Have you ever realised that man remains generous and accommodating to his fellow beings only till the time he himself is well-heeled? Basically affluence is the breeding ground for magnanimity and philanthropy. And since nations are guided by men, you can expect similar behaviour from all nations. But what happens when nations themselves are ravaged by depredations of recession and economic collapse? In order to seek answer to this question we need to logically predict the turn of events from the symptoms as visible today.
The first thing that this truly global recession will bring about is trade wars. It still hasn't started in full scale but the writing is on the wall. World Bank has recently announced that 17 countries from G20 have already taken some protectionist measures against foreign competition to survive the recession. World Trade Organisation report has confirmed last week that there has been significant slippage towards protectionism from richest countries.
As the global economic crisis deepens, the shadow of trade war will lengthen. No wonder trade is likely to be main topic at the G20 Meet on 02 Apr 2009 in London. G20 Meet is bound to issue out strong statements against protectionism but will the G20 nations themselves abide by the rule book of WTO in their own countries? Haven't most of them already committed the crime as World Bank and WTO reports suggest? Good intentions alone cannot help nations to work against trade barriers. Local politics and question of survival of politicians will push nations towards trade conflicts. Once trade barriers are in place we shall see replay of scenes from Great Depression of 1930's. It is commonly believed that passage of Smoot-Hawley Tariff in the USA brought the global economy down then. Will it be different this time around? I wonder.
If trade war rages on a global scale, world trade will come to a grinding halt. In fact now itself, without any significant trade conflict, global demand has collapsed. WTO has forecast that global trade, as measured by volume, will decline by 9% this year. Such a devastating fall has not been seen in the last 60 years. And this decline is not attributed to trade conflicts. Just imagine what will happen to global trade once trade wars are declared by nations!!!
Time is running out for world leaders who wish to avoid global catastrophe. Leaders of G20 nations have their last chance on 02 Apr 2009 when they meet to alleviate this global crisis. Whether they establish $100 billion fund to lubricate global trade finance as suggested by World Bank or use other innovative ideas, they must be utterly sincere in implementation and enforcement of the same. Like it or not, brutal truth is that today the world depends on leaders of G20 nations to steer it away from Global Depression.