Currently, the Global North appears to have no hesitation in dominating the marginalized and economically less developed world. This approach is casting a long shadow on developing countries.
This course of action has led strategic analysts from the developing world to refer to this evolving scenario and point out that developing countries need to urgently cooperate to better struggle for their shared interests in achieving world peace and sustainable development.
One of the activist analysts- J.K. Sundaram has drawn attention to some interesting dimensions. He has observed that during the first Cold War between the US, NATO, and other allies, on the one hand, and the Soviet Union and its allies, the former prided itself on sustaining economic growth, especially during the post-war Golden Age. However, it appears that since the 2008 global financial crisis (GFC), successive governments – led by Obama, Trump and Biden – have all strived to sustain full employment in the US. However, real wages and working conditions for most appear to have have suffered. It has been noted that among monetary authorities, the US Fed’s mandate includes ensuring full employment, but, without the US-Soviet rivalry of the first Cold War, Washington appears to no longer seek a buoyant, growing world economy.
This has affected US relations with its NATO and other allies, most of which have been hit by worldwide economic stagnation since the GFC.
Since early 2022 there has also been overall interest increases- and that has contributed towards slower growth. This has happened in the United States unnecessarily. Stanley Fischer, later IMF Deputy Managing Director and US Federal Reserve Bank Vice Chair, and colleague Rudiger Dornbusch have however found low double-digit inflation acceptable, even desirable for growth. Since then, the US Fed and most other Western central banks have been fixated on inflation targeting, which does not appear to have has no theoretical or empirical justification.
Economists have pointed out that such current fiscal austerity policies have complemented such monetary priorities and compounded contractionary macroeconomic policy pressures. Many governments are also being ‘persuaded’ that fiscal policy is too important to be left to finance ministers.
Instead, independent fiscal boards are setting acceptable public debt and deficit levels. Consequently, macroeconomic policies are inducing stagnation everywhere. While Europe has primarily embraced such policies, Japan has not subscribed to them. Nevertheless, this new Western policy dogma invokes economic theory and policy experience when, in fact, neither supports it.
There is also another dimension. The US Fed’s raising of interest rates since early 2022 has triggered capital flight from developing economies, leaving the poorest countries worse off. Earlier financial inflows into low-income countries have now started leaving with great haste.
J.K. Sundaram has also underlined that the new Cold War has worsened the macroeconomic situation, further depressing the world economy. Meanwhile, geopolitical considerations increasingly continue to disregard developmental and other priorities. The growing imposition of sanctions has also reduced investment and technology flows to the Global South.
Meanwhile, most unfortunately, the weaponization of economic policy is fast spreading and becoming a normal dynamic.
In this context one needs to remember that there have been various dimensions of instability created by war and invasion- not only in Iraq and Syria but also in Afghanistan, Ukraine and Palestine. Unfortunately, after such fiasco, the US, NATO and others have not been seeking requisite support of the UN Security Council to endorse sanctions. They seem to have forgotten that their sanctions contravene the UN Charter and international law. Nonetheless, such illegal sanctions have been imposed with impunity. Such action has a particular denotation- might is right.
Such action has cast a long shadow on most of Europe now in NATO, the OECD and the G7. This has led to many western institutions increasingly undermining UN-led multilateralism, which they had set up and still dominate but no longer control.
Inconvenient international law provisions are ignored or only invoked when useful. Such unilateral sanctions have compounded other supply-side disruptions, as we witnessed during the Covid pandemic. This has at times aggravated recent contractionary and inflationary pressures.
We have witnessed how Western powers in their response to the evolving scenario have raised interest rates in concert. Such a measure has tended to worsen the ongoing economic stagnation by reducing demand without effectively addressing supply-side inflation.
All these more or less unilateral decisions have created obstacles in the ability of the rest of the world being able to reach internationally agreed sustainable development and climate targets. Poverty, inequality and precariousness have worsened, especially for the most needy and vulnerable.
However, due to its diversity, the Global South faces different types of constraints. The problems faced by the poorest low-income countries are quite different from those in East Asia, where foreign exchange constraints are less of a problem. Such an emerging scenario has persuaded IMF First Deputy Managing Director Gita Gopinath to observe that developing countries should not be aligned in the new format of the Cold War. Such an observation suggests that even those walking the corridors of power in Washington recognize the new Cold War is exacerbating the protracted stagnation since the 2008 global financial crisis.
Sundaram in this regard has referred to Josep Borrell – the second most important European Commission official, in charge of international affairs. This EU official apparently, according to Sundaram, “sees Europe as a garden facing invasion by the surrounding jungle. To protect itself, he wants Europe to attack the jungle first”.
Meanwhile, many – including some foreign ministers of leading non-aligned nations have started arguing that non-alignment is irrelevant after the end of the first Cold War. It is true that non-alignment of the old type – that we saw emerging in Bandung in 1955 and Belgrade in 1961 – may be less relevant, but a new non-alignment is needed for our times. Today’s non-alignment should also include firm commitments from members to sustainable development and peace. Meanwhile, the Non-Aligned Movement (NAM) remains marginalized. The Global South urgently needs to get its act together despite the limited options available to it.
At this juncture one must remember the important role that South-South cooperation can play in the coming years. The term South in this regard needs to be defined as regions in the world that have similar political, social and economic histories that are rooted in disparities that occurred during the colonial or imperialist era. The South is understood as an ideological expression of the concerns facing developing regions, which are increasingly diverse in economic and political experience.
South-South Cooperation (SSC) is a term historically used by policymakers and academics to describe the exchange of resources, technology, and knowledge between developing countries, also known as countries of the Global South.
It would also be correct to observe that the Global South is making increasingly significant contributions to global development. The economic and geopolitical relevance of many countries has grown. In the past, south-south cooperation focused on sharing knowledge and building capacities, but the countries of the Global South and new financial institutions have recently also become increasingly active in development finance.
This collaboration refers to the long-term historical project of liberating communities and nations from the remnants of colonialism, poverty, oppression and backwardness.
This cooperation can become the main organizing concept and set of practices in achieving historical change through a vision of mutual benefit and solidarity among groups that can be said to be 'disadvantaged' in the world system.
This would also convey the hope that cooperation through the development sector can be achieved by these 'disadvantaged' communities through their mutual assistance to each other, and the entire world order could be changed to reflect their shared interests from the domination of the Northern countries.
Muhammad Zamir, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance, can be reached at <muhammadzamir0@gmail.com>
