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17 January 2024

The West’s rivals everywhere are exploiting its vulnerabilities

From Africa to Latin America, competing power blocs are gaining from liberal democracies’ stalled growth and lack of focus.

By Wolfgang Münchau

The international outlook is dire. A new conflict has broken out in the Red Sea. Ukraine’s plight is not looking good. Worse for us in the West, the rest of the world is not on our side any more. South Africa and Brazil have strongly distanced themselves from the West over Israel. They did not support us over Ukraine either. Nor does India.

A lack of global support is one of the reasons Western sanctions against Russia are not working. There are enough countries willing to help divert goods to Russia or buy its oil. The US semiconductor ban on China is not working either, because the Biden administration underestimated the intelligence of Chinese engineers and their ability to work around the restriction.

The West’s big ongoing delusion is the idea that the rest of the world thinks we are just wonderful and wants to be like us. Our version of liberal democracy topped the global popularity charts after the fall of communism. That lasted for a decade and ended for good somewhere around the time of the global financial crisis.

The West is embroiled in four huge battles: its various proxy wars (in Ukraine, the Middle East and soon, maybe, in the Taiwan Strait); the fight against climate change; reindustrialisation; and the preservation of the liberal open society at home. We are not doing great on any of these fronts right now. At most, I think we can tackle two of the four crises. My own preferences would be the preservation of liberal democracy and supporting technological innovation to help us reduce carbon emissions, as an alternative to the imposition of unworkable targets.

We can no longer afford to be the world’s policeman. As for reindustrialisation, forget it. It would be better for us to forge strategic alliances with other parts of the world, such as Latin America. This is what China did when it invested in Chilean lithium mines. Unfortunately, the EU went too far in its trade negotiations with South America – the so-called EU-Mercosur agreement – in trying to force its own environmental standards on the Latin American countries. The 23-year-old project to forge a deal has now hit an impasse. The age of big trade agreements is over. The world is retreating into competing trading blocs.

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The West is also under attack from the inside. The right is in the ascendancy almost everywhere, except Britain. And in Iowa Donald Trump has taken a first big step towards becoming the Republican Party’s presidential candidate.

I am sympathetic to Bernie Sanders, who said in a recent interview that the underlying problem in the US was “a belief that the government is failing ordinary Americans”. This is what is happening all over the West. Governments are not solving problems. In the past, they did not either, but the circumstances were more propitious. When economic growth is 3 per cent, as it used to be in the 1980s and 1990s, and when levels of inequality were lower, many problems sorted themselves out. When you grow, there is enough money to go around – even to do multiple things at the same time. But when you stagnate, and inequality is high, an increase in financial aid to Ukraine comes at the expense of a railway that you are not building at home. Welcome to a world of zero-sum politics.

Incumbent liberal governments are in trouble everywhere: Joe Biden is in acute danger of being defeated in November. Rishi Sunak will soon be forgotten too. Perhaps the biggest surprise is Olaf Scholz. He started out well, but has since become Germany’s least popular chancellor in memory because his government has no strategy to counter the country’s fast-progressing deindustrialisation. In the Netherlands, the party of Mark Rutte, the liberal-conservative Dutch prime minister, was defeated by Geert Wilders’ right-wing Party for Freedom in last year’s elections.

The major issues the West is failing to address are growth and inequality. The backlash against immigration is a result of these failures. We used to complain that the tax policies of the Thatcher era gave rise to inequality. They did, but it was nothing compared to what has happened since. In the late 1990s, the Federal Reserve, the US central bank, started to bail out the financial markets by cutting interest rates. Western central banks have since stepped up support for financial markets through quantitative easing, in which they purchased government debt in unprecedented volumes. At the same time, governments imposed austerity to compensate for the central banks’ financial bonanza. That combination turned into an inequality Doomsday Machine.

The prevailing attitude was captured by a comment from Mario Draghi, the former president of the European Central Bank. He said he’d do “whatever it takes” to save the eurozone from the onslaught of financial investors. It is fashionable among Western politicians to use variants of that phrase. David Cameron, the Foreign Secretary, said the UK would support Ukraine for “however long it takes”. The political reality is that we can no longer make such promises. The West will continue to support Ukraine for as long as a majority wants to. Support is already ending in the US. It will probably continue in Europe this year, but not indefinitely, as voters will soon want to spend increasingly scarce resources on other things.

Our collective affliction is best described as a lack of strategic focus: an inability to concentrate, which in some ways resembles a clinical diagnosis of attention deficit hyperactivity disorder, or ADHD. The West has a short attention span, and often acts without thinking.

[See also: A European fiscal union is a vanishing dream]

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This article appears in the 17 Jan 2024 issue of the New Statesman, Trump’s Revenge