Asharq Al-awsat English https://aawsat.com/english Middle-east and International News and Opinion from Asharq Al-awsat Newspaper http://feedly.com/icon.svg

The Crisis Facing the Idea of 'Economic Boycott' Today

The Crisis Facing the Idea of 'Economic Boycott' Today

Wednesday, 26 February, 2020 - 10:45

The interdependence of the world’s economies has received unprecedented attention in wake of the outbreak of the new coronavirus. The observation, repeated matter of factly today, deals with the decline of China’s GDP growth and its consequent impact on decline in the price of oil and increase in the price of gold.


This, in turn, will impact several countries and economic sectors, as well as millions of people, in addition to hundreds of millions of Chinese. Accumulated debt has hit their companies, whose inability to pay their employees’ salaries and the price of imported supplies has exacerbated. Millions of small and medium sized factories are now in danger of bankruptcy…


The Christian Science Monitor listed some of the links between China’s economy and other economies: in Cambodia, textile factories depend on China for more than half of their primary resources, and some of those factories may be forced to close as a result. A large portion of Australian exports, from natural gas to beef and seafood, go to China, meaning that a slowdown in the Chinese economy would reduce demand for Australian goods.


Car manufacturers all over the globe are worried about the negative effects: Nissan in Japan and Hyundai in South Korea were forced to reduce production due to a shortage of parts supplied by China. In Europe, Fiat Chrysler has closed, though it said only temporarily, one of its factories in Serbia for the same reason. Jaguar Land Rover warned that it might face a supply problem if the Chinese crisis goes on for a few more weeks.


High-tech computer and electronic companies were also affected. This includes Apple, which relies on Chinese factories and materials to manufacture the iPhone. To make matters worse, its retail stores were closed, keeping in mind that China is now the world's largest market for Apple smartphones. In Britain, the luxury clothing brand Burberry has been paying the price of the collapse of its Chinese branches in the past few weeks, and it is estimated that further collapse will occur in case of a drop in the numbers of Chinese visitors abroad…


The big picture, as the Christian Science Monitor concludes, is that global economic growth will surely be affected after it was relatively reinvigorated because of the decline in the intensity of the global trade war between the US and China.


The globe’s increased economic interdependence (in contrast to what is happening culturally and politically) first began with globalization in the late 1970s and early 80s. The Soviet camp’s collapse at the end of that decade provided a strong push in this direction: instead of calls for separation from the global capitalist system, integrating into it was required. Theories advocating the curtailment of relations with the outside world, self-reliance and the substitution of imports with nationally manufactured goods fell apart.


In the “third world”, the isolationist ideas, meant to allow countries to rid themselves of “dependency”, fell apart as well. The debt crisis in Latin America, where these ideas flourished, played a major role in that, as did the failure of similar experiments in countries with which cooperation and exchange were supposed to take place.


The countries of East Asia, in contrast, were developing a different approach, one which was fated to win: “manufacturing via exports”. Imitating the Japanese precedent, the slogan emerged: What is required is not separation, but integration. The "national market" became legend, with emphasis put on open borders and "invading" developed countries with commodities similar to their own, except that they were much cheaper. East Asians went further than the Japanese by not imposing any protections of any kind. The abundance of cheap labor in their countries was the source of protection on which they relied.


Thus, markets became intertwined and commodities and their materials did as well. Now, one who intends to punish one entity ends up also punishing others along with it and may even end up punishing oneself in the end.


Ideas promoting economic boycotts lose, in this case, most of their viability. The example of South Africa, which is often used to prove the success ofboycotts, is different: the popular call for boycotting the apartheid regime had started in Britain more than half a century before. However, it did not become reality until the mid-80s. The reason was that Mikhail Gorbachev became the secretary general of the Soviet Communist Party in 1985. Months after that, he withdrew his troops from Afghanistan.


The Cold War fronts became relaxed. Western governments, which had been mindful of South Africa’s strength as an ally in the battle against the spread of Moscow’s influence in Africa, became more concerned with South Africa’s racism and the eradication of this phenomenon.


The members of the European community and the Commonwealth were the first to respond to this major issue, with a few sanctions imposed in 1985. The American Congress issued the bill against racial prejudice, imposing more extensive sanctions that were to be lifted only after South Africa complied with five conditions, the implementation of which would lead to their regime’s disintegration. Ronald Reagan tried to stand in Congress’s way and failed. That same year, the final blow was delivered by the Security Council, which banned investment in South Africa. The decision was meant to pressure the apartheid regime into negotiating its self-dismantling.


In other words, the consensus of the whole world, without exception, especially western countries, was a prerequisite for the boycott’s success. Furthermore, this happened 35 years ago, when economic interdependence was far weaker than it is today. Today, boycotts can cause minor damage, but their success depends on the existence of a regime like North Korea’s that does not care about the outside world in the first place.


Other opinion articles

Editor Picks

Multimedia