A LOSS-FREE GLOBALIZATION

The fortune owned by eight billionaires is equal to that of 3.6 billion ordinary people. These are the findings taken from an Oxfam report prepared for the World Economic Forum in Davos.

The gap between rich and poor was much larger than the experts expected: only 1% of the richest people own a fortune larger than that of the rest of the global population.

Such a level of economic stratification leads to polarization of political views, says Katie Wright of Oxfam, noting the election of Donald Trump as the US President and Britain’s decision to leave the European Union.

"People are getting angry and looking for alternatives. They feel neglected, as no matter how hard they work, they cannot have an adequate share of national welfare.", says Wright.

As a charitable organization, Oxfam calls for a "more humane economy" and requests the authorities of countries to pay close attention to the incomes of top managers of companies, be more aggressive against tax evasion and impose higher tax rates for the rich.

The WEF experts also believe economic inequality and social stratification are the major threats to the development of the global community in the upcoming 10 years.

According to the Global Risks Report 2017, the number of potential threats include climate change, a lack of trust, international conflicts, a higher probability of natural disasters, cybercrimes, terrorist attacks and a significant increase in the number of forced migrants.

The Davos Forum was also held under the slogan "A Responsive and Responsible Leadership" calling for political and economic elites to pay more attention to the economic well-being of the general population.

Director of the International Monetary Fund, Christine Lagarde, noted the risks associated with a widening gap between the rich and the poor, and declared a crisis of the middle class in developed countries. In fact, it was the middle class, which has always been the driving force of the economy of developed countries.

Lagarde also noted that the middle class in some of the developed countries has decreased in volume because of the low trust of citizens and their disappointment in politics.

At the same time, she stated, for the past 40 years, the number of middle class people on a global scale had increased from 7 to 13%. This is mainly due to the collapse of the Soviet Union and the socialist camp, as well as the development of a number of Asian countries, including China and India.

By and large, the policy of globalization had contributed to the development of the middle class in developing countries.

In general, the Davos Forum has been considered a main engine of globalization for the last few years. Globalization and the threats associated with the rise of populism and protectionism could not disturb the participants. Klaus Schwab, Executive Chairman of the WEF, has set the tone of discussions reading out his 20-year-old speech. He warned about the threat of populism and stressed that the globalization should benefit the whole of society not just a small fraction of it called the elite.

Over the past two decades, Schwab’s warning have became even more relevant: the centrifugal forces triggered by globalization have been gaining an increasing weight in the society, and the events of the recent past including the Brexit, Donald Trump’s electoral victory, as well as the growing popularity of the far-right in Europe could have been linked with this process.

Interestingly, the developing countries led by China, which had followed the policy of protectionism for years in the past, are supporting the expansion of globalization. On the contrary, the main driving force behind all kinds of associations - the United States, are likely to become more defensive.

The protectionism announced by Trump during his pre-election debates is being actively implemented. Thus, the new US president has signed a decree on withdrawal from the agreement on the Trans-Pacific Partnership (TTP), which has envisaged the creation of a free trade area in the Asia-Pacific region. He has also initiated the negotiations with Mexico and Canada to revise the terms of the North American Free Trade Area (NAFTA). In such circumstances, the chances that the Transatlantic Partnership Agreement is signed are actually equal to zero.

But a vacant place never remains unoccupied. China has been actively promoting itself as a new driver of integration processes in recent years. Immediately after the US renunciation of the TTP, Australia and New Zealand have welcomed China’s as an alternative to join the agreement. The Davos summit has demonstrated Beijing’s increasing role in global economic processes. It was the first time in the history that the Forum was visited by a Chinese President, Xi Jinping. In his speech, the principal Communist in the world has defended the globalization.

"Today, mankind has become a close-knit community of shared future. Countries have extensive converging interests and are mutually dependent. All countries enjoy the right to development. At the same time, they should view their own interests in a broader context and refrain from pursuing them at the expense of others. Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war ", said Xi.

The second largest economy of the world has been actively expanding the economic expansion since the beginning of this century. With the collapse of the Soviet Union, the Chinese investment has actively flowed into the countries of Central and Middle Asia, particularly in oil and gas projects in Kazakhstan, Turkmenistan and Uzbekistan. China is a major importer of oil and gas from Central Asia.

China has initiated a global economic zone project of the New Silk Road, which covers dozens of countries, 3 billion people, and requires hundreds of billions of dollars of investment in order to expand Chinese sales markets.

This project promises economic benefits to many countries in the region, including Azerbaijan. Located in a favorable position - at the crossroads of Europe and Asia, the country has been actively developing its transport capacity in recent years. This includes the construction of a new port and free trade zone in Alat, the Baku-Tbilisi-Kars railway, facilitation of transport and logistics procedures for the establishment of a single competitive tariff policy for the whole route of goods from China to Europe. All these measures are aimed at enhancing Azerbaijan potential in the new Silk Road strategy.

"Azerbaijan has invested direct investments in reconstruction related to our segment of the Silk Road. We also support the initiatives on promoting regional cooperation. The project has political support", said President of Azerbaijan, Ilham Aliyev, at one of the sessions in Davos, "The effectiveness of the Silk Road".

Mr. President noted that Azerbaijan has always sought ways to initiate projects and to participate in those that would benefit the country, the people, and would contribute to the stability and create equal opportunities for all residents of the region. These are the positive aspects of globalization, as was mentioned by the Chinese President. Thus, the existing transport infrastructure helps keeping up with global trends.

"This year, together with our partners in Georgia and Turkey, we will complete a very important junction of the Silk Road in the three countries between Baku, Tbilisi and Kars. This will allow us to use this project for many years. This project will reduce the route from China to Europe from 30-35 to 14 days. This will be the shortest but certainly not the cheapest route. Today, we are working with our partners in order to make this route commercially attractive and to get the tariffs in line with the general level. While we are happy with positive developments in this area, as soon as the project is completed, we will be able to benefit from the significant movement of commodities. Last year, a test train with containers departed from China and passed through Central Asia, the Caspian region, Azerbaijan, Georgia and Europe", said Aliyev at the meeting with the Georgian Prime Minister, Giorgi Kvirikashvili.

Aliyev also said that Azerbaijan was actively involved in creating North-South corridor that would simplify cargo shipment from India and the Persian Gulf to Russia and Europe. "We hope that in the next two years the project will be integrated into the Silk Road, and will open a new transport route," said Aliyev.

The concept of economic belt created through the New Silk Road is not limited to the physical delivery of commodities from China to Europe and back. It is planned to develop the whole complex of relations between the two countries, including energy, IT, culture, etc.

In fact, Azerbaijan made the first steps to create the components of this ambitious project two decades ago. The choice of the route for the Baku-Tbilisi-Ceyhan pipeline for the export of Azerbaijani oil to the world markets was a harbinger of bringing together regional countries to establish the East-West corridor. These efforts were followed by the construction of the Baku-Tbilisi-Erzurum gas pipeline, through which the Azerbaijani gas is supplied to Georgia and Turkey. The construction of the large-scale Southern Gas Corridor will help to bring the Azerbaijani gas to Europe. It should be noted that the planned infrastructure will allow a number of other countries, particularly Turkmenistan, Kazakhstan, Iraq, Iran, etc., to export their energy resources to Europe.

"In fact, the existing energy corridor linking Azerbaijan, Georgia and Turkey through a set of oil and gas pipelines is basically the same corridor where the Silk Road lies. Without these projects, it is unlikely that we would have started the construction of the railway. Therefore, all of these projects are related to each other. Today, we have created a new corridor for the export of electrical power. This corridor passes through Azerbaijan, Georgia to Turkey. Thus, one project opens the way for another one. Today, we export electricity, gas and oil, building a railway. We will continue investing in the digital sector as well. There is another project called TASIM. This is a communication line through the same Silk Road corridor. A digital support for these projects will increase their efficiency and will bring even more benefits," said President Aliyev.

"We are happy that all countries along the Silk Road maintain a good working relationship with each other. Mutual communication will strengthen it even more. This will provide a unique form of cooperation between different countries - countries with a different agenda, culture, religion, history. I believe it is a new model of the world, as we in Azerbaijan are investing largely to intercultural dialogue. For example, we announced the last year as the Year of Multiculturalism. This year is the Year of Islamic Solidarity. At the same time, we are one of the few countries being a member of both the Council of Europe and the Organization of Islamic Cooperation,” said President Aliyev. He also suggested holding a meeting of the heads of relevant ministries of all the countries lying along the Silk Road, willing to join it to improve coordination of activities, and monitoring of implementation.

The New Silk Road project is just an example of integration, when the economic cooperation can bring benefits to all parties. Participation in the project does not restrict political or economic freedoms to the national borders but it is bound not only by countries and companies, but also of people, making the region more stable.

This project significantly intensifies economic activity in many countries of Eurasia, promoting jobs and income for billions of people in developing countries and reducing a gap between the rich and the poor.