A transformational shift in global power is not on the way; it has already happened
Three recent figures tell us that our future is here. We are no longer talking about direction signs indicating some distant destination, these ones say: “Welcome, you have arrived.”
The figures come from Wall Street, Rio de Janeiro and the US Congress and tell us that systemic shifts in global power are all happening, right now.
The research firm Capital IQ, part of Standard and Poor’s, estimates that global stock offerings are down 15 per cent, and bond issuance down 25 per cent, on last year’s figures. Remember that 2009 was not a particularly great year for stock exchanges anywhere.
Trading in shares listed on the New York Stock Exchange was down from 2009 levels by 11 per cent in July and by almost 30 per cent in August. Citigroup analyst Keith Horowitz told the New York Times earlier this month that
“the summer was horrible for everyone . . . it’s coming back a little bit . . . but nowhere near enough to make up for what happened in July and August”.
Many now predict a substantial drop in Wall Street profits and bonuses this year, with more pessimistic forecasters talking of layoffs of up to 10 per cent of staff in US financial services later this year or early in 2010.
The view from Rio de Janeiro is somewhat different where Brazil’s state-owned energy conglomerate Petrobras recently sold more than €50 billion worth of shares in the world’s biggest-ever corporate issue. Brazil’s development bank BNDES is reported to have increased the government’s holding in Petrobras from 39 to about 50 per cent.
Brazil ranks fifth in terms of mergers and acquisitions and seventh in terms of rights issues in world tables. Petrobras, already the world’s fifth largest publicly listed oil and gas firm, plans to invest almost €170 billion over the next four years in its oil, natural gas and biofuels businesses.
It is hardly surprising that Dilma Rousseff, who is widely tipped to succeed President Luiz Inácio Lula da Silva in next month’s presidential election, cut her governmental teeth as his energy minister.
South America’s economies are collectively twice the size of India’s, and if you expand the picture to cover all of Latin America, including Mexico, you come up with an economic giant that is almost as big as China and growing just as fast.
Although the rise of new powers and the relative decline of older ones is a familiar historical narrative, the change in the actual nature of power we are now witnessing is something altogether new.
The research service of the US Congress reported at the beginning of September that global arms sales fell by 8.5 per cent in 2009 to their lowest level since 2005. The US still dominated those sales, accounting for almost 40 per cent of the total. But as any business will tell you having a dominant position in a shrinking market offers cold comfort.
While China, India, Brazil and other expanding economies are becoming new centres of our global economic order, none of them are expansionist military powers.
China and India may both be nuclear powers with significant armed forces but defence spending, unlike in the US, is well down their list of priorities.
The emerging economic powers do not seek to threaten each other, nor anybody else for that matter.
Some, such as China, never really bought into the post-cold war “Washington Consensus”, which held that the keys to economic success lay in unfettered free market policies with a shrinking role for the state. Others, such as Brazil under President Lula and most of Latin America, have actively rejected such policies.
All place significant emphasis on reducing poverty, increasing access to education and investing in new technologies.
Brazil is a world leader in ethanol, China in wind and solar power, and India a global software giant which is connecting an additional six million mobile telephone subscribers every month.
Ireland sits in the wreckage of its economy as though the world had not changed, as though consumer demand in the US and across the EU will suddenly pick up tomorrow and before we know it unemployment will vanish and the good times will roll once again.
Where is the European media’s coverage of the Brazilian presidential election? Where are our new language courses or our the new diplomatic and commercial missions?
If Ireland is to emerge from the economic hole our Government has worked so hard to excavate, we will have to attract at least as much interest from today’s economic giants as we once did from yesterday’s.
As the UK struggles to square the circle about how it could finance two aircraft carriers it cannot afford, does not need, and in any case lacks the aircraft to equip them, Nicolas Sarkozy concentrates on rounding up fewer than 15,000 Roma gypsies, Asian and Latin American leaders and businesses are forging the future.
A future that has already begun.