Category: trade

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Systemic Change, Institutional Lag and Societal Resilience.

The following is a draft of a talk that I am giving to a professional group. I thought that it would be good to trial it here. It is not quite stream-of-consciousness in nature but is fairly loose in terms of argument tightness and structure. My usual approach is to write a long form essay on the theme of the talk, then condense and memorize it for an off-the-cuff presentation. I do not use slides or power point presentations for the talks. 25 years of university lecturing and a lot of public speaking allows me the luxury of distilling fairly complex thoughts into shorter talking points. I have incorporated some references brought up by reader Barbara Matthews because they add depth to the discussion.

Introduction.

As Dickens wrote, “we live in the best of times and we live in the worst of times.” That is because we are experiencing  a moment of systemic transition in world affairs. This transition is political, economic, cultural and technological, something that in aggregate affects the entire global network of human institutions. It also involves changes in nature, which cause and compound the human changes that we are now observing. As the Greek philosopher Heraclitus observed, we never step in the same river twice. The moment is fluid and uncertain, the possibilities both open and endless yet potentially dark and forbidding.

In order to make sense of this we might break down the broader picture into component parts. These are 1) the structure of the international system; 2) the rules governing the global order; and 3) the geopolitical repercussions of the changes currently underway.

First, the world is moving from a multipolar to a poly-centric system. In the past 50 years we have seen the long transition from the bipolar world of the Cold War, to the unipolar world of the first post-Cold War decade, then the emergence of a multipolar world where rising great powers like China and India compete for global primacy with declining powers like the US and Russia, and where new and old middle powers are finding necessity in forging alliances amongst themselves and smaller States rather than seek the security provided by larger Powers. That includes the rise of the Global South, exemplified by the emergence of a bloc of so-called BRIC countries, which represent a challenge to traditional “northern” dominance of the international arena (“South” here referring not to a geographic location but an ideological orientation that has roots in anti-colonial struggles).

“Polarity” traditionally has only involved nation-States. Large Powers exercise gravitational “pull” on smaller powers that seek their physical protection and provision of material security. It now includes non-State actors like technology conglomerates and their supply chain adjacents. The “poles” themselves can be divided into techno hubs, entities that use knowledge economies to generate wealth and power, and resource hubs, those that provide energy and material inputs to the global knowledge economy.  Both need each other and in fact hybridisation of these productive models is now the norm in many places such as the Arab Gulf States. When the independent power of non-State actors and cross-border impacts of technology are factored in, we see that rather than multipolarity what is emerging is a polycentric constellation of global-reach actors that cluster around mutual interests or, often enough, conflict nodes based on their rival pursuit of competitive advantages in specific material or ideological realms.

Secondly, this has led to the demise of the post-WW2 “liberal” status quo, which was designed to bring stability and predictability to the exchanges between State and non-State actors in the international field. The disruption of this “liberal” international order (liberal defined not on ideological terms but as a voluntary system of mutual checks and balances governing International relations and foreign affairs), has led us to what is now a “post-liberal” (and often illiberal) world order, one where  liberal rules, norms and conventions are violated and its institutions increasingly  ignored. This is a return to what Hobbes called a “state of nature” in international affairs, often interpreted as a return to “might makes right” doctrines associated with the golden era of late 19th century imperialism. Those who can, do. Those who cannot suffer at the hands of those that can.

The institutional edifice created after WW2, what came to be known as the Liberal International Order, is breaking down. The norms, rules and institutions that made up that order have been rendered ineffective by the rapid changes in human societies, and liberal rules, norms and institutional processes are being increasingly ignored in favour of more self-interested actor-centric approaches to global affairs. An area where this has been seen quite starkly is in the field of international affairs, where the liberal international order attempted to stabilise and regulate away from actor-centric foreign policies and towards mutually cooperative inter- or transnational institutional arrangements that mitigated power disparities between nation-States and among private market agents based on their geographic and political position in the global system. One such regulatory mechanism was the concept of freedom of navigation, which guaranteed safe passage to civilian shipping on the open seas and in smaller maritime spaces (e.g. chokepoints such as straits and small seas) otherwise subject to the interference of adjacent littoral states or non-state actors (like pirates).

Third, that returns us to a core notion now commonly used in non-specialist circles: geopolitics. Put simply, geopolitics  is the relationship between geography and politics. It traditionally used to be seen as a matter of how human politics and military strategy conformed to or utilised immutable geographic characteristics in pursuit of (national) State interests, recognising that geopolitics also encompasses economic, diplomatic and sociological factors as they are influenced by geography and geographic trends. Mass migrations are an example of such activity because they have cultural, economic and security implications, but things like hydro dam construction on rivers that traverse national borders have the potential to become serious diplomatic, economic and military problems as well. The disputes about Mekong River damming, dredging and usage, and the consequent end of traditional riverine lifestyles and population exodus from riverine communities, are an example of this.

Now, although the need for geopolitical adaptation remains a constant of international relations, the relationship between geography and politics has shifted. On the one hand, technologies have made human adaptation or utilisation of geographic features far more extensive than in previous eras. Humans dominate nature in a measure that they did not before, which in turn allows them to exploit terrain and earthcapes in previously unknown ways. Think of undersea and space travel, geospatial mapping, deep sea mining—and warring. Once unimaginable, all are either now currently in existence or on the threshold of becoming reality. Automation, robotics and nano-technologies, to say nothing of AI applications in those fields, allow for the exploitation of geography (and nature in general) in ways unheard of during the golden era of geopolitical thought in the early 20th century.

On the other hand, climate change and other natural shifts have altered the physical world in fundamental ways: consider the melting of the Arctic Ocean icepack opening up the Northern Passage and the retreating ice cover in Antartica opening up accessibility to mineral exploration in ways never seen before. The same is true with the impact of warmer temperatures of drought/deluge cycles on fishery stocks and freshwater supplies. At the intersection of climate change and technological advancement, solar, wind and hydro energy production have significant geopolitical implications that go beyond traditional comparative advantages in one or the other under previous technological regimes.

In summation: geopolitics is at once more fluid and yet remains constant as a guiding principle of international relations. The more things change, the more that they stay the same. In moment of global systemic transition, geopolitics becomes a core feature of the process. That is where human agency becomes a decisive variable for better or worse. What follows is two issues where human agency is at play.

Institutional lag.

“Institutional lag”  refers to the time gap between an event or appearance of a phenomena and the response to them from complex organisations. Derived from management theory, the concept posits that institutions will be slow to respond and adapt to changes in their environment, which in turn will lead to unnecessary costs, superfluous behaviours, design obsolescence, duplication of functions, misplaced objectives and ill-suited planning. 

This syndrome is often more than just a failure to react in a timely or responsive manner. Complex organisations develop a type of bureaucratic inertia where established systems and procedures are resistant to change unless some externality forces them to. Even then, they way the respond is not agile and may often not be what is needed for the adaptive task at hand. The adage about generals always preparing for the last war is an illustration of the concept but the notion extends further. Until a technological or other form of social breakthrough occurs, the organisation is perpetually bound by “tradition” (procedure and usage) and therefore always behind the times. Innovative breakthroughs are more often forced by externalities, not pushed by proactive internal reform within the organisation.

Societal Resilience.

Refers to the ability of human societies, including businesses and economic sectors but extending beyond that, to be adaptable and flexible when it comes to unforeseen, unexpected or sudden events that disrupt their business models and the production chains in which they are located. These can be caused by sudden technological advances, black swan events, political crisis and wars, epidemics and pandemics, natural disasters and other unanticipated phenomena. The term is derived from “Industrial resilience,” which is basically management-speak for changes in processes, procedures and networks caused by external events that require rapid responses via technological advancement and/or diversification of input and output links as well as market substitution, among other things.

In a way, societal resilience, and especially business or industrial resilience, is inversely related to institutional lag. The more resilient a society, industry or social group is, the more bureaucratic inertias can be overcome and institutional lags minimised. Therein lies the problem. Societies and the organisations and demographics that comprise them seek stability, and stability depends on commonly accepted status quos. When something happens that disrupts the whole or part of an institutionalised status quo, the response is often increased resistance to change “in the way things are” rather than flexible adaptability. It is embedded in the human condition so the issue is not trivial in times of systemic change.

It was thought that the Covid pandemic would force industrial resilience upon the global trading community, and indeed, concepts such as “near-shoring,” “friendshoring,” and regional hubs all gained traction in the international system of production, consumption, telecommunications, transportation and commodity and service exchange. The reality was that genuine resilience strategies was adopted by a minority of businesses, with the majority opting, after a period of disruption, to assume a “business as usual” approach and resume their old ways of doing things. This included “just in time” production schemes that worsened the impact of the pandemic in terms of post-recovery demand increases. With little inventory stockpiled while demand was low, business found themselves unable to fill orders quickly, leading to inflationary pressures resultant from demand on limited stock, compounded by the US imposition of tariffs on a wide range of goods from dozens of countries and regional trading blocs. None of this was anticipated by corporate elites once the Covid wave had crested.

Likewise, once the pandemic peaked in terms of deaths, illness and infection rates, many social actors, including political parties, interest groups, community organisations and an assortment of individuals grouped into a variety of grassroots agencies, engaged in revisionist historical interpretations of the pandemic and its underlying causes. Besides theories about Covid’s origins (in a Chinese lab or wet market, among others), there was questioning of whether the disease existed at all and whether vaccines were needed, necessary, useful in fighting the its spread or were part of some Deep State mind control plot. The use of surgical masks as simple front-line defense against airborne infections was even questioned. People were murdered in disputes over mask usage, and an assortment of quacks sprang forth to offer a range of pseudo- or non-scientific solutions such as injecting bleach into the body (advocated by president Trump), horse vaccines and perineum tanning (advocated by assorted alternative medicine adherents and wellness “influencers”).

This reaffirms the axiom that transitional moments such as that involving global systemic change are marked by conflict, not just in the form of rules and norms violations between competing actors such as nation-States and global non-State powers, including the resort to violence in order to settle disputes, but in the human propensity to resist change per se. That is what resilience must focus on: overcoming the innate human tendency to resist change even when it is forced upon us.

One measure that is both a sign of societal resilience and a stop-gap during periods of institutional lag is hedging. Hedging can be both strategic or practical and can be deployed at both levels simultaneously. Diversifying trade partners, seeking alternative sources of information or material inputs, widening exposure to previously unknown contacts, languages, cultures and experiences, experimenting with new ways of doing things are in one way or the other examples of resisting complacency and stagnation by not putting one’s eggs in one basket. Strategic hedging focuses on planning for (and against) long-term events. Tactical hedging focuses on immediate problems.

For example, if the PRC decides to restrict NZ dairy or meat imports because of displeasure with a NZ foreign policy stance, what does NZ do as a contingency plan? Rescind the foreign policy measure that caused Chinese displeasure? Find alternative foreign markets? Open at a lower price scale or subsidise the domestic market for the excess inventory caused by the Chinese bans? Reduce production and ask producers for patience (and reduced profits)? One decision (what to do with the foreign policy stance) is a strategic matter, the answer to which will determine subsequent tactical choices if necessary.

While that is happening industrial resilience will be tested in the export sector, determining whether it is flexible and adaptable enough to weather the dispute and emerge with better plans that cope with future exigencies.

The point of this illustration is to highlight the utility of hedging as a resilience response to crisis, uncertainty and change. That may or may not lead to more durable patterns of behaviour, and that depends on how the inevitable conflicts that arise are resolved and mitigated. Much money and effort has been spent developing sophisticated risk analyses that offer predictive models for myriad of systemic events. That is helpful in framing and avoiding identified problems but it is in the solutions that stem from them where true resilience is found. Given what has been mentioned above, that may be the most daunting project before us.

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The video sums things up.

Let me make this short and sweet (taken from my other social media):

Seeing some of the world’s richest men shaking the blood-stained hand of Saudi Crown Prince Muhammed bin-Salman while being warmly introduced by US president Donald Trump pretty much sums up the era we live in. It was a Petrotechthugocracy meeting in real time. Shameful.

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The Comparative Notebook on Trump’s Tariffs.

The ever brilliant Kate Nicholls has kindly agreed to allow me to re-publish her substack offering some under-examined backdrop to Trump’s tariff madness. The essay is not meant to be a full scholarly article but instead an insight into the thinking (if that is the correct word) behind the current moment of trade madness. However unpleasant, there is a method to it, and there is a twist to how it may be applied today.

The link is here. It is well worth the read.

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A Return to a US Gilded Age?

I have been trying to figure out the logic of Trump’s tariff policies and apparent desire for a global trade war. Although he does not appear to comprehend that tariffs are a tax on consumers in the country doing the tariffing, I can (sort of) understand that he may think that this is a good way to protect US manufacturing and employment. But because the evidence that tariffs wind up hurting domestic consumers and do not necessarily bring back manufacturing, farming or employment in those or other sectors, I found myself somewhat mystified as to why Trump is determined to push them through.

I realise that he is using them as a form of leverage to obtain concessions in non-trade areas like illicit drug interdiction and immigration. But he seems to want to go further than forcing neighbouring countries to tighten their border controls in exchange of a lifting of tariffs or reduction in the amount of them (both in terms of reducing tariff costs–say from 25 percent to 10 percent–as well as the range of goods subject to tariffs). He truly does appear think that tariffs are good for the US, all evidence to the contrary.

Because of his intellectual limitations (remember my empty vessel argument of a couple of weeks ago), I then thought about his economic advisors and how they may see the issue. Here is where I think I have found the answer to Trump’s obsession with tariffs. It has to do with the so-called Gilded Age.

Readers may recall Trump speaking of president William McKinley and the “Gilded Age” when the US was prosperous, expanding and turning into the global superpower that it eventually became. He even restored the name “Mount McKinley” to the mountain in Alaska known as Denali by indigenous people and has otherwise extolled the virtues of the 25th US president even though McKinley was assassinated while in office in 1901 (Vice President Teddy Roosevelt succeeded him). As it turns out at least one person (an anarchist) was not happy with his policies. Yet it seems that Trump seeks to return to a new US Gilded Age in light of what he and his advisors see as the failure of capitalist globalisation.

Needless to say, there have been global trade systems since ancient times. Notions of Riccardian and competitive advantage were eventually developed around them to explain and justify the commonweal benefits of global trade. This accelerated with the technology-driven globalisation of production, consumption and exchange that emerged as of the 1990s and grew exponentially in the following two and a half decades. While all economic boats would be lifted by this rising tide, the argument went, the expansion in trade was expected to benefit the US the most because it was the core of the global capitalist system, including finance, advanced manufacturing, information and high-tech services, logistics and even value-added primary good extraction.

For its adherents, the post-Bretton Woods moment was the US’s oyster and free trade under standardised monetary exchange conditions was considered to be so universally positive that theories (known as “neo-modernization” theories after the original 1950s variants) were advanced that posited that joining global systems of trade would lead to rising middle classes and eventually democracies in poorer authoritarian countries that adopted the export-import logic and other development models such as the so-called “Washington Consensus.” The Consensus (by industrialised nation’s finance ministers of the time) married neoliberal domestic economic theories based on the primacy of finance capital in determining a country’s investment opportunities in a macroeconomic environment characterised by the reduction of the State’s role as both manager and direct producer of national goods and services, on the one hand, with an abject faith in the invisible hand dynamics at play when national markets were opened up to unfettered foreign competition.

As it turns out, things did not go as planned. Rather than benefit the most as the core of the globalised system of trade, the US saw significant declines in domestic manufacturing, mining and other extractive enterprises as well as a number of value-added business sectors (textiles, shoes, ship-building) when US firms migrated abroad in pursuit of cheaper labour and supply chain inputs. Even service sectors saw business move abroad–think of off-shore call and computer service centres–something that in the aggregate saw the economic decline of the so-called Industrial Age-originated “Rust Belt,” growth of increasingly precarious labor markets and the rise of a host of social pathologies associated with that decline (the book Hillbilly Elegy by JD Vance sums them up pretty well even if it is a fictionalised account of his own life story pre-politics).

Put bluntly, instead of being at the top of the globalized pile, when it came to many US domestic businesses, profits were prioritised over patriotism, they moved their businesses abroad and the benefits of globalisation went to them (in terms of re-patriated profits), not their former employees and the communities that depended on their livelihoods. When it comes to free trade and open markets, businesses acted as capitalists first, and that made them globalists rather than nationalists.

The bottom line is that while the US remains the core of the global economy, the location of where globalisation impacted negatively the most within the US and the perception of its general decline as a result is a strong component of the economic nationalist discourse that propels the modern US Right. From Pat Buchanan to Rand Paul to Steve Bannon, US economic nationalists see US decline as rooted in two main things: 1) the migration of industries away from the Heartland to foreign countries which do not adhere to the overly restrictive environmental, labor, welfare and taxation standards of the US; and 2) the “woke” cultural transitions associated with granting equal rights to everyone regardless of merit while opening admission to immigrants from foreign cultures that are inherently anti-Western in orientation and yet upon which the US was increasingly dependent for both skilled and unskilled labor.

This is where economic nationalists on Trump’s staff like Peter Navarro come in. It is he and his colleagues that put the thought of the McKinley Gilded Age into Trump’s otherwise adderal-addled head. For them, a global trade war suits the US because as the biggest economic bully on the block, others will fold their cards before it has to. The belief is that although there will be short-term pain in the US domestic economy, eventually foreign countries and businesses will, for their own political as well as economic reasons, bend a knee and comply with US demands on trade and non-trade issues. Some manufacturing and other businesses may return to the US but even if they just adjust their bilateral export pricing and other trade measures in line with US demands, the view is that the US will eventually win and ultimately prosper because the advantages it has when it comes to complex economies of scale.

We need to underscore that many trade globalisation supporters did not see the US as necessarily benefitting more than others under the modern trade framework. Instead, they saw all nations receiving some benefit in excess of what they would accrue if they did not join the network, and within that “limited gains” perspective the US would still do well even if it lost uncompetitive businesses to foreign markets that held comparative and competitive advantages like lower wages and costs and proximity of raw materials, rising educational standards etc. They believed that the US would simply specialise in higher-end production and services that used advanced technologies and value-added capital goods while continuing to domestically supply most consumer non-durables like food staples and the like.

This is different than what the economic nationalists envisioned, and whereas the globalist economic vision is an integral part of the liberal internationalist perspective and institutional order codified in the likes of the IMF, WTO and World Bank, economic nationalists see the entire combine as inimical to US economic supremacy and hence an existential macroeconomic threat that increased US economic dependency on the whims of others such as the PRC and EU. Where globalists see trade interdependence and mutual benefit, economic nationalists see trade dependency and economic vulnerability The latter is the dominant rationale in the White House at the moment.

With Navarro and other economic nationalists back in the West Wing and the liberal international order in disarray for more than just economic reasons, the in-house consensus is that the time is ripe to push for another Gilded Age on the back of a tariff-based national economic restructuring. Coupled with a new version of gunboat diplomacy and carrying a foreign policy Big Stick, Trump is offered as the champion of and vehicle for that metamorphosis.

The trouble is that US capitalism today is not the capitalism of a century ago, nor is the nature of its connections to a globalized capitalist world with multiple centres of economic gravity. Think of the Middle East, the Arab oil oligarchies and their sovereign hedge funds. Think of the reach of the PRC’s Belt and Road initiative. Think of the rise of the Global South and emergence of the BRICS as an economic bloc. All of this suggests that while Trump may see himself as McKinley bringing in a new US Gilded Age, he is just a real-time protagonist in his economic advisor’s pipe dreams. What may have worked at the turn of the 20th century in terms of tariffs benefiting the US is unlikely to work in the early 21st century, at least not in the measure envisioned. So even if some countries cave to US demands on a host of issues, the chances of the US “winning” a truly global trade war seem long at best, and even if the US “wins” the economic contest, the political costs of subjecting the US electorate to consumer price hikes and supply chain disruption through the 2026 Congressional midterm elections and 2028 presidential vote may spell serious trouble for Trump, MAGA and the GOP regardless of who may or may not succeed him. The political fallout of the tariff moves, in other words, may yield negative dividends even if it is “successful” because the short-term economic pain that Musk and Trump talk about as necessary may not be tolerable for many voters, including those in Red States.

If that is the case, all the tariff-led economic gilding project may just turn into political rust.

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Media Link: Post-pandemic economics and the rise of national populism” on “A View from Afar.”

On this edition of AVFA Selwyn Manning and I discuss post-pandemic economics and the rise of national populism. It seems that a post-pandemic turn to more nationalist economic policies may have encouraged the rise of populists who use xenophobia and bigotry as a partisan tool by adding non-economic fear-mongering and scapegoating to the necessity of shifting to more inwards-looking structural reform. You can find the show here.

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Media Link: “A View from Afar” on the moment of friction, and more.

After a hiatus of over four months Selwyn Manning and I finally got it together to re-start the “A View from Afar” podcast series. We shall see how we go but aim to do 2 episodes per month if possible.

Here we start of with a catch up on events since the last podcast of 2023. Selwyn liked the KP moment of friction post from April 1, and so we used it as the stepping stone into a discussion that incorporates material from several recent KP posts and other news. I hope that you find the podcast of interest. You can find it here.

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A moment of friction.

In strategic studies “friction” is a term that it is used to describe the moment when military action encounters adversary resistance. “Friction” is one of four (along with an unofficial fifth) “F’s” in military strategy, which includes force (kinetic mass), fluidity (of manoeuvre), fog (of battle) as well as uncertainty (of outcomes, which is usually referred to in military circles as the “oh F**k” factor)). Friction comes from many causes, including terrain, countervailing force, psychological factors, the adversary’s broader capabilities and more. As German strategist Karl von Clausewitz noted, friction can be encountered at the three levels of warfare: strategic, operational and tactical.In other words, “Clausewitzian friction” is not just confined to the battlefield.

The notion of friction is drawn from the physical world and has many permutations. It is not confined to one particular element or dimension. It is about opposition, even if of similar elements or forces, including the element of will. For example, when they meet, fluids and air of different weights create turbulence. Fire on different fire extinguishes or expands. Earth on earth leads to crumbling or inertial momentum. The product of the combination of these physical forces, say fluid on air or earth or fire, depends on the relative weight of each. The same goes for psychological factors in human contests. Mutatis mutandis (i.e., with the necessary changes having been made), this is applicable to international relations. It may seem like a conceptual stretch but I see the use of the notion of friction in terms of international relations more as an example of conceptual transfer, using Clausewitz as a bridge between the physical and the political/diplomatic worlds (more on this later).

In the past I have written at length about the systemic realignment and long transition in post Cold War international relations. The phrase refers to the transition from a unipolar post-Cold War international system dominated by the US (as the “hegemon” of the liberal internationalist world order) to a multipolar system that includes rising Great Powers like the PRC and India and constellations of middle powers such as the other BRIC countries (Brazil, Russia, South Africa and recently added members like Egypt, Iran, Saudi Arabia, the UAE, Ethiopia and perhaps Argentina (if it ratifies its accession)) as representatives of the rising “Global South.” In spite of their differences, these rising power blocs are counterpoised against what remains of the liberal institutionalist order, including the EU, Japan, South Korea and Australia. I have noted that the long moment of transition is characterised by international norm erosion and increased rule violations and the consequent emergence of conflict as the systems regulator until a new status quo is established (and from which that new status quo emerges). That conflict may come in many guises–economic, diplomatic, cultural and, perhaps inevitably, military or some combination thereof. When conflicts turn military, the moment of force has arrived. And when force is met by opposing force, then friction is inevitable.

Here I extend the notion of friction to include the international moment that we are currently living in. That is, I have conceptually transferred the notion of friction to the international arena because “transfer” in this instance means applying the notion of friction to a wider environment beyond the physical plane without distorting its original meaning. That allows me to avoid the methodologically dubious practice of conceptual stretching (where a term is stretched and distorted from its original meaning in order to analytically fit a different type of thing).

The long transitional moment is what has taken us to this point and allowed me to undertake the transfer, and it is here in the transitional trajectory from unipolar to multipolar international systems where the future global status quo will be defined. It is a decisive moment because it is the period where force has become the major arbiter of who rises and who falls in the systemic transitional shuffle. Given that there are many competitors in the international arena who are capable and willing to use force as well as other means to advance their interests, I suggest that the global community has reached its moment of friction, that is, the turning point in the long transitional process. Everything that has come before was the lead-in. Everything that comes after will be the result of this conflict-defined moment.

It is no exaggeration to write this. Besides the Ruso-Ukrainian war and the Israel-Hamas war, there is the armed stand-off in the Red Sea between Iran-backed Houthis and a naval coalition led but he US, the ongoing skirmishes between PRC naval forces and those of the Philippines, Vietnam and Western naval forces as well as the PRC military threats to Taiwan, the Israeli-Hezbollah conflict along the Israel-Lebanon border, Islamist violence in the Sahel and Eastern Africa as well as in Russia, Afghanistan, Pakistan and other other parts of Central Asia, ongoing conflict in Syria between Assad’s Russian-backed forces, the remnants of ISIS and Western-backed rebels, the Turkish-Kurd conflict along the Turkish, Syrian and Iraqi borders, the civil war in Libya, escalating fighting between the Democratic Republic of Congo and Rwanda over mineral rich areas in and around the eastern Congolese city of Goma (in which private military companies and irredentist militias are also involved), narco-violence in Latin America that has reached the level of challenging state monopolies over organised violence in places like Ecuador and parts of Mexico, piracy in the Indian Ocean and in the Malacca Straits, cross-border ethno-religious conflict in Afghanistan and Pakistan, ethnic cleansing in Myanmar, the PRC and Gaza, tribal conflict in Papua New Guinea and more. Norms and rules governing interstate as well as domestic forms of collective behaviour are honoured in the breach, not as a matter of course. Individuals, groups and States are increasingly atomised in their perspectives and interactions and resort to the ultimate default option–conflict–to pursue their interests in the face of other’s opposition..

Friction extends to economics. The era of globalisation of free trade has ended as nations revert to post-pandemic protectionism or focus on “near-“and “friend-shoring” in order to avoid supply chain bottlenecks resultant from commodity production concentration in a small number of countries. Although not a trade pact strictly speaking, the PRC Belt and Road Initiative undermines Western trade agreements like the TPPA and lesser regional arrangements because it ties developmental assistance and financing to Chinese industries and markets. Intellectual property and technology theft is wide-spread despite International conventions against them (endnote just by the PRC). The era of Bretton Woods is over and the agencies that were its institutional pillars (like the World Bank, IMF and regional agencies such as the IADB and ADB) are now increasingly challenged by entities emerging from the Global South like the China Development Bank and BRICS common market initiatives.

In addition, as part of international norms erosion and rules violations, many diplomatic agreements and treaties such as those prohibiting the use of chemical weapons and even genocide are also now largely ignored because, in the end, there is no international enforcement capability to reinforce what is written. The International Court of Justice and International Criminal Court can impose sanctions and issue arrest warrants but have no enforcement authority of their own. The UN can authorise peace-keeping missions and issue resolutions but is subject to Security Council vetoes on the one hand and belligerent non-compliance in the other (besides Israel ignoring UN demands for a cease-fire and humanitarian pauses in Gaza, people may forget that there are UN peace keeping missions in the Sinai, Golan Heights and Israel-Lebanon border, including NZDF personnel among them, because these “blue helmet” missions have had no ameliorating impact on the behaviour of the participants in the Israel-Hamas-Hezbollah-Syria conflict). Adverse rulings in international courts have not stopped the PRC island-building and aggressive military diplomacy in the South China Sea. The examples are many. Given that state of affairs, States and other actors increasingly turn to force to pursue their interests.

Whatever restraint was promoted by the laws of war and international conflict-resolution institutions during the post-Cold War interregnum has been abandoned or become exceptions to the new anarchic rule. One might even say that the international community is increasingly living in a state of nature, even if the terms “anarchy” and “state of nature” are loose interpretations of what Hobbes wrote about when he considered the Leviathan of international politics. But the basic idea should be clear: the liberal internationalist system has broken down and a new order is emerging from the conflict landscape that characterises the contemporary international arena.

Again, the friction is not just things like the military confrontations between Russia, Russian and Iranian-backed proxies in the Middle East and the PRC against a range of Western and Western-oriented nations in the Western Pacific. The BRICS have proposed to develop a single unitary currency to rival the Euro and are openly calling for a major overhaul of international organizations and institutions that they (rightfully so), see as made by and for post-colonial Western interests. But the question is whether what they have in mind as a replacement will be any better in addressing the needs of the Global South while respecting the autonomy of the Global North. My hunch is that it will not, and will just add another front to the moment of friction.

I shall not continue enunciating the reasons why I believe that we have arrived at an international moment of friction (e.g. cultural degradation and social vulgarisation, etc.). That is because I cannot specify what will be come given that push has now led to shove, nor can I offer a solution set to the problems embedded in and underwriting this sorry moment. What I can say is, just like the fact that we need to learn to embrace uncertainty in the transitional process since outcomes are not assured and guarantees cannot be offered (although some industries like tobacco, liquor, weapons and insurance all profit during times of uncertainty and market hedging strategies become the common response of risk-adverse actors to uncertain economic times, so can be calculated or anticipated), so too we must, if not embrace, then learn to prepare for an era in which friction will be the dominant mode of international transaction for some time to come.

For small countries like NZ, repeating empty mantras about foreign policy “independence” no longer cuts it even as a slogan. The moment of international friction poses some existential questions about where NZ stands in the transitional process, how it will balance competing international interests when it comes to NZ foreign and security policy, and about who to side with when conflict comes.

Because it will.

Forget the date. This is no April Fools joke.

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Article Link. “South America’s Strategic Paradox” in MINGA.

The Latin American multidisciplinary journal MINGA just published my article on “South America’s Strategic Paradox.” I was surprised that they wanted to do so because they have a very clear left-leaning orientation and my article was pretty much a straight-forward geopolitical analysis. This was the article that an editor of the New Zealand International Review felt was too broad in scope to publish. Go figure. Judge for yourself (the article is in English, with translation pending).

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About the Houthi Red Sea blockage.

The announcement that NZ has joined with 13 other maritime trade-dependent states in warning Houthis in Yemen to cease their attacks on commercial shipping in the Red Sea (particularly in the Bad-el-Mandeb Strait) got me to thinking of about some finer points embedded in the confrontation (beyond wondering if NZ will send a warship to join the US-led task force being assembled to protect commercial shipping in the Red Sea. After all, joining group communiques is cheap. Putting grey hulls into remote conflict zones is not)).

First, even though they are also maritime trade dependent, India, Indonesia and the PRC, among other Asian states, have not joined the coalition. This suggests that protection of freedom of navigation is not the sole criteria behind the decision to join or not, something confirmed by the fact that other than Bahrain, all of the signatories to the statement are 5 Eyes partners, NATO members or NATO partners (like Australia, Japan, New Zealand and South Korea). Bahrain is the location of the US Navy Central Command, the US Fifth Fleet and the combined task force (CTF-153) responsible for overseeing “Operation Prosperity Guardian,” the name given to the anti-Houthi maritime defense campaign. It has a strained relationship with Iran due to its suspicion that Iran foments unrest among it’s Shia majority (which is ruled by a Sunni aristocracy). Like many Sunni oligarchies, it sees the Houthis as Iranian proxies.

Some Muslim majority states may have declined to join Operation Prosperity Guardian out of caution rather than solidarity with the Palestinians. Anti-Israel demonstrations have broken out throughout the Islamic world, so reasons of domestic stability and elite preservation may be as much behind the calculus to decline as are sympathies with Gazans or Houthis. Conversely, nations that are not as dependent on Red Sea maritime routes (say, in the Western Hemisphere) may see little to be gained by taking sides in a conflict that does not involve their core national interests (matters of principle aside).

The name of the Operation suggests that is focused on maritime security and freedom of navigation. Twelve percent of the world’s trade passes through Bad-el-Mandeb. There is an average of 400 ships in the Red Sea at any one time. The Houthis have launched dozens of attacks on Red Sea shipping since the Gaza-Israel War began using a variety of delivery platforms. The situation has the potential for expansion into regional war, and even if it is not, it is adding transportation time delays and billions in additional costs to the global supply chain, something that will sooner or later be reflected in the cost of commodities, goods and services.

But there is a twist to this tale. The Houthis claim that they are only targeting ships that are suspected of being in- or outward-bound from Israel as well as the warships that seek to protect them. They argue that they are not targeting shipping randomly or recklessly but instead trying to impede Israel’s war re-supply efforts (this claim is disputed by shipping firms, Israel, the US, UK and various ship-flagging states, but the exact provenance of cargoes is not subject to independent verification). They claim that their actions are justified under international conventions designed to prevent genocide, specifically Article One of the Convention on the Prevention and Punishment of the Crime of Genocide (given the wholesale slaughter of Palestinian civilians in Gaza since October 7) and point to UN statements supporting the claim that what Israel is doing in Gaza and the West Bank, if not a “complete” genocide, certainly has the look and feel of ethnic cleansing. The South Africa application to the International Court of Justice charging Israel with genocide in Gaza, now supported by Turkey, Malaysia, Jordan, Bolivia, the Organisation for Islamic Cooperation (OIC) and hundreds of civil rights organisations around the world, is also being used by the Houthi rebel regime (and alternate sovereign) in Yemen as justification for their attacks.

In essence, what has been set up here is a moral-ethical dilemma in the form of a clash of international principles–guaranteeing freedom of navigation, on the one hand, or upholding the duty to protect against genocide on the other.

Needless to say, geopolitics colours all approaches to the conundrum. The Houthis (who are Shia) are clients of Iran (home to Shia Islam), who are also patrons of anti-Israel actors such as the Shia Alawite regime in Syria, Hamas in Palestine, Hezbollah in Lebanon and numerous Iraqi Shiite militias. Iran (and through it its various regional clients and proxies), has strong military ties to Russia and the PRC (for example remember that Russia is using Iranian-made attack drones in the Ukraine). For their part, the NATO alliance and its partners are all major intelligence partners of Israel, as is Bahrain. So the confrontation in the Red Sea may not be so much about the moral-ethical obligations in defending freedom of navigation or resisting genocide per se, but instead is part of larger balance-of-power jousting in which the principles are extra-regional but the agents are in the Middle East.

New Zealand has already chosen a rhetorical side based, presumably, on its support for the principles of freedom of navigation and its rejection of the argument that the Houthis are doing the little that they can to resist genocide in Gaza. Should NZ send a warship to join the CTF-153 naval picket fence protecting commercial ships running the gauntlet at Bad-el-Mandeb, then it will have further staked its position on the side of its Western security partners as well as put its sailors in harm’s way. Some will say that it has placed more value on containers than the lives of Gazan children.

That may be a pragmatic decision based on sincere belief in the “freedom of the seas” principle, disbelief in the Houthi’s sincerity when it comes to resisting genocide (or the argument itself), concern about Iranian machinations and the presence of Russia and the PRC in the regional balance of power contest, indirect support for Israel or simply paying, as former PM John Key once said, “the price for being in the club.” Whatever the reason or combination thereof, it appears to the neutral eye that once again NZ has put facilitation of trade ahead of upholding universal human rights in its foreign policy calculations.

Perhaps the best way to characterise this approach is to call it a matter of prioritising conflicting principles in strategically pragmatic ways. Whether that puts NZ on the right side of history given the larger context at play remains to be seen.