Geo-economics is the new geopolitics

Once we re-evaluate our situation through the geo-economic lens, we won’t be resorting
to quick answers

Aneela ShahzadOctober 22, 2021

The writer is a geopolitical analyst. She also writes at globaltab.net and tweets @AneelaShahzad

In the post-Cold War world, with the rise of transnational companies and with
the era of mass production aided with specialisation of different segments of
industry in different parts of the world, international borders have been blurred
in terms of economic activity. It is being said that economic activity is replacing
political activity, hence geo-economics is becoming the new geopolitics.
While there is no denying that commerce dictates a lot of our decision making, it does
not replace politics per se as politics caters to the ideological and social life of human
communities. Physical boundaries of states are not erased just because cross-border
economic activity has increased.
Nevertheless, geo-economics in itself needs to be understood as a new norm in
economics, which opens us to the realisation of how commerce is moving in new
ways in the 21st century.
China was India’s top imports source in 2020 despite the ongoing Ladakh crisis.
Despite its repeated calls for boycott of Chinese products, India imported $58.71
billion worth of goods from China in the year. This tells us two things: Firstly,
economic interdependence has become so huge that just like air and water it has to
keep moving across borders even if the people are at war or at ideologically opposite
poles. Secondly, it tells us that any amount of economic interdependency does not
mean that people or states will give up their political differences.
The lesson that has to be learned by everyone is that states have to create a perspective
on where they stand within the increasingly complex network of geo-economics,
because in today’s world no state can progress or even survive in isolation. Businesses
need to reevaluate their usefulness and relevance in the evolving global market and
widen their integration across borders and across continents.
In order to understand the swiftly changing world of our times it is vital to use the two
analytical tools of geopolitics and geo-economics, each keeping the other in context.
Unless we are able to have a new, broader and more open vision of our world, we will
neither be able to see where our future is headed nor will we be in a position to make
sound decisions as a state.
The age of globalisation is characterised by factors that include revolutionary
technological advances, specialisation in sciences, faster travel and shrinking
distances, and interconnectedness and interdependency. In this new air, not only do
people interact with each other more, but the frequency of nations interacting with
more and more nations has increased tremendously — turning politics into geopolitics
and economics into geo-economics.
After the Cold War, when the UN and its auxiliary organisations became more
powerful and penetrative, global trade and commerce was bounded in a unified
financial system. Although the unified platforms, controlled by the banking system
and international financial frameworks, opened traders and trading nations to many
advantages, they also impose certain sets of regulations which are usually kind of
biased towards dominant powers. But with time, because of sharing the same
platforms and networks, nations have learned how to play with the system. They have
learned how certain changes in trade policy can bring them enhanced profits, or can
affect the economy of their adversaries or even send a wave of change across the
globe — and even allow them to gain political leverage against their adversaries.
So, the US being the sole superpower, used geo-economic strategies such as imposing
trade deals upon states or regional groups that benefit it or employing more and more
economic sanctions on its adversaries because it controlled the financial system. Later
we saw the Russia-Ukraine gas dispute, in which Russia used its mineral resource to
obstruct Ukraine’s growing ties with the West and its bid to join the Nato; and now
we see the ongoing US-China trade war. All this amounts to the rise of geo-economics
as the new tool in state-craft and to states being more and more aware of their true
potentials with their human and natural resources.
This takes us back to the idea that “the way we see the world” always matters. In fact,
the reason why we have so many eras in history, philosophy and even in sciences —
and in human civilisation as a whole — is that in each era the way the dominant
thinkers saw and defined the world impacted how decision-makers approach the
problems of their times. So, why can’t we, in the developing world, find our true
potentials and chose and control the way we will do business with the world. Instead,
as nations we feel hopeless for a future, inapt to compete with technologically
advanced states, and thus render ourselves dormant in the midst of a blooming global
economy.
What we need is to see our world more clearly, understand the problem before
running for the solution, or rather understand the tool with which we will see our
problems; and that tool is geo-economics. We need to learn that ideas don’t work in
isolation but in amalgamation and that even ideas have become more interconnected
and interdependent. So, should Pakistan — a developing state seemingly mired in
economic instability and stagnation issues, strategically surrounded by regional and
global adversaries, being a victim of externally induced terrorism — be in a state of
hopelessness? Or should we realise that we live in a regional and global environment,
not a local one.
Re-evaluation is the key to finding new solutions and ways forward. Once we
re-evaluate our situation through the geo-economic lens, we won’t be
resorting to quick answers, instead the answers will be more innovative,
workable and futuristic.
Published in The Express Tribune, October 22nd, 2021.