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COLD WAR 'TWO': 'MADE IN' LABEL AS INSTRUMENT

Imtiaz A. Hussain | Published: June 03, 2019 21:31:06 | Updated: June 11, 2019 20:46:08


There is no Winston Churchill to announce an "iron curtain" dividing the world today, as in 1946, when his imaginary line from Stettin (on the Baltic) to Trieste (in the Adriatic) depicted what came to be called the "east-west" Cold War fault line, from 1947 to 1987. Another dividing line may be splitting the Pacific Ocean if any visionary wishes to conjure new labels for the fractious China-US relationship. It will not be as precise as Churchill's, nor as European as the imperialist Churchill wanted his to be. Nevertheless, Europe remained the only location where the Cold War remained 'cold'. Elsewhere, the "east-west" conflict simmered: in Africa (from Colonel Muammar Gaddafi's 'Islamic socialism' to the more nationalistic socialism or 'Baathist' philosophy of Gamal Abdel Nasser, Hafez Abdul Assad, and Saddam Hussein of Egypt, Syria, and Iraq, respectively), Asia (with battlefronts from Korea through Taiwan to Vietnam, with socialist sympathies in India), and Latin America (where Fidel Castro's revolutionary identity still lingers, albeit in subdued hues).

Churchill's "iron curtain" metaphor for any China-US spat already draws attention of both an old force (academic) and a new (global media). Just in this 2019 spring-summer cusp, many have actually used the "cold war" term, in lower case, to refer to it. The Economist's May issue uses it as the cover story; and Times's May 17 issue pares that war down to its leading weapon, trade; while the Foreign Affairs May/June issue implicitly diagnoses, through several contributors, how the United States lost it, for example, George Packer argues how conducting two of "the longest wars"  (Vietnam and Afghanistan, chronologically), ensnared the United States; William J. Burns posits US diplomacy had become "the lost art" by not capitalising on what the US  Department of Defence had dubbed "the military technical revolution" in 1992, based on "networks of sensors and shooters" (artificial intelligence); similarly Christian Bose identifies "two decades of war after 2001" and "reductions in defence" spending as the causes; while Calvert W. Jones laments that deploying "all the king's consultants" to befriend authoritarians never helped deliver either the security the United States wanted nor the ultimate prize: democracy.

Any China-US conflict will not be easy to profile, let alone produce the decisive victor as Cold War One did with the United States in 1987: going eyeball-to-eyeball with each other militarily, the Soviet Union, even with more nuclear missiles, blinked because it was financially exhausted. So too was the United States in the 1980s, but the first blink mattered: it was all the US economy needed to rebound in the 1990s.

Fittingly, through a spate of free-trade agreements (FTAs), the United States made the 1990s the longest 20th century economic growth phase. Here, too, "all the king's consultants" messed it up by unnecessarily globalising war against Muslims on the pretext of isolated terrorist actions (in some cases, with US-trained fingerprints, such as with Taleban, against the Soviet Union in Afghanistan). To cut a long story short, two mortal wounds crippled US chances: the greater security-tinged US lust over democratic or economic interests, and its independently vanishing competitive economic advantage. Whereas the former traces its roots to the military-industrial complex, built as a result of the December 1941 Pearl Harbor attacks, the latter indirectly flowed from security priorities during both Cold War One (with the first 20th century US trade deficit in 1971 crushing the original gold-standard-based Bretton Woods precepts), and Cold War Two (by not applying US artificial intelligence comparative advantage to capture world markets).

With trade incongruities firing the opening shots of Cold War Two, soft power is more likely to determine the outcome than hard (military), inverting the Cold War One order. Those shots were the tariffs President Donald J. Trump imposed upon China (Canada, European Union, and Mexico) in 2018, (then again in 2019, as with Mexico too). In spite of protracted negotiations, no resolution with China is in the forecast. Neither side apparently wishes to reconcile: trigger-happy Trump, to strengthen his 2020 electoral credentials when they are falling apart elsewhere; and China's Xi Jinping, since he already has much of the rest of the world wrapped around his fingers, like the Belt Road Initiative (and with it, a debt-trap snaring more countries increasingly), the Shanghai Cooperative Organisation (through which a military framework has been outlined including the erstwhile US adversary, Russia), and the Asian Infrastructure Investment Bank (in place to eventually eclipse the World Bank and the International Monetary Fund out of business).

Just as with Cold War One in the 1940s, how will the rest of the world line up with moods? Then it was ideological: socialism versus capitalism, or authoritarianism versus a world of democracy. Today it is materialistic, since that became the most powerful dynamic between the end of the Cold War One in the 1980s to communist China institutionalising capitalism (all 1+ billion of its people embracing it more succulently than any US counterpart), by the 2008-10 Great Recession: by hijacking a US tool, trade, China laced it up with low-waged production of many products. This "made in" label displaced comparative advantage as the most powerful economic tool irrespective of US FTA girding against China's non-market trade distortions.

This "made-in" label has had a long and winding road to become a game-changer. Many emerging countries have climbed into that group upon the strength of their low-waged exports. Those exports rely heavily on western markets: that is where the money was when China was still climbing the ladder to the top; and it is where the demand lay, as western countries preferred instead the consumptive consequences of post-industrial society (that is, let others do the factory work, while they seek the hedonistic lifestyles of golf, travel, tourism, fashion, and sports).

China became the model the United States once was. Low-waged "Made in China" products packed US stores increasingly from the 1990s, just as they did in other industrialised countries. Local industries were seemingly anesthetised. Further down that same power ladder, other countries independently played the same card. From Bangladesh to Cambodia, India, Malaysia, Pakistan, the Philippines, and Vietnam, among others, a huge middle class emerged across Asia, big enough to help downsize DC (developed countries) market clout. Without even accessing China's massive market, they have built their niche, played China off against the United States (like no country could the Soviet Union and the United States during Cold War One), and carved promising futures for themselves with two ace cards in hand: the untapped China market, as already noted; and a Plan B option of diversifying to higher-end production, if and when the low-wage industries dry up. China needs them, as much as the United States needed other African, Asian, and Latin countries during Cold War One. Just as the democracy/capitalism preference then without even becoming democratic/ capitalistic as the United States desired was good enough for the United States, so too is the "Made in" label compatible with China's strategic interests of claiming the top-spot is playing the music today.

There are lessons for Bangladesh right here: if building markets is the name of the game, diversification and FTA expansion vie to become the very strategic keys it needs to capitalise on the four blowing winds today. Opportunities like these do not come knocking every day.

Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.

imtiaz.hussain@iub.edu.bd

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