Business World

Saturday 1 October 2016

Cheer up, history tells us that the world's not so bad

Ambrose Evans-Pritchard

Published 04/01/2016 | 02:30

The conflict in Ukraine has backfired on Russia Photo: AP Photo / Vadim Ghirda
The conflict in Ukraine has backfired on Russia Photo: AP Photo / Vadim Ghirda

I've been gently scolded for having too much­optimism last year, with people wondering why I refuse to see that the world economy is in dire trouble and that the international order is coming apart.

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So for Christmas reading I retreated to 'The World of Yesterday', the poignant account of Europe's civilisational suicide by the Austrian writer Stefan Zweig - the top-selling author of the inter-war years. From there it is a natural progression to Zweig's biography of Erasmus, who saw his own tolerant Latin civilisation smothered by fanatics four centuries earlier.

Zweig's description of Europe in the years leading up to 1914 is intoxicating. Everything seemed to be getting better. Wealth was spreading. People were healthier. Women were breaking free. What is interesting in Zweig's account is that even during the slaughter of World War I, Europe still had a moral conscience. All sides still bridled at any accusation they were violating humanitarian principles.

Two decades later, even that had disappeared. Zweig lived to see his country reduced to a half-starved rump. He saw Hitler take power and burn his books in Berlin's Bebelplatz in 1933. He saw what remained of Austria extinguished in 1938, and his friends sent to concentration camps. As a Jewish refugee in England, he slipped from stateless alien to enemy alien. He committed suicide with his wife in February 1942.

Erasmus was also the best-­selling author of his day. Over one million copies of his works had been printed by 1515, devoured by a Latin intelligentsia in the free-thinking heyday of the Renaissance, chortling at his satires on clerical pedantry and the industry of holy relics.

But after lighting the fire of evangelical reform, he watched in horror as the ideologues took over. So, perspective is in order as we look at the world now. The fateful rupture between the US and China that many feared has not happened. Washington has so far managed the rise of a rival superpower benignly.

China has been admitted into the governing elite of the Bretton Woods financial system with US backing. To wide consternation, Barack Obama and Xi Jinping steered through a sweeping climate change accord in Paris, the template for a new G2 condominium. This is not to deny that the Pacific Rim remains the world's most dangerous fault-line. The South China Sea is on a hair trigger.

Russia's Vladimir Putin has gained little by overthrowing Europe's post-war order. He has kept Crimea but his attempt to foster revolt in the Donbass through proxies fizzled out long ago, and he has transformed a neutral Ukraine into a hostile rampart of the West. His hopes of dividing the Atlantic alliance came to nothing. Europe has just renewed sanctions. The country is shut out of Western capital markets. Unless oil recovers, Russia will have exhausted its reserve fund by 2016, and will face a fiscal crisis by mid-2017.

So why so much political angst in the West? Joschka Fischer, the former German foreign minister, calls it - a little carelessly - the fascism of the affluent. "It is a fear based on the instinctive realisation that the 'white man's world' is in terminal decline," he said.

Perhaps, but his evidence for America's chauvinist lurch is that Donald Trump is scoring well in the polls. Whether Republican voters will really back him is questionable, and US campaigns are prone to wild moments. We forget that Texan billionaire Ross Perot won 19pc of the presidential vote in 1992.

In the early 1990s, I covered the Oklahoma bombing - America's worst act of home-grown terrorism - and the eruption of state militia movements, mostly blue-collar workers who had fallen through the bottom of the globalised economy and spent their weekends training with assault rifles. This weird revolt spread but disappeared as the labour market tightened.

Mr Fischer is closer to the mark on Europe but there is a glaring omission in his diagnosis. He never mentions monetary union, which has ensnared the Eurozone in a seven-year depression. Output has yet to match its earlier peak, worse than during the 1930s.

The Eurozone's deformities have not been corrected. There is still no fiscal union. The crisis will return in the next global downturn. But for now the stimulus of a cheap euro, cheap oil, quantitative easing, and the end of fiscal austerity are combining in a "perfect positive storm".

The one great disorder is the collapse of the century-old Sykes-Picot dispensation in the Middle East (under which the British and French agreed to divide up the Arab provinces of the Ottoman Empire), made more combustible by the Sunni-Shia battle for regional mastery. It is a humanitarian tragedy, but in geostrategic terms it is a regional problem, a particular struggle within Islam to come to terms with modernity. It is sui generis and of no universal relevance.

Nor should we overestimate the staying power of the Wahhabi caliphate as it tries to hold fixed ground against a world now seriously irritated; and without fixed ground, constant infusions of money, and the allure of rising momentum, Isil does not add up to much.

Yes, the world is a mess, but it has always been a mess, forever climbing the proverbial wall of political worry even in its halcyon days. So let us drink a toast to 2016 with a glass at least half-full.

Irish Independent

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