The shared pursuit of a values-based Globalization

Western liberal globalization needs a reboot. Over the past years, the West and its institutions have distanced themselves from the outside world, while becoming entangled in their own economic nationalist policies. A collective hubris, invigorated by the end of the Cold War, led many to believe that rationalism and enlightened values would be perpetually embedded in the multilateral system. Yet then came populist and authoritarian forces knocking at the door and the liberal ideals started to fade away. Take Europe. Because of naivety, idealism, irresponsibility or a combination of these, the greatest economic bloc on earth stringed itself to Vladimir Putin and made its gas supply substantially dependent on a dangerous autocrat. While the EU’s coordinated response to the Kremlin’s attack on Ukraine has been effective in the form of economic sanctions or energy decoupling, these actions should be seen as the start – not the end – of the pursuit of a new liberal grand strategy: a values-based globalization.

During the aftermath of World War II, liberal institutions experienced a period of expansion and consolidation as a result of reconstruction efforts led by the United States and its key allies. At its core, this emerging political project envisioned a new multilateral system that would secure the economic and security relations between post-war allies. However, with the exception of Western allies such as Japan and Australia (the latter still part of the Commonwealth), the rest of the world was not fashioned with same strategic interest as industrialized nations. For instance, there were other constitutional democracies in Latin America which were left adrift from this global restructuring. Evidently, the devastation caused by the war and the perils of a rising Soviet power, made European economic integration a priority. Besides, America’s new position of international prominence, together with Cold War geopolitical assumptions, created a new paradigm of state-to-state interactions, where partnerships were defined not so much by their affinity with liberal values but by economic and security gains. 

Under this system, the geopolitical glue eventually became substituted by stronger normative or ideas affinity between economic blocs. But it was not until the fall of the Berlin Wall, which ended bipolar rigidities, that it became possible to establish extended horizontal production schemes through global value chains. Up to the Global Financial Crisis of 2008, this rules-based international system proved to work for the vast majority. For decades, facts supported the modernization theory: the economic growth rates experienced by developing economies were fairly similar to those of industrialized nations, the world became more integrated as trade in goods as a share of global GDP increased from 43% in 1995 to 60% in 2007, and the number of democracies continued to expand. However, after the market crash, the teleological expectations of liberal globalization crashed in equal proportion. Moreover, the economic and moral vacuum that came with the crisis paved the way for widespread mistrust of the established institutions opening the tab for both antagonist and authoritarian systemic projects. 

Latin America’s flirt with autocracies could be tracked to this point. At the turn of the century, several nations in the southern hemisphere benefitted from Beijing’s growing demand for commodities. As a result of this “China effect,” mineral and oil-exporting countries benefited with estimated net export gains between 20% and 50% of the increase in commodity prices. Thus, when the crisis hit, thanks to China’s economic lifesaving demand, the region witnessed capitalism sinking from the shore. And while the financial collapse was seen by many in the region as a signal to seek independent policies from the West, it actually reinforced an earlier trend of South-South international cooperation. It was during this time when Chile became the First Latin American country to sign an FTA with China, Brazil joined the BRICS, and after successfully boycotting the Free Trade of the Americas hemispheric integration project, Venezuela sponsored the ALBA, an authoritarian-based form of regionalism. Today, four of its current leading members declined to condemn Russia’s attack on Ukraine at the UNGA resolution.

Truth to be told, the autocratic expansion in Latin America – and the rest of the world – has come in parallel of Western retreat. This is not a coincidence. In fact, international liberalism’s malaise is the result of these two self-reinforcing events occurring simultaneously. The Trump administration’s retreat from the global arena came at the expense of regional stability: it threatened to pull out from established trade agreements, defunded international development programs, and cut millions in aid to some of the poorest nations. The United States does not stand alone in its disregard for Latin America, the EU has also neglected the need for deeper relations with the region. It took Brussels more than 20 years to reach an agreement with Mercosur, and when it finally did, it backed down and did not want to approve the negotiated agreement. In a similar fashion, after two years of strenuous negotiations, the EU is halting the ratification of the modernized EU-Mexico Global Agreement. Since globalization patterns were rapidly changing before the pandemic and the war in Ukraine, this political turnaround comes at an unsuitable moment. If Europe plans to reshuffle critical dependencies from countries that do not respect liberal values and meet long-term challenges, it utterly needs to make more friends.

While Russia’s invasion of Ukraine will not imply the end of globalization, as numerous voices have said, the war unarguably will transform the international economic relations known for the past years. Decoupling from Russia will have far-reaching consequences, some of which are already being felt – like the surge in the prices of energy and food staples. Moreover, if the no-limits friendship between China and Russia continues to grow, the EU needs to develop a comprehensive policy strategy, institutional as much as moral, that can deal with the reinforced security and geopolitical threats. A values-based globalization would imply that economic relations will not only be assessed in terms of market access or financial gains, but on its commitment with fundamental values: rule of law, civil equality, and human rights. Countries and companies alike would prefer to engage with partners that support fair rules and level playing fields, transparency and respect of the rules-based multilateral regime. Under this systemic project, geopolitical risk would be substituted for moral certainty by reorienting the current system of global value chains, to one of global chains of values.

At certain junctures in time, states are confronted with the challenge to establish stable and enduring systemic orders. Nonetheless, while many international regimes have existed in the past, and different motivations have defined their character, none of them could have been forged if leading countries had sheltered within their economic nationalist bubbles. Today, Europe finds itself in a moment where it can lead and shape the governing multilateral rules according to its values. Liberal internationalism was never a finished project but in order to remain attractive and appealing to the rest of the world, it must also provide higher yields to its adherents. Or what John Ikenberry has called increasing returns to institutions. Certainly, a robust network of trade and cooperation agreements is necessary. But as the world becomes more digital, and AI technologies become part of everyday life, Europe should also champion innovation globalisation. The new technological transformation has the potential to increase growth, production and raise living standards,  but the new technologies and their use should also be based in values. The AI revolution will refashion systemic competition with China, and transform existing knowledge and economic systems beyond our current understanding. Thus, the West most ensure that these critical technologies are developed within embedded liberal values and ethical principles to protect fundamental rights. If these technologies are restricted to a network of partners that are alike in values, it will raise the premium for allying with the west.

For the EU to succeed, it’s critical to forge new alliances and strengthen old ones. As Chancellor Olaf Sholz recently remarked, “realpolitik in the 21st century must mean involving friends and partners with shared values and supporting them in order to be strong in global competition through cooperation.” Along these lines, in the past weeks it was leaked to the Spanish newspaper El Pais that the EU is planning to launch a diplomatic offensive to regain influence and presence in Latin America. And though it seems as a step in the right direction, Brussels is once again getting the wrong end of the stick. Bonds with Latin America can and should be strengthened, but it should be a component part of its global leadership and not only be a substitute for failing to approve the new Mercosur agreement and the modernised trade accord with Mexico. It cannot be a policy dilemma when the two choices are indispensable for preserving the integrity of the liberal order.

Complementarity between the EU and Latin America goes beyond trade. They share culture and ideas, even if those manifest themselves in different ways. For instance, every year around 2,000 student exchanges take place between the two regions. This represents an enormous pool of talent that could be harnessed through an inclusive and renovated migration policy oriented to reduce the EU’s skills gap. Furthermore, nearly 70% of the Latin-American population is between the ages of 15 and 65, making it one of the youngest regions in the world. Hence, investing in capacity building and expanding R&D programs between European and Latin American universities is as well on the EU’s strategic long-term interest.

Certainly, the Latin American region is not homogeneous and its political swings determine the extent to which countries engage with the world. However, with the exception of a handful pariahs, it is not morals that have driven rapprochement policies towards global autocracies, but mere economic pragmatism and a great need to find development solutions. Beijing has appealed to a shared colonial past as a tactic to connect politically and emotionally. And while colonialism is a wound that still hurts for many, the region’s more recent experience of autocrats and military dictatorships is still very much alive in the collective memory. People in Europe and Latin America has a common history, similar language, and strong family ties. They also share democratic aspirations.

Ultimately, the problem is not the existence of new challengers or a fully multipolar order but rather that the emerging alternatives aren’t more liberal or better for the pursuit of peace. And while values-oriented narratives have been misused in the past and fuelled bad policies, the rise of powerful authoritarianism requires liberal societies to safeguard their political systems. Principles and virtues are just as important as material factors to the rise and fall of regimes.