Economic Wars

Since the end of the Second World War, the big powers have concentrated on military might and the build up of arms and ammunition. The Soviet Union on one side and the USA on the other side have spent much public resources over the last six decades on stockpiles of missiles, submarines, and other logistics to become super powers.

What is now evident is that while the super powers were building up militarily, some non descript poverty stricken economies such as India and China were pouring as much resources as they could into economic capacity building over the last four decades.

The irony is that the remaining protagonists of the Second World War continued the war through arms build ups and missile pointing across the oceans, while some developing economies changed the parameters of the war from firepower to economic growth and dominance.

These economic wars have always been around from time in memorial. Today the wars have evolved and become more sophisticated under the guise of the World Trade Organisation (WTO), the North Atlantic Free Trade Area (NAFTA), the European Union (EU), the Association of South East Asian Nations (ASEAN), the South African Customs Union (SACU), the Economic Community of West African States (ECOWAS), the East African Community (EAC), the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA) to name but just a few.

The WTO grapples with development concerns of various nations. North versus South, East versus West, Developed versus Developing, Socialist versus Capitalist, and the list of economic battles goes on. Free movement of human resources in addition to free movement of goods and services is an ongoing debate. The battle on Intellectual property rights continues to rage between East and West. The patenting of technologies has opened up new conflicts in the Genetically Modified Organisms domain. The debate on private ownership of technologies versus global or public ownership is constantly being fuelled.

The EU continues to battle to get African, Caribbean and Pacific (ACP) developing countries to sign new Economic Partnership Agreements (EPA) in replacement of the unilaterally cancelled Cottonou Agreement. ACP countries are continually harassed by the implications of not signing an EPA with the EU, and spend sleepless nights trying to negotiate a position that will favour economic and social development in developing countries.

The impact of the SACU in southern Africa indicates how domestic growth has been stifled over the last three decades. Lesotho, Swaziland, Namibia, and Botswana display themselves as satellite states of the South African economy with no real domestic economic activity visible on the ground. Much of the economic activities in these satellite states benefit the South African economy to the extent that the launch of a Commercial Court in Lesotho would probably not yield much positive results in supporting the local private sector because many of the significant companies on the ground are subject to South African jurisprudence.

COMESA poses a new set of challenges as the Customs Union goes into operation in 2010. What will be the trade balances amongst member states? How much equity in the regional trade will each member state take up? What mechanisms will each member state use to fast track domestic economic development without undermining the spirit of the Customs Union? What constitutes fair trade in the region? What constitutes a level playing field for trade related activities amongst member states?

These and many more questions need to be asked and need to be answered by our Governments and our private sector. As the doors of free trade begin to open the battle lines for economic wars are soon established.

In the developed world, subsidies were put in place to ensure that strategic industries were propped up and kept operational. These include agriculture to ensure domestic food security, the military and armed forces to ensure protection of the lives of all citizens, education to uplift the value of domestic human resources, health to ensure a physically higher quality of citizen, and government to develop a managed society that follows some basic rules and regulations which foster peace and prosperity.

All of these measures promoted harmony amongst people in a community and set a focus on domestic economic and social development. These measures also invested in a higher capacity for the developed countries to exploit other less developed countries with special know how and developed resources such as money, insurance, knowledge, and other parameters.

Each country in the global economy is an army of producers of goods and services. Some are very efficient such as those in the East. Some are very intellectual such as those in the West. Some are very enterprising such as those in the North who have to face cold winters. Some are very laid back such as those in the South where resources are abundant and the weather is very kind.

The economic wars are more acute and strategic in the East and North. They are patronisingly considered in the West where development is more prevalent. They are largely dismissed in the South where Africa is located.

The economic wars will escalate rapidly as the worlds resources become scarcer with the last deposits residing on the African continent. The last thirty years has seen armed conflicts across the continent seemingly due to political clashes amongst people, but more truthfully, as a result of the scramble for resources which are needed in the developed world.

Africa currently holds vast reserves of diamonds, gold, oil, copper, and other minerals sought after by the developed world. The economic wars will soon be at our doorsteps and we had better be prepared to engage in a manner that will bring prosperity and equity to our people.

The world has become a business market place where economic wars are high on the agenda and the casualties are dead economies, because there is no option for the taking of prisoners.

Published 9 March 2010