September 2011 (GEAB N°57)
Certain economic zones like the European Union and the United States are quite withdrawn in commercial terms: the sum of exports + imports represents only 16% of GDP for the EU and 17% for the USA85. In addition, both areas are highly integrated with common currencies. They will, of course, be the major players in this development because they will be able to support it and want to impose it. The EU, however, will want to keep good relations with Russia (for gas and oil) and more generally with the BRICS, which will lead to “tailor-made” protectionism.
However, for the BRICS (which is a network and not an integrated region, much less a bloc), this development will undoubtedly result in strong internal tensions because they are not, at this stage, an area sufficiently linked to be able to adopt joint protectionist measures. They must accelerate the implementation of free trade treaties between them in a strategy of South-South86 cooperation, but which can only, in the short / medium term, remain complementary to their trade with Europe on one side and the United States on the other. From 2012/2013, the interest of the BRICS will undoubtedly be, via the G20 or bi-multilateral summits (such as a Euro-BRICS summit87), to ensure it avoids a situation of inter- bloc conflict, and at least negotiate successful agreements with each of the two major integrated regions.
Progression of German exports to China (1999-2010) and German manufacturing investments overseas (2006-2009) (%) - Source: Spiegel / Bundesbank, 07/2011
Japan cannot stay out of China’s sphere, whilst the United Kingdom will see its position become increasingly uncomfortable between the United States which withdraws to North America and a Euroland which integrates on the Continent.
Last but not least, in a world that is breaking up into integrated regions or blocs, there is an activity that quickly becomes secondary: that of a major global financial centre. Whilst on the contrary a demand for effective regional financial centers is rapidly emerging. Another piece of bad news for Wall Street and the City, foreshadowing the huge upcoming new layoffs in New York and London.