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The security threat to the global economy – Economist

April 07
16:12 2017

THE global economy faces many threats, but security, or geopolitical risk, is perhaps the most profound; it was a world war, after all, that ended the first great era of globalisation in 1914. As pointed out in this blog before, there are some parallels with the pre-1914 era; globalisation seems to provoke a reaction because of the changes it thrusts on to the social and economic order.

Security issues are particularly fraught at the moment, with the chemical attack in Syria revealing the ideological divide at the United Nations. But it is not just Syria; the world also seems unable to deal with the excesses of the North Korean dictatorship, with its assassinations and missile launches.

This helplessness recalls the 1930s when the League of Nations, the great hope for security co-operation in the aftermath of the first world war, proved ineffectual in the face of Japanese, German and Italian aggression. Sanctions were imposed after Italy’s invasion of Abyssinia, but in a half-hearted and ineffective manner.

The underlying problem was that the dominant military power of the day, the United States, had refused to join the League; Britain and France were too traumatised by the Great War to contemplate military action; and Germany and Japan were determined to upset the existing order. In the end, the inability to contain Germany and Japan brought disaster on the world. We have something similar today. America has been chastened by its failures to establish stable states in Iraq and Afghanistan; Europe has almost no appetite for military involvement; while Russia and China are keen to upset the existing order (the latter is more conservative than the former but still wants to assert its rights in the South China Sea).

Continue Reading At The Economist

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