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How to survive the economic crisis and what will happen after it

President of the Association "Getting to know Eurasia" Professor Antonio Fallico

President of the Association “Know Eurasia” Professor Antonio Fallico

A photo: Valery CHUMAKOV

Due to the difficult geopolitical situation, this year the Verona Forum is being held for the first time not in Italy, but in the capital of Azerbaijan.

The President of the Association “Know Eurasia” Professor Antonio Fallico in his speech explained the change of the “address” of the event:

“Our annual Eurasian Economic Forum is not held in Verona for the first time.

The holding of the Verona Forum in Baku this year is not a random or opportunistic choice, but the beginning of a new stage in the development of our forum as such, which has already reached maturity and seeks to anticipate the fundamental role that the Eurasian mega-region can play in the short and medium term in the international economic and social development.

Why Baku? Because historically and culturally it is located in the center of the space between the Atlantic and the Pacific; because geopolitically it is located between Asia and Europe, between the ancient and the new “Silk Road”; and because Azerbaijan is a crossroads of trade routes between Europe and China, South Asia and Russia.”

The past year has been especially rich in events and changes. As Antonio Fallico noted, we are witnessing an acceleration of processes in the world economy that previously developed weakly or even imperceptibly.

These changes in the economy apparently matured slowly, but the turning point was the 2008 global economic crisis.

“This was not an accidental or cyclical crisis, but a systemic one. The blow was dealt to the system itself, that is, globalized neoliberalism, which could not withstand the blow, had to react in an atypical way (recall the famous quantitative easing, quantitative easing) to keep the economy afloat. These timely actions made it possible to save what could be saved, plug the holes, move forward, even if the limits of these measures and the risks of new serious problems were seen, which, in fact, appear little by little, one after another. This refers, for example, to inflation and other factors hindering growth and development,” said Antonio Fallico.

In his opinion, 2008 revealed the need for a profound change in the neoliberal development model and at the same time began the formation of a new economic system.

What will this model look like? Will it be unique?

“I think we don’t have the answers yet. Anyone who could give them can certainly claim the Nobel Prize in Economics right now. At present, we can only predict some partial elements of the outline of the future economic model. I am not saying that both neoliberalism and globalism will disappear. Of course not. They will simply change their nature, lose their monopoly position, which was indisputable a few years ago, “Fallico believes.

One of the most relevant modern trends, which we have seen accelerating over the past 12 months, is the regionalization of globalization, rapidly responding to the need to both shrink production chains and rebuild more neutral supply chains.

Now this trend is becoming more and more evident.

What will be the meaning of this term? It will claim to combine two trends: the abandonment of globalization in the previous version, which perceived the world as a single single market governed by converging and uniform rules and regulations, and the growing segmentation of the world into geographic macro-regions. Within these macro-regions, there is a tendency to create and develop uniform norms and rules. In other words, within these vast territories, the economy and trade tend to be maximally liberalized, but outside, various kinds of protective systems are being built.

“We can see, for example, the consolidation of the Atlantic Pole, which includes mainly Western Europe and North America, with various additions, for example, Australia and Japan,” the speaker said, “We see the Chinese pole, which has become the focus of the One Belt, One Road project. or the New Silk Road. A pole with its own interests is emerging around the Persian Gulf (the role of the Cooperation Council of the countries of the Persian Gulf is significant here); India, with its nearly 1.5 billion people, is another hub and will soon become the world’s second largest economic power after China. We see the increased role of the Eurasian Economic Union, which in one way or another attracts most of the countries of the former USSR. We see the expansion of spaces for regional cooperation in Latin America and Africa.

In this context, in recent months we have seen the consolidation of various international organizations, including the BRICS and the SCO.”

BRICS has gained new development potential. There is a marked difference between the preparation and outcome of its last summit, held at the end of June 2022, as between a mere advisory organization as it used to be, and a platform for aligning a new type with development potential and ambition in the commercial and investment sectors. If earlier the expansion of the BRICS was a hypothetical prospect, now Argentina and Iran have filed an official application for membership. Saudi Arabia, Egypt and Turkey have already begun to move in this direction. Fallico noted that the only ones missing there are Indonesia, Nigeria, Pakistan and, with some reservations, Mexico, in order for the structure to bring together the higher powers – / economic, political and demographic, global and regional scale – outside of the Western context.

Could this have been imagined a year ago? Not.”

Can this development trend affect the economy and finances? Still, especially if we analyze the various ideas and initiatives that were voiced at the recent BRICS summit, including the discussion of payment and investment mechanisms.

Current events aimed at the formation of new global economic models are not swift and even less linear. Even within the mega-regions, there are contradictions and strong competition.

When studying Western trends, important differences can be identified. While in the United States fighting inflation leading to higher interest rates by the Federal Reserve is a priority, in Europe and Japan, where inflation has not been observed for four decades, interest rates remain relatively low while maintaining economic growth marked by very high prices for raw materials, in particular for energy and food. As a result, the dollar strengthens, while the pound sterling, the euro and the yen fall, which directly affects other sectors of the economy. For example, it is planned to transfer factories and production sites from Europe to North America.

The professor noted an important and priority trend: national egoism begins to prevail over the common interest, which can be seen, for example, in the opposition of interests in the dollar/euro binomial. Everyone is starting to play their game, not only Western countries, but also China, India, Arab countries and many others.

The pessimistic view of a destroyed and divided world is not without an alternative.

We can get out of the systemic crisis that has been developing since 2008, with ups and downs, by accepting a multipolar world, but without “exceptional” countries or vassals or even colonies, recognizing the interests and economic and geopolitical role of each country and group of countries without discrimination and exceptions .

Moreover, the absence of discrimination does not mean the absence of competition.

Only in this way will it be possible to overcome the current negative context and the untenable neoliberal economic model, and at the same time ensure the security and prosperity of the planet. Here the decisive role is played by Greater Eurasia, stretching from the Atlantic to the Pacific and Indian oceans.

What is the result? Where to move and what to do? According to Professor Fallico,

the business world, with its industrial, commercial, financial and economic structure at the international level, must direct its energies to try, despite today’s difficulties, to unite and not to divide, to create and not to destroy, to bring wealth, prosperity, and not poverty and desolation. . Economic diplomacy can and should force the global political and geopolitical superstructure to share the urgency of launching a multipolar strategy to ensure the salvation of planet Earth, the security and prosperity of mankind.

The prospect, of course, is difficult, but it exists and, in fact, is more attractive than the current model, which is outdated, rusted and has become a closed geopolitical system.

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