New Economic Order

Globalisation and then Covid

As regards WTO, it is a product of the mindset that, after 2 catastrophic wars, the only way to peace
and prosperity is through global centralisation with multilateral institutions. You are well aware that
post World War II, the global power landscape was skewed in favour of the West. They had an upper
hand in devising the structure of those multilateral institutions in a hue of Western values rooted in
Christianity. In my previous letter to you, I had remarked that, for them, it was in their interest that the
idea of globalisation, spread. Since with colonisation, ‘The West’ had demolished the East and
prospered, while having an edge over technology and ideas – what it then required was labour, raw
materials and factories to manufacture. Therefore, in the name of globalisation, the West devised such
mechanisms that made the East act as a source of provider of cheap labour, raw material supplier and
a hub of polluting factories, while it itself stood as a group of consumers and beneficiaries. To add to
this, globalisation would also help it to maintain and further cement its dominance and hegemony over
the world. Thus, the West portrayed globalisation, as the key to success, peace, and prosperity which
has been accepted globally as ‘God’s Gospel’ since the last seven decades.

But in the face of the COVID pandemic, leaders have realised that globalisation is not the only and
ultimate future. In fact, it made the blind fanatics of globalisation realise that there exists a downside
to the same. The idea, which acted as a freeway for seamless cross-border trade, acted as a prime factor for the elevation of an epidemic into a pandemic. Never before was it visualised by those
fanatics that, one day this globalisation itself, would be the greatest threat to the Bio-Security of the
entire humanity (including the West). Along with this, globalisation also blurs a nation’s self-identity
and results into coupling of economies in such a way that it makes the country’s economy a
bandwagon, without even knowing where the engine is headed. Today, the western economies are
facing the fallout of such coupling in a way, that even if they wish, they are unable to instantly decouple
with China. This, along with today’s unpromising status of globalisation, is decreasing the relevance of
multilateral institutions. Failure to perform the promised task at an appropriate time, again, is resulting
in loss of their credibility.

India and WTO

In the case of WTO, it too is on the verge of extinction with its inability to perform even raison d’etre
tasks. Today, though India has strived to resurrect the feeling of global co-operation at WTO, yet at
heart, India must know that these structures are created by the West which still has an edge over her
operations, legislation, enforcement, and verification processes. Additionally, a few
undertakings/commitments made by India during the inception of WTO, have been unfavourable and
will be a bigger hurdle for India in the future (E.g. Agricultural subsidies). This hurdle is today
personified in from of twelve congressmen of US urging Mr. Biden to hold India accountable at WTO
for its ‘trade-distorting practices’. And in the current scenario it is highly unlikely that the West would
agree for reforms easily; (something that the Modi government has faced on the issue of IPR waivers
for vaccines) and recalibrate the institution as fair, just and equitable. Hence, working in this direction,
will really not help much.

New Economic Order

Further, as the global political order is subject to transformation by shifting its nature from
unipolar/bipolar to multipolar, similarly the economic order too, is subject to transformation. In the
New Economic Order, which is in the making, the philosophy underlying the faith in the potential of
trade, might be deformed. The trade may not be seen as a goal, but as a means to subsist. Long
distance trade as a part of supply chains, which ultimately serves the West will be substituted by
regional bi-laterals and pluri-laterals. In such a scenario it is uncertain as to what and how much of a role, WTO-like other multilateral bodies, may play or be effective. Deciphering this, instead of India
getting into RCEP like multilateral trade pacts, she is correctly moving in the direction of bi-laterals
like: India-UAE, India-UK, India-Australia, India-EU and India-US.

Along with this, the current export regimen has the policy to boost exports with multiple layers of
subsidies and facilities which need to be recalibrated for the new economic order. If we get into the
arithmetic of calculating the cost to promote exports and expended to earn a dollar, it would surely be
mind-boggling. To boost exports, the country is providing specialised infrastructure in the form of
EEZs, subsidised power, cheap labour, tax holidays, tax exemptions, cheap raw materials, logistics
support, etc which adds burden on the coffers of the Government of India, and which is ultimately
borne by her citizens, for serving the West. This is one of the forms of drainage of wealth and labour
of India. And the irony is that those very citizens are deprived of the top notch produces which are
exported and thus have to experience a lower standard of living, which is further marred by high
inflation.

New Financial Order

Much of the current global financial order was shaped by the principles set in 1945 by the Bretton
Woods agreement. By this, the USD was globally established at par with gold. Due to this, it earned a
huge trust and was accepted as a reliable medium of trade. Later, the gold standard vanished but the
trust and dependency on the USD, persisted. It became imperative for all nations wanting to trade, to
earn and accumulate the USD. At times, lack of USD in its forex reserves even posed a threat to their
survival and stability, like what Sri Lanka is experiencing currently. Slowly and steadily, the world has
now recognised the slavery of the USD. But, considering the direction of the current transition, this
slavery of the USD may weaken and the imperative to accumulate the USD may become less intense.
And here’s why: Over the last decade, the strong underlying faith in ‘The US$’ is dwindling which can
be observed from the stagnated trajectory of China, Japan investment graphs into the US treasury
bonds. Frequent weaponising of the dominance of the USD in the form of sanctions, has depleted the
trust on it. To circumvent these sanctions, many alternatives to the western financial systems are on the
horizon. The advent of cryptocurrencies also poses a threat on the monopoly of the USD. Deciphering
these threats in advance, the current once in a lifetime monetary measures of the US FED to allow high inflation, high interest rates, tapering and reducing the size of FED’s balance sheet, are in place –
which is a clear indicator of the perceived fear that the US$ has never ever faced in its lifetime. Such
measures aim to suck as much US$ as possible and to create a cushion to safeguard the US economy
in a scenario in which a sudden plunge of faith triggering a steep slide in its rates would occur. Now, if
once that plunge occurs and the faith fades, the principal reason to earn and accumulate the USD will
cease to exist.

While touching upon these four insightful subjects namely: Globalisation and the Covid pandemic,
India and the WTO, New Economic Order and the New Financial Order – I wish you ‘शुभ मंगल कामना’ for
your future endeavours in making India economically sovereign and ‘समृद्ध’ as the BHARAT, which
ultimately flourishes ‘संस्कार’ and Spirituality.

May every soul be uplifted; may every soul live innocently and allow others to live innocently, too.

Dharmalaabh