Strategic Panorama 2009 - 2010 - IEEE

The global recession and its impact on international economic relations
Although this process of power diffusion and state withdrawal seemed
unstoppable in the 90s, the attacks of 11 September slowed it down by
putting security back at the centre of international relations. The new laws
aimed at combating terrorism and the new rise in military expenditure, particularly
in the United States, took us back temporarily to the past, when
the «high politics» of war and security took priority over the «low politics»
of the economy. However, the huge economic growth that followed the
crisis of 2001-2002 and the fresh impetus given to production and trade
by the emerging economies led by China allowed economic globalisation
to continue its spectacular progress. And with this new wave of liberalisation
the nation state’s scope for action was again narrowed, as reflected,
for example, by growing doubts about the sustainability of the Welfare
State in Europe and workers’ fears about industrial relocation and the
outsourcing of services, phenomena which endangered their jobs and
about which there was little that the state could do.
But the global economic crisis appears to have brought this process
to an abrupt halt, ushering in a still subtle deglobalisation that is accompanied
by a return of strong nation states. The bail-out programmes for
the financial system, the huge fiscal stimulus packages the countries
have implemented and regulatory reforms in economic matters—which
are still underway—have served to strengthen governments, which now
consider themselves entitled to curb the market excesses which the
crisis has put on the table. Furthermore, higher taxes to square public
accounts will be necessary in the medium term and everything appears
to indicate that the post-crisis world will be more regulated in many
aspects of economic life, but above all in relation to the financial markets.
Lastly, public opinion in most of the countries, which was already
critical of the economic globalisation process as it considered that the
benefits of liberalisation were distributed very unequally, will begin to
demand more forcefully a bigger role for public policies. Therefore, as
paradoxical as it may seem, the advanced countries that promoted globalisation
and lost influence as it progressed will recover power and legitimacy
thanks to the first major crisis of globalisation. In short, although
it still too soon to judge to what extent this crisis is substantially altering
the power balance between state and market, what can be affirmed is
that it has marked a turning point in globalisation that is facilitating the
return of the nation state.
The other major change precipitated by this crisis is the G-20’s
takeover from the G-7/8 at the helm of the world economy. The emerging
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