC was forgiven years later in 2005 while the benefits under the SAP partly laid the foundation for Zambia becoming B+ rated economy and labeled one the fastest growing economies in Africa and the world around 2010.
Such were the eventual benefits of reopening the country’s borders in the 90s to re-enter global trade and end the deleterious effects of a command economy.
Nonetheless, the overarching theme, whether borrowing from the IMF or seeking debt forgiveness, is the demand for structural changes that align with the liberal global agenda than the immediate needs of the domestic economy.
Such suspicions suggest a direct challenge to the idea of national sovereignty.
The second observation around globalisation is that not all countries are inclined to its capitalist or liberal foundations. China is the perfect example of a global trading power that has a different political-economic model but still managed to surpass Japan to become the second largest economy in the world in 2011 valued at $5.8 trillion.
This direct comparison is important not just because both are Asian nations, but because Japan used the capitalist model to demonstrate how to structure and grow a successful trillion-dollar economy. It was an example to the world that capitalism could work successfully outside the United States and Western Europe and, to some extent, propelled the globalisation agenda.
China now proves that there are alternative growth models that can integrate economically at the global level; and that perhaps, capitalism is optional.
It’s not surprising that the better calculated challenges to the globalisation agenda have come from mainly Russia and China in recent times.
Russia recently suggested that it may not accept either the US Dollar or the Euro for purchases of its oil and gas in future. The US Dollar is widely used as a benchmark in the oil, gas, stock exchange and many other markets globally, which adds to why the US is a global power.
So, consider, what will happen to the US economy when the dollar is withdrawn as the benchmark currency in global markets and replaced by the Russian Rouble!
To fully grasp Russia’s strategy, one has to recall that after 1972 when the floating currency system was introduced, the value of a currency and the economic power of its native state, became largely determined by how easily convertible that currency is outside its borders and how many industries use it as a benchmark.
This idea takes away US relevance in key global markets and would undermine the foremost global economy.
Earlier in 2016, China succeeded having its currency, the Renminbi, added to the IMFs Special Drawing Rights (SDR) bucket of currencies which included the US Dollar, Pound Sterling, Japanese Yen and the Euro.
The SDR is what the IMF uses to create liquidity in countries struggling with slow economies around the world – Zambia is a beneficiary. This potentially makes the holders of those currencies in the SDR the largest creditors and beneficiaries of loans granted worldwide.
This gives the Chinese currency tradeable value but also makes China one of the most eminent creditor nations singularly, and as part of the IMF reserve currency. For example, if Zambia converted the loans owed directly or indirectly to China, about USS5 billion, into the Chinese currency, the impact in the US may be miniscule, but when all nations that owe China did the same, the impact would be dire on the American economy.
This is why these nations are pushing to increase the tradeable value and reach of their own currencies to compete with the US dollar and the Euro.
It is difficult to conclude emphatically on a complex and ongoing topic like globalisation. This is because the idea of a global village interlinked economically, politically and socially is still an attractive proposition even though few governments are willing to concede political power in the way some European nations did to form the EU trading bloc.
Infact, Brexit traded a blow to that idea of single customs union with a single parliament. Economically, the US Dollar and other western European currencies are coming under increasing pressure by other nations that want to use their own currencies as a medium of exchange when trading their own commodities.
While Russia and China are redefining their place in the global economy, it may be time for the continent endowed with significant resources traded outside our borders of Africa, to begin recasting our own place in the global economy.
The questions that may beg to be answered would include: what will be the impact of the sanctions on Russia following the invasion of Ukraine? Will sanctions create impetus for the BRICS nations to urge further with rolling out their own global settlement system to counter the USA’s SWIFT system?
Whatever the outcome, globalisation will be subject to further “interrogation” over the next few months and years.
