After the pandemic, what does it mean for the world to be left in the hands of a relentless G2?

One of the more interesting notes to emerge from the IMF’s latest outlook report on the expected auspicious performance of the global economy this year was not in the report or in the columns detailed in this week’s announcements. It is obvious. Agency figures revealed nothing other than consolidation in the post-pandemic era of a G2 between the United States and China, obliged to share the world summit.

This is how the world will be from now on. The rest of the planet will depend on the level of coordination and stress management between these two unique players who repel each other.

This company, which will be very different from what we have seen so far, is based on basic numbers. The United States will grow 6.4% this year, greatly exceeding the 3.5% contraction experienced in 2020, in the midst of the pandemic. On the other hand, China will advance by 8.4% without having recorded losses last year whereas it progressed by 2.3%. This is almost 11% of aggregate wealth if we add the periods.

The answer in both cases was a huge public investment to escape the jam of crisis associated with disease. The same gigantic formula tested after the 2008 economic tsunami.

Joe Biden’s administration just launched a $ 1.9 trillion stimulus package that, added to the Donald Trump-era bailouts and the $ 900 billion Democrats promoted last December, rounds up to 5 trillion. In this issue, he explains the support the markets maintain for Biden. Equals just under a quarter of US GDP of some $ 22 trillion, the highest in the world.

Five trillion dollars is also the difference in favor of the United States compared to Chinese GDP, a distance that will narrow in the last half of the decade. when the two powers have the same economic dimension, if one of the two rivals fails to prevent the development of the other.

This rain of budgetary money configures “An experience without parallel since the Second World War” The Economist recently pointed out. For this energetic liberal milieu, the good news is overshadowed by “The danger for the United States and the world of economic overheating” and shoot inflation and rate hikes. The IMF, far from these worries, noted in a festive tone that the sails of the American wind are due to these extraordinary stimuli.

About China, he repeated the same words. The Asian giant has returned to a pre-pandemic level of growth “which many others (in the north of the globe, not to mention the south) they will not reach before 2023 ” thanks to “an energetic response in terms of public investment and support from the Central Bank”.

This impulse in each of its paths, the two capitalists beyond formats, maintains China and reestablishes the United States as the two engines of the global economy. Especially North America, whose structure is still superior to that of its Asian rival. The OECD, a club of rich countries, predicts that the United States, among the world’s largest economies, will be by the end of 2022 even bigger than expected before the pandemic.

This economic power is verified in political power. There is not one without the other, and especially without the first before the second. That’s why Biden, after these pandemic bailouts, is proposing equally extraordinary spending to spur US development and bolster his rivalry with China. A central axis, the technological field.

The plan includes investments that will be spread over eight years and will be funded by an increase in corporate tax to 28% from the current 21%. Until The savingsI didn’t agree with this measure. At this point, Biden’s cabinet chief economist Yanet Yellen has proposed that taxes be standardized around the world for stop competing with tax breaks and attract capital. If given, it would be a small sample of the coordination that emerged in the second postwar period, then with the gold standard.

This struggle for economic development and political influence between the giants can be good news for the rest of the world because this would accelerate the pace of global growth. This is what the Fund has pleaded throughout the Trump era and even now repeats as a mantra about the need to defuse tensions between the two largest planetary economies.

This dynamism will be verified, moreover, if the specters that the British magazine disturbingly indicates are not embodied The Economist. A rate hike, if it were necessary to contain a possible inflationary surge, would further strangle the countries of the south of the world. “Emerging Markets with significant deficits, like Brazil, or with large dollar-denominated debts, such as Argentina, they have reason to fear the tightening of global financial conditions after a change in US monetary policy, “he said in an article under the headline” The big bet “, that of Biden, with its rain of dollars.

This G2 of royal power is transcendent because it anticipates a crucial transformation in the global geopolitical conception. China and the United States fly over almost the same conflicts in similar scenarios and with similar impetus to become the global regulator. The nascent leadership initiated last Tuesday in Vienna by Washington to try to save the 2015 nuclear deal with Iran is reflected in this panorama, and is an example of what we have indicated.

There are a handful of reasons why the Biden administration has embarked on such a complex endeavor amid the current global crisis that would impose other priorities. One of them is the finding that the Persian power, which had frozen its atomic structure in the 2015 agreement with the United States. resumed with more dynamism after Trump unilaterally deactivated this landmark pact.

Iran has therefore come to enrich uranium up to 20%, a scale that the jump to the 90% required for a bomb makes it imminent. It is estimated that in four months Tehran would have its first pack of nuclear devices. China has stopped doing it and has just signed a plan to help Iran with $ 400 billion in infrastructure in exchange for a quarter of a century of continuous oil and gas supplies.

In other words, the Vienna Pact that Barack Obama concluded with Iran, placed Persian power under western influence, amplified by the flood of investments which have started to move in particular from Europe. Trump’s strategy, on the other hand, lled Iran to embrace China which consolidated its Asian and Middle Eastern projection.

Within the G2, these games of chess are predictable. China and its close Russian ally sympathize with the US approach to Iran. They are not competing with Washington on these chapters, nor on climate change or the zero-sum conflict-relief initiative. But the case of Iran is of particular importance because involves the rewriting of the North American agenda in the region, a fact that interests everyone.

Trump reversed the Vienna deal in response to demand from Israel and Saudi Arabia who were looking for a tool to reduce or annihilate the growing Iranian influence, gigantic after the turn in its favor of the war in Syria. But today Biden has placed limits on the “carnal” link that his Republican predecessor had with these countries, in particular with the crown of Riyadh.

The rapprochement with Iran therefore has a larger dimension than the object which motivates it. Israel is aware of this and, in this observation, the reason for the attack launched in the last hours against an Iranian supposedly spy ship, in the Red Sea. A dangerous sign of the rejection of the new world brought by the White House.

It is possible to guess another reed in these movements. European (and North American) companies want to resume their activities in Iran and compete hand in hand with China. Car maker Peugeot has never been able to recover some $ 450 million that remained in the Islamic Republic due to pressure sanctioning Trump against any negotiations with the regime.

The powerful French oil company Total still has $ 50 million dead. And so a large number of frontline companies that have started operations in airports, aircraft fleets, services and infrastructure and have had to cancel them. The EU has managed intensively over the years so that the negotiating relationship with Iran is restored. The United States is now associated with this interest, which is part of the strategy of regaining the alliance with the continent that the Republican broke by opening a vacuum that China occupied.

Minor but illustrative information about these stunts concerns South Korea. Seoul owes Tehran $ 7 billion for its oil purchases. The blockade due to sanctions prevents repayment of this debt. Recall that at the beginning of this year, Tehran confiscated an oil tanker from the Asian country in the Persian Gulf.

Now, the US National Public Radio (NPR) website has quoted an academic who pointed out that if South Korea in principle forgives Iran $ 1 billion of that debt, this time the White House will hijack it. look. In return for these actions, the United States must refreeze the nuclear program. China is a paradoxical partner for the same goal, and a decisive influence with Russia on the Iranian theocracy. The G2.
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