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EconomicsFeaturedGlobalizationHistoryPrint ArticleThe International EconomyUnited States

How Recessions Affect Developing Economies: Lessons from the Great Recession

written by Ben Chlarson

The world economy is in turmoil and developing countries are likely to bear the brunt of the turbulence. An unexpectedly strong recovery from the pandemic recession of 2020 has resulted in inflationary surges and supply chain bottlenecks across the economy, especially in the food, fertilizer, and energy sectors. The cascading crises of the COVID pandemic, coupled with the war in Ukraine, have resulted in supply chain issues and other supply-side shocks. Efforts to combat inflation with rising interest rates and fiscal tightening in advanced economies have induced a slowdown in economic growth and stoked fears of an impending global recession and international debt crisis. All regions are affected by the slowdown, but it is especially of concern for developing countries where the average growth rate is forecasted to drop below 3%, insufficient for sustainable development and further binding them financially.(1) 

The United Nations Conference on Trade and Development expects the world economy to have grown 2.5% in 2022, and forecasts that growth will fall to 2.2% in 2023.(2) This would result in a cumulative global shortfall of more than $17 trillion, just shy of 20% of the world’s income.(3) With 60% of low-income countries and 30% of emerging market economies in or near debt distress, the risk of a global debt crisis is at its highest level in recent years.(4) David Malpass, the president of the World Bank warns that with global growth slowing sharply, more countries are likely to fall into a recession, creating long-lasting consequences that are devastating for people in emerging markets and developing economies.(5) As signs point to a global recession in 2023 and business and political leaders issue warnings for the financial gloom ahead, we can understand the potential impact of a global recession on developing economies by examining the data from the fallout of the Great Recession of the late 2000s. In doing so, the global economy may also be better able to understand how to mitigate or even avoid the devastation in 2023.

The inflationary surges caused by the recovery from the pandemic caused prices to rise across the globe, but its impact on the United States has an outsized role due to the dollar’s importance in the international economy. In March of 2022, United States consumer prices 8.5% higher compared to a year prior.(6) The risks of inflation are best illustrated by the global recession of 1982 when high inflation and weak growth triggered debt crises in more than 40 countries and was followed by a decade of lost growth for developing economies. Even as growth slows, persistent inflation–particularly in areas of the economy such as energy, food, fertilizer, and commodities–has spurred policymakers to prioritize the battle against inflation rather than implementing policies to encourage growth. 

To combat rising prices in the United States, the Federal Reserve has rapidly raised interest rates. In 2022, US interest rates went from 0% to 4% at the fastest rate since the late 1980s.(7) Interest rate hikes in the United States can have catastrophic effects on developing economies. As US interest rates rise, the dollar appreciates in value. This is bad news for countries that have outstanding debts held in US dollars, as their debt suddenly becomes more expensive. Rising interest rates also result in a decrease in money supply, thereby contracting lending and credit markets. Furthermore, commodities that are commonly priced in US dollars such as oil, gold, and cotton, among others, also become more expensive as interest rates are raised and the dollar appreciates. All of these byproducts of interest rate hikes will be potentially catastrophic for developing economies and emerging markets if the United States and other advanced economies continue on their current fiscal and monetary policy trajectories. According to UNCTAD projections, these interest rate hikes in the United States are set to cut an estimated $360 billion of future income for developing countries.(8) 

Of particular concern for US policymakers and the international economy as a whole is the emerging debt crisis. Over half of all low-income countries are experiencing debt distress. Countries that were already facing debt distress prior to the pandemic such as Sri Lanka – which has already experienced domestic tumult as a result of economic strife – are especially being devastated by the global slowdown. More debt is held in US dollars than any other currency, and US dollar-denominated debts have been increasing steadily over recent years. When the US hikes interest rates – as they are currently doing – and the dollar appreciates, the foreign exchange rates between the dollar and other currencies widen, meaning these debts become more difficult to pay off, increasing the risk of defaults by foreign governments. 90 developing countries have already seen their currency weaken against the dollar, with more than 30 experiencing depreciation of over 10%. Developing countries have already spent $379 billion thus far in efforts to combat weakening currencies.(9) Even middle-income countries such as Turkey, Brazil, and South Africa, all of whom perpetually run trade deficits and have to finance their debts in US dollars, will see their economies suffer greatly as a result of the appreciating dollar. 

In addition to making debt more expensive for developing countries, a rise in US interest rates also reduces the supply of US dollars in circulation, causing credit and lending markets to contract. As interest rates increase, the cost of borrowing money becomes more expensive, and the cost of capital increases correspondingly. Expensive capital results in reduced investment in manufacturing and production and reduced consumption. This impact will be the most profound in Asian economies which have a heavy reliance on foreign capital. China, which has already been experiencing financial disruption in its economy, will likely experience even more turbulence. Furthermore, commodities that are commonly priced in dollars, such as oil, gold, and cotton, among others, will also become more expensive as the dollar appreciates. Developing economies that rely heavily on these natural resources and commodities will be adversely affected. 

Food and energy prices have risen over the past two years, but have seen their price increases accelerate due to a stronger dollar and the war in Ukraine, significantly disrupting the oil, food, and fertilizer markets. Large multinational corporations (MNCs) — having substantial market power — have also contributed to these price increases by unduly raising prices to boost profits. This is particularly challenging for farmers as the cost of fertilizer, their main input for production, has shot up. While commodity-exporting countries such as oil-producing Nigeria and soybean-producing Brazil will see those industries rake in increased windfall profits, their consumers will still be hurt by the upward pressures in other aspects of the economy. Meanwhile, countries that rely heavily on importing these commodities, particularly oil imports – such as Sri Lanka, Tunisia, Turkey, and Mozambique – are especially vulnerable to any further shocks in the commodity market. 

These are all typical consequences of a recession. Due to the United States hegemony in the global economy, shocks in the US economy have ripple effects across economies all over the world. These ripples may turn to tsunamis as countries already on the brink of disaster are suddenly pushed over the edge. This is apparent when examining the causes and outcomes of the Great Recession during the late 2000s. During the Great Recession, countries with vulnerable economies preceding the economic dip fared much worse. Countries rated to have high economic vulnerabilities as rated by the IMF’s vulnerability report entered into recession earlier and exited recession later.(10) This means that the 60% of low-income countries that are suffering from debt distress currently are all at risk of severe contractions. Additionally, during the Great Recession, real GDP growth in emerging and developing economies fell from 8.3% in 2007, to 6.1% in 2008, and to just 2.9% in 2009.(11) The cumulative nominal GDP loss for these countries between 2008 and 2010 was around $2.6 trillion.(12) It is believed that 120 million more people are living on less than $2 a day as a result of the Great Recession, highlighting the urgency for world leaders to curtail this downward spiral.(13) 

Countries that relied on exports were significantly exposed to the fallout from the crisis. Exports in 2010 were about 20% lower than originally forecasted in 2007, reflecting over $1 trillion in losses as a result of the recession.(14) Countries that specifically relied on labor exports for remittances also suffered greatly as a result of the global slowdown. Remittances fell 6% after consecutive years of double-digit growth, a $100 billion loss for countries that rely on these cash flows.(15) The notable reduction of income for these countries most significantly impacted by the recession had tremendous consequences for their long-term growth and catastrophic immediate consequences for the people living within their borders. The IMF believes that potential growth has been permanently lowered due to the crisis, with no chance of recovery.(16) This loss in income also meant that ⅔ of countries had to cut their 2010 budget allocations in at least one of the areas of education, health, agriculture, and social protection, hindering development and cutting lifesaving necessities for some of the world’s poorest.(17)

Recessions have tragic consequences for developing countries, and central banks and policymakers across the world should be doing everything possible to avoid one. The only benefit of the Great Recession is that the lessons learned from a “once-in-a-lifetime economic recession” can help to mitigate or avoid another disaster barely a decade later.(18) Advanced economies’ central banks, and particularly the Federal Reserve, should opt for more precise policy tools rather than relying on wieldy measures such as ever-increasing rate hikes. Policymakers should prioritize policies to increase labor-force participation and international cooperation to alleviate supply chain bottlenecks. Regulations to reduce commodity speculation would prevent volatility and price-gouging for necessities such as food products and fertilizers. UNCTAD has also implored for greater multilateral assistance to reduce vulnerability before a possible recession. Fiscal stimulus from organizations such as the IMF helped to mitigate the effect of the crisis in the short term and prevented much worse outcomes for poverty.(19) Vulnerable countries should cooperate through multilateral institutions to increase their foreign currency reserves as this was shown to help dampen the effects of the financial crisis.(20) Moreover, it would be extremely beneficial for the health of the global market if multilateral organizations developed a comprehensive framework for debt restructuring in order to reduce fiscal pressure on developing countries. A globally coordinated response during the Great Recession was very effective in helping to mitigate the effects and provide large amounts of financing quickly to the countries that direly need it. Readiness for any scenario is of the utmost importance. As warnings about the global economy reach cacophonous levels, developing countries need to heed these warnings and take proactive measures to protect their economies. Their long-term growth and the fates of billions of people rely on the ability of policymakers across the country to coordinate their policies and cooperate to prevent economic disaster. Fortunately, there already seem to be signs of improvement in preparation for a potential recession. Many developing countries have increased their foreign currency reserves, increasing their ability to pay back debts in the event of a crisis. Robin Brooks, the chief economist of the Institute of International Finance notes that though there is still vulnerability, many emerging market economies are positioned much better financially than they were leading up to the Great Recession and that the international framework for dealing with these events has been strengthened as a result of the upheaval from a decade prior.(21) So while the outlook for the international economy looks grim, there is still a chance to avoid catastrophe, and at the least, to prevent the crisis from reaching the magnitude of the Great Recession.

Endnotes:

  1. UNCTAD. “UNCTAD warns of policy-induced global recession.” October 3, 2022. Accessed January 14, 2023, https://unctad.org/news/unctad-warns-policy-induced-global-recession  
  2. Ibid
  3. Ibid
  4. UNCTAD. “Trade and Development Report 2022.” Accessed December 29, 2022, https://unctad.org/tdr2022 
  5. World Bank. “Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes.” September 15, 2022. Accessed December 27, 2022, https://www.worldbank.org/en/news/press-release/2022/09/15/risk-of-global-recession-in-2023-rises-amid-simultaneous-rate-hikes 
  6. Ibid
  7. Brookings Institution. “Key economic policy developments in 2022 and what to expect in 2023.” December 21, 2022. Accessed December 29, 2022, https://www.brookings.edu/blog/up-front/2022/12/21/key-economic-policy-developments-in-2022-and-what-to-expect-in-2023/ 
  8. UNCTAD. “Trade and Development Report 2022.” Accessed December 29, 2022, https://unctad.org/tdr2022 
  9. UNCTAD. “UNCTAD warns of policy-induced global recession.” October 3, 2022. Accessed January 14, 2023, https://unctad.org/news/unctad-warns-policy-induced-global-recession 
  10. IMF. “IMF-FSB Early Warning Exercise – Design and Methodological Toolkit.” September 1, 2010. Accessed December 29, 2022, https://www.imf.org/external/np/pp/eng/2010/090110.pdf 
  11. Ricardo Llaudes, Ferhan Salman, and Mali Chivakul. “The Impact of the Great Recession on Emerging Markets.” IMF. October 2010. Accessed January 4, 2023, https://www.imf.org/external/pubs/ft/wp/2010/wp10237.pdf 
  12. Ibid 
  13. Ibid
  14. Ibid
  15. UNCTAD. “UNCTAD warns of policy-induced global recession.” October 3, 2022. Accessed January 14, 2023, https://unctad.org/news/unctad-warns-policy-induced-global-recession
  16. Ibid
  17. Ricardo Llaudes, Ferhan Salman, and Mali Chivakul. “The Impact of the Great Recession on Emerging Markets.” IMF. October 2010. Accessed January 4, 2023, https://www.imf.org/external/pubs/ft/wp/2010/wp10237.pdf 
  18. Buly Cardak and Vance Martin.”Once in a Lifetime? The Effects of the Global Financial Crisis on Household Willingness to Take Financial Risk.” Econ Rec, 95: 442-46. November 16, 2019. Accessed January 7, 2023 https://doi.org/10.1111/1475-4932.12506  
  19. Ricardo Llaudes, Ferhan Salman, and Mali Chivakul. “The Impact of the Great Recession on Emerging Markets.” IMF. October 2010. Accessed January 4, 2023, https://www.imf.org/external/pubs/ft/wp/2010/wp10237.pdf 
  20. Ibid

UNCTAD. “Trade and Development Report 2022.” Accessed December 29, 2022, https://unctad.org/tdr2022

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ChinaEconomicsFeaturedPrint ArticleThe International Economy

The Recession-Proof Luxury Market

written by Grace Funk

The world economy is on the brink of a recession. According to statistics from the research firm Ned Davis, there is a 98 percent chance of a global recession occurring in the next year. (1)  The firm has only before recorded such high probabilities twice before: in 2008, during the American financial crash, and in 2020, during the COVID-19 pandemic. Generally, a recession is understood as two consecutive quarters of negative GDP growth, but this definition can neglect other significant factors like employment and income levels. A more developed definition comes from the National Bureau of Economic Research, which states that a recession is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” (2) Faced with grim economic prospects, consumers across the world anxiously await 2023.

In periods of economic downturn, discretionary spending, which often includes fashion and travel, is significantly reduced. The average person is often ambushed by the two-headed monster: inflation – which remains high at 9.1 percent – and recession. (3) And, as is happening now, revenge spending–when consumers spend saved money to make up for lost time during tough economic periods–is decreasing, as many parts of the world have (hopefully) passed the height of the pandemic. So, with a looming recession and decreased revenge spending, one would think the luxury market would flounder in 2023 as well.

However, one would be wrong.

The luxury market remains immune to the warning signs of a global recession. Currently, the market is valued at approximately 353 billion euros (377 billion dollars), a figure which is expected to grow at least 3 to 8 percent next year (4). While the International Monetary Fund is projecting that the worst is yet to come regarding economic downturn, conglomerates like Moët Hennessy Louis Vuitton SE (commonly known as LVMH) post strong sales that surpass analyst profit estimates. (5) Ninety-five percent of all luxury brands have in fact achieved “positive sales growth” in 2022, forecasting even greater success in 2023. (6)

Brands like Walmart, Best Buy, and Gap, on the other hand, are all bracing for dismal futures. Many of their consumers are simply not spending because of inflated prices and recession fears. The luxury market, however, does not project a gloomy future, for it is well insulated by its stable and wealthy consumer base. The Chief Financial Officer of LVMH, Jean Jacques Guiony, remarked upon the so-called disconnect between the global economy and the luxury industry. (7) “Luxury is not a proxy for the general economy,” he stated. “We end up selling to affluent people and they have a behavior of their own, which is not necessarily totally aligned with economics.” When Louis Vuitton, for example, raises prices, its average consumer will still be able to afford its products. In stark contrast, much of the world’s population actually feels the effects of inflation and recession and will reduce their consumption as a result.

Many wealthy buyers from Asia and the United States have taken advantage of the dollar trading for more than a euro for the first time in 20 years and have traveled to Europe to buy their luxury goods. (8) Chanel, whose classic flap bags sell for 9,000 euros – 8,850 dollars – has lines out the door on Paris’s Rue Cambon. Leather goods from heritage brands like Hermès and Louis Vuitton are considered investments that will hold value over time. And, this year alone, the average transaction for an American at a luxury goods store in Europe totals about 1300 dollars, significantly greater than the average of about 530 dollars in 2019. (9)

China, once holding a powerful stake in the luxury market, has suffered under Xi Jinping’s zero-Covid policy and its resulting shutdowns of public places like shopping centers. Luxury stores were inaccessible. Because of this, China’s share in the luxury market is estimated by Bloomberg Intelligence to have been halved in 2022. (10) But, as the zero-Covid policy begins to relax, Chinese consumers – potentially poised for revenge spending – will rely on luxury boutiques in second- or third-tier cities like Chengdu or Hainan for their luxury needs because of government restrictions on international travel. Ordinarily, these consumers would travel to London, Paris, Seoul, or Hong Kong to visit luxury boutiques, but they now mostly travel regionally instead of internationally to access luxury goods. Interestingly, the luxury market has not been adversely affected by the decreased spending of Chinese shoppers; this is likely because the American and European markets are booming. And, even though China’s share in the luxury market has dipped in zero-Covid times, it will rebound in the future. In fact, Chinese consumers are expected to comprise 40 percent of all luxury consumers by 2030. (11)

The luxury market has demonstrated its resiliency to recession in 2021 and 2022. While most of the world is currently preparing for a period of economic downturn, money keeps flowing to luxury brands from the very wealthy and ultra-wealthy – about 20 percent of their clientele. (12) This recent success of the market reflects larger class disparities within and between each country. Elite wealthy consumers partake in acts of revenge spending, but the harsh reality is that most of the global population does not have the resources – or luxury – to do so. 

In short, as the world economy sinks around it, the luxury market is doing just fine.

Endnotes:

1: Kristopher Fraser. “Is luxury fashion proving itself recession proof?” Fashion United, August 23, 2022. Accessed December 14, 2022, https://fashionunited.uk/news/business/is-luxury-fashion-proving-itself-recession-proof/2022082364782.

2: Jamie Johnson. “Are We in a Recession: the Answer Isn’t That Simple.” Business Insider, October 26, 2022. Accessed December 15, 2022, https://www.businessinsider.com/personal-finance/are-we-in-a-recession. 

3: Allison Morrow and Christopher Hickey. “5 signs the world is headed for a recession.” CNN, October 2, 2022. Accessed December 15, 2022, https://www.cnn.com/2022/10/02/business/global-recession-fears-explained/index.html.

4: Lauren Indvik. “Luxury market forecast to grow despite global recession fears.” Financial Times, November 15, 2022. Accessed December 14, 2022, https://www.ft.com/content/8b795dde-cc05-4d2b-b84c-35234e4b47ab. 

5: Angelina Rascouet. “Luxury Goods Still Sell Big Even As Recession Fears Grow.” Bloomberg.com, October 20, 2022. Accessed December 15, 2022, https://www.bloomberg.com/news/articles/2022-10-20/luxury-goods-still-sell-big-even-as-recession-fears-grow.

6: Ron Emler. “Luxury sector will be ‘resilient to recession’ in 2023, say consultants.” The Drinks Business, November 22, 2022. Accessed December 15, 2022, https://www.thedrinksbusiness.com/2022/11/luxury-sector-will-be-resilient-to-recession-in-2023-say-consultants/.

7: Angelina Rascouet. “Luxury Goods Still Sell Big Even As Recession Fears Grow.” Bloomberg.com, October 20, 2022. Accessed December 15, 2022, https://www.bloomberg.com/news/articles/2022-10-20/luxury-goods-still-sell-big-even-as-recession-fears-grow.

8: Ibid.

9: Nick Kostov. “Americans Flock to Europe for Holiday Shopping Binge.” The Wall Street Journal, December 12, 2022. Accessed December 14, 2022, https://www.wsj.com/articles/americans-flock-to-europe-for-holiday-shopping-binge-11670797821. 

10: Elizabeth Paton. “In China, Luxury Shopping Faces Ongoing Headwinds.” The New York Times, December 7, 2022. Accessed December 16, 2022, https://www.nytimes.com/2022/12/07/business/dealbook/covid-china-luxury-shopping.html. 

11: Ibid.

12: Ian Krietzberg. “Ultra-rich still shopping for luxury despite inflation, recession fears.” CNBC, August 13, 2022. Accessed December 14, 2022, https://www.cnbc.com/2022/08/13/ultra-rich-still-shopping-for-luxury-despite-inflation-recession-fears.html.

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ChinaEconomicsFeaturedInternational TradePrint ArticleThe International EconomyUnited States

China’s Debt Issue: Its Weakening Economic Grip

written by Jack Hill

In his first campaign for the presidency, Barack Obama highlighted the U.S.’s difficulties with promoting American interests in Asia. The most imposing obstacle? China’s fiscal influence throughout the continent articularly lamenting China’s fiscal influence. “It’s pretty hard to have a tough negotiation,” Obama complained, “when the Chinese are our bankers.” (1)

At the time, the People’s Republic of China (PRC) held well over $1 trillion in U.S. government debt, with some estimates even ranging up to $1.7 trillion (2). While that number has dipped to $980.8 billion dollars as of October 2022, China’s holdings of U.S. government debt are still some of the largest in the world (3). China’s massive share of U.S. government debt effectively confers serious influence over American policy making. Moreover, as China competes with the U.S. for global influence (particularly in the Taiwan Strait), their financial authority serves as a particularly potent weapon for the PRC in seeking to supplant the U.S. as the world’s hegemon. Yet as the global economy enters a period of turbulence, and the American economy teeters on recession, China’s financial leverage is bound to be weakened, thereby threatening the PRC’s greater hegemonic ambitions as well.

Why does China own so much of the U.S.’s debt? In essence, because it is beneficial for the Chinese economy. China’s large volume of U.S. treasuries purchases help stimulate consumption in the American economy, which in turn increases Chinese export sales to the U.S. In addition, Chinese loans allow the U.S. to run persistent budget deficits and continually commit to high rates of government spending (i.e., an expansionary fiscal policy), invigorating American economic activity as a result. Of course, massive spending bills, lower tax rates  also contribute to the U.S.’s budget imbalance. Nonetheless, since the U.S. is the largest importer of Chinese goods, the PRC naturally stands to benefit from strong economic activity in the U.S (4).

As China and the U.S. have grown closer as trade partners, Chinese holdings of U.S. debt have ballooned. And as mentioned earlier, China’s status as a large creditor to the U.S. provides the PRC with significant political leverage over American policy making. A Chinese sell-off of American debt would hinder the U.S. to continue to commit to high levels of government spending. As a result,  the U.S. would be forced to restrain its fiscal policy by either reducing its budget deficits, or by selling U.S. treasuries to other countries. However, the feasibility of both these solutions is questionable. The dollar’s value is currently riding strong as the U.S. Federal Reserve has hiked interest rates to tame inflation, making it an expensive investment. The U.S. would thus experience trouble finding willing states to purchase American debt. Similarly, it is unlikely the U.S. would significantly reduce their budget deficit, since it would require further economic austerity measures, which would be challenging politically for the Biden administration. However, what is certain is that both of these solutions would slow economic activity in the U.S. This means China can levy the threat of sell-off whenever American policy conflicts with their goals. For instance, China’s recent reduction of U.S. debt in July of 2022 dropped their holdings to their lowest level in 12 years, which analysts argue was motivated largely by the U.S.’s exclusion of Russia from the SWIFT international banking system (5).

However, many disregard the notion that China’s share of U.S. debt confers political leverage to the PRC. Instead of a coercive instrument, analysts emphasize the degree of China’s ownership of American foreign debt as a mere reflection of  the interconnectedness of the two economies.This approach states that China could not threaten a wholesale sell-off of its U.S. debt holdings, contending their sheer scale would have negative consequences for the Chinese economy itself. Thus, why worry about China’s fiscal influence over the U.S., or even portend its weakening as a result of the global economic downturn?

While China and the U.S. may share a very close economic relationship, the aforementioned attitude ignores not only the diametrically opposed political orientations of both nations, but also that they are both engaged in competition for global hegemony. This is particularly exemplified in the controversy of Taiwan’s sovereignty. If the U.S. is reliant on the PRC’s purchasing of American debt to maintain strong economic performance,  China can leverage this to deter U.S. policy which conflicts with their aims to reincorporate Taiwan with the mainland. Though it did not force the U.S. to reverse its policy, China’s debt reductions after the U.S.’s exclusion of Russia from the SWIFT international banking system exhibits the execution of this threat clearly. Furthermore, China need not threaten a complete sell-off of its American debt in order to influence the U.S.’s actions if the PRC did attempt to reincorporate Taiwan through military means.  Small but significant reductions would still be capable of forcing the U.S. to reevaluate its policy by inflicting severe enough damages for the U.S. to sustain. Thus, it is misguided to assume that China’s status as a significant creditor of American debt does not threaten the U.S.’s position as the world’s predominant power.

However, the global economic downturn poses a serious hazard to the potency of China’s fiscal influence over the U.S.. As previously mentioned, projections for the U.S. economy in 2023 are characteristic of recession, with the U.S. Federal Reserve predicting GDP growth to grind to 0.5% in 2023 and unemployment to rise (7). Additionally, the Conference Board, a nonprofit think tank, expects that the American economy will experience three consecutive quarters of negative economic growth beginning in Q1 2023 (8). Similarly, the U.S. Federal Reserve’s efforts to tame inflation through restrictive monetary policy will tighten the American money supply, further contributing to a sluggish economy. 

Decreased economic activity in the U.S. will naturally harm China by reducing demand for Chinese goods in the U.S., a worrying trend the PRC is already facing globally (9).  Consequently, China’s massive investment in U.S. debt will not yield equally substantial returns as poor economic conditions affect American consumption. The severity of the economic downturn will harm China despite their past financing of strong activity in the U.S. economy. In turn, this will render the PRC’s holding’s of U.S. debt as less consequential to American economic performance and thus reduce the political influence attached to China’s large share of U.S. Treasuries. This is particularly true in the event tensions escalate further over Taiwan as they are expected to do.  If their financing ceases to significantly contribute to a strong U.S. economy, then the PRC only wields empty threats. Thus, how can China expect the U.S. to flinch if it threatens to decrease its holdings of American debt in the event of a clash over Taiwan?

It should be noted, however, that the American economy is expected to rebound in 2024, along with the rest of the global economy (8). Nevertheless, global economic turbulence will leave scars on China’s fiscal influence, and with it consequences for the nation’s goals of global hegemony.

Citations:

  1. Oatley, T. (2019). International political economy. Routledge, Taylor & Francis Group.
  2. Stetser, B. W. (2009, February 26). Who bought all the treasuries the US issued in 2008? and who will be the big buyers in 2009? Council on Foreign Relations. Retrieved March 14, 2023, from https://www.cfr.org/blog/who-bought-all-treasuries-us-issued-2008-and-who-will-be-big-buyers-2009 
  3. Sebastian, A. (2023, February 7). 5 countries that own the most US debt. Investopedia. Retrieved March 14, 2023, from https://www.investopedia.com/articles/markets-economy/090616/5-countries-own-most-us-debt.asp
  4. China Trade. China Trade | WITS Data. (2020). Retrieved March 14, 2023, from https://wits.worldbank.org/CountrySnapshot/en/CHN
  5. Jamali, L. (2022, July 19). Why is China reducing its U.S. debt holdings? Marketplace. Retrieved March 14, 2023, from https://www.marketplace.org/2022/07/19/why-is-china-reducing-its-u-s-debt-holdings/
  6. Is it a risk for America that China holds over $1 trillion in U.S. debt? China Power Project. (2020, August 26). Retrieved March 14, 2023, from https://chinapower.csis.org/us-debt/
  7. Schneider, H. (2022, December 20). Recession, or recession-ish? Fed outlook for U.S. walks a fine line. Reuters. Retrieved March 14, 2023, from https://www.reuters.com/markets/us/recession-or-recession-ish-fed-outlook-us-walks-fine-line-2022-12-16/
  8. The Conference Board Economic Forecast for the US Economy. The Conference Board. (2023, February 15). Retrieved March 14, 2023, from https://www.conference-board.org/research/us-forecast
  9. China balance of trade February 2023 data – 1981-2022 historical – March forecast. China Balance of Trade – February 2023 Data – 1981-2022 Historical – March Forecast. (2023). Retrieved March 14, 2023, from https://tradingeconomics.com/china/balance-of-trade
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AsiaDevelopmentEconomicsFeaturedGlobalizationInternational TradeInternetPrint ArticleTechnology

The Chip Shortage: a Lasting Symptom of COVID-19

written by Seher Alvi

Every day, the average person will come into contact with hundreds of chips. The term “chip”, which refers to the entirety of an integrated circuit contained within a microchip, has become somewhat synonymous in everyday conversation with semiconductors. This is in spite of the fact that semiconductors, which are elements that function in between insulators and conductors, are merely one element of a circuit, used to allow an electrical current to flow in some cases and not in others (1). Common semiconductors such as silicon, germanium, gallium arsenide, and others are used by the majority of manufacturers in building integrated circuits that are later installed in computers, cars, microwaves, and countless other devices. Many have complained that the COVID-19 pandemic has caused a shortage in semiconductors. In reality, the shortage has impacted microchips themselves, due to insufficient supply from manufacturing companies.

With the entire world on lockdown in the beginning of 2020, the transportation industry came to a grinding halt, and automotive manufacturers drastically cut down on their chip orders (2). The demand for chips, however, was simply relocated; as more and more people began to work from home and seek entertainment in quarantine, electronics and digital appliance manufacturers found themselves with an uptick in sales and sought an increased supply of microchips as a result (2). 

It’s important to note, however, that the complexity of chips and the subsequent cost of production can vary greatly depending on what the chip is being manufactured for. As semiconductor producers adjusted their factories according to the market’s appetite for sophisticated processors and electronic semiconductor circuits, their prices rose accordingly. When people began to emerge into the outside world and travel once more, the demand for transportation skyrocketed, and the vehicle market scrambled to create fresh stock for eager waiting customers. However, they found themselves faced with an insurmountable challenge: the chip factories which once churned out low-cost, simplified chips for cars were now focused on a new clientele, and their motors and navigation systems simply could not function without these advanced circuit mechanisms. 

This story of supply and demand racing to keep up with one another is by no means new. It is merely the typical cycle seen in any market. But why, then, has it gained so much visibility? The first answer is surprisingly simple; even though the auto industry only makes up 10% of the overall demand in chips, it’s extremely important to many leading world governments such as the United States’ and the U.K.’s, due to the great deal of domestic revenue it generates (3). As a result, many pieces of active legislation have actually been passed in an attempt to alleviate the circuit shortage. The CHIPS and Science Act of 2022, for example, provided over 50 billion dollars to American research and production of integrated semiconductor secrets, so that U.S. auto and technology manufacturers can source their supplies domestically without the added hassle of international imports (4). The widespread nature of chips in nearly every area of production and industry, be it transportation, electronics, and household goods, has also added to the notoriety of the scarcity issue. A surprising aspect of the chip market and its conspicuousness is its underlying involvement in the U.S.-China conflict. 

Over 50% of microchip manufacturing happens in one firm in Taiwan: the Taiwanese Semiconductor Manufacturing Company, or TSMC (4). This means that this small island is single handedly responsible for nearly a third of the United States’ digital computing power (2). As a result, the American motive behind protecting the nation’s sovereignty extends beyond a Good Samaritan dedication to upholding democracy, and ventures into the territory of capitalist self-interest. Even so, the political nature of public support for Taiwan cannot be ignored, given the salience of the issue. While it’s unlikely that China would destroy the chip plants in an invasion of Taiwan, considering their own reliance on the technology, they would most likely take control of them in order to profit. And considering the rocky nature of Chinese-American trade relations, there’s a high possibility that they may withhold the sale of chips to factories in the United States, forcing them to turn to Korean factories or other manufacturers elsewhere (4). 

At this very moment, the chip shortage appears to be following a cyclical pattern. Experts predict the surge in demand will subside as the pandemic recedes and the travel infatuation dies down, and the competition for semiconductor chips will die down accordingly (5). However, it will be interesting to see how this market, which is now proven to be extremely volatile, will be impacted by future world events, and if it will change further as a result. Perhaps Taiwan will lose their long-held monopoly, or perhaps will evolve to rely on some new innovation. Either way, it is certain that those in the forefront of the manufacturing industry will hold not only a great deal of economic power, but also an incredible amount of sociopolitical influence as well. 

  1. Sean Speer and Chris Miller. “Why are chips so important, anyway? Professor Chris Miller on the fight for the world’s most critical technology.” The Hub, November 24, 2022. Accessed February 17, 2023, https://thehub.ca/2022-11-24/why-are-chips-so-important-anyway-professor-chris-miller-on-the-fight-for-the-worlds-most-critical-technology/. 
  2. Tamera Max. “Understanding the Current Global Semiconductor Shortage, Preparing for the Future.” S&P Global, August 19, 2022. Accessed January 19, 2023, https://www.spglobal.com/engineering/en/research-analysis/understanding-the-current-global-semiconductor-shortage.html.
  3. Samuel K. Moore. “How and Why the Chip Shortage Will End, in 4 Charts.” IEEE, June 29, 2021. Accessed February 3, 2023, https://spectrum.ieee.org/chip-shortage.
  4. David Shepardson and Patricia Zengerle. “U.S. Senate passes bill to boost chip manufacturing, compete with China.” Reuters, July 28, 2022. Accessed January 27, 2023, https://www.reuters.com/business/majority-us-senate-backs-bill-boosting-chipmakers-compete-with-china-2022-07-27/.
  5. J.P. Morgan. “Supply Chain Issues and Autos.” August 11, 2022. Accessed February 3, 2023, https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage. 
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ChinaEast AsiaEconomicsFeaturedPrint Article

A Super-Aged Region: The Economic Implication of East Asia’s Aging Population 

written by Lillian Shen

China’s population has started to shrink. On January 16, the government announced that, in 2022, the number of deaths had surpassed the number of births. This demographic milestone is the culmination of a steady decline in the birth rate and is one which hasn’t occurred since the widespread famines under Mao Zedong’s leadership. In fact, the situation is so dire that China lost its title as the world’s most populous country earlier this year to India. (1) The country’s population concerns may be a recent development, but they mirror the current demographic trends of the rest of the East Asian region, as well as similar economic implications. 

All of China’s regional counterparts are trending toward a super-aged population, where more than 20% of its inhabitants are over the age of 65. Japan’s population is considered one of the world’s oldest. Its reproductive rate has been described by its own government as a “critical situation.” (2) South Korea reports the world’s lowest birth rate. The average South Korean woman is expected to bear 0.79 children, well below the 2.1 replacement rate needed to keep the population at the same level. (3) Taiwan’s birth rate is also declining rapidly. Forecasts predict that by 2035, Taiwan’s fertility rate will be lower than South Korea’s. By 2025, one in five Taiwanese citizens will be over the age of 65, joining Japan as one of the world’s super-aged societies. (4) 

East Asian nations also share similar causes behind their low reproductive rates. The primary concerns of young adults in these countries are economic. Many couples cannot afford to pay for expenses such as childcare with low wages and pessimistic career prospects, especially alongside the societal expectation to take care of aging parents. Furthermore, the demanding corporate culture of East Asian nations also means there is little time outside of work to properly raise children. (5) Clearly, rising costs in a slowing economy have limited the desire for young East Asians to have children. However, the region faces economic consequences for an aging population as well. 

As the median age increases, the young workforce supporting the elderly gets smaller. The government will collect less revenue from taxes, but expenses will be greater as retired citizens collect their pension benefits. National healthcare systems will also be strained from addressing the various health issues the elderly face. The economic impact of an aging population is undeniable. Japan’s average annual GDP growth will slow by 1% over the next three decades as a result of aging. China may see a decline of 170 million workers over the same period of time as well. (6) For the domestic economy, a scarcer workforce would lead to increased production costs. China may currently be known as the factory of the world, but such changes would lead to manufacturing shifting to other, cheaper nations. As China reports its slowest GDP growth in almost half a century, its aging population will only exacerbate the situation.

East Asian governments have long recognized the worrying trend and have taken steps to address the issue. However, current efforts to increase the reproductive rate have been limited to financial incentives for young families. Infants under a year old receive a monthly payment of $230-$540 from the South Korean government, with plans to increase that amount to further encourage reproduction. (7) Beijing relaxed its infamous “one-child” policy and now offers cash, tax cuts, and property incentives. There are also other solutions to an aging population. Automation can fill the productivity gap left by a shrinking labor force. Foreign workers can also fulfill the same purpose, with the added benefit of contributing to government revenue. (8) 

China’s economy has dominated the global market for years. The Asian Tigers, Taiwan, and South Korea grew rapidly in the late twentieth century. Japan is the world’s third-largest economy. Yet the aging populations of East Asia must be addressed to maintain economic growth in the 21st century.

Endnotes

  1. Alexander Stevenson and Zixu Wang. “China’s Population Falls, Heralding a Demographic Crisis.” The New York Times. January 16, 2023. Accessed January 30, 2023, https://www.nytimes.com/2023/01/16/business/china-birth-rate.html.
  2. Mari Yamaguchi. “Japan births at new low as population shrinks and ages.” AP News. November 28, 2022. Accessed January 30, 2023, https://apnews.com/article/business-japan-economy-82a54de52e3d121b80b9ba2bc0917225.
  3. Paula Hancocks. “South Korea spend $200 billion, but it can’t pay people enough to have a baby.” CNN. December 4, 2022. Accessed January 30, 2023, https://www.cnn.com/2022/12/03/asia/south-korea-worlds-lowest-fertility-rate-intl-hnk-dst/index.html#:~:text=South%20Korea%20recently%20broke%20its,is%20down%20to%20just%200.79.
  4. Focus Taiwan. “Taiwan’s fertility rate to fall to world’s lowest by 2035: NDC.” October 31, 2022. Accessed January 30, 2023, https://focustaiwan.tw/business/202210310020.
  5. Alexander Stevenson and Zixu Wang. “China’s Population Falls, Heralding a Demographic Crisis.” The New York Times. January 16, 2023. Accessed January 30, 2023, https://www.nytimes.com/2023/01/16/business/china-birth-rate.html.
  6. IMF Blog. “Chart of the Week: The Cost of Asia’s Aging.” May 1, 2017. Accessed January 30, 2023, https://www.imf.org/en/Blogs/Articles/2017/05/01/chart-of-the-week-the-cost-of-asias-aging.
  7. Paula Hancocks. “South Korea spend $200 billion, but it can’t pay people enough to have a baby.” CNN. December 4, 2022. Accessed January 30, 2023, https://www.cnn.com/2022/12/03/asia/south-korea-worlds-lowest-fertility-rate-intl-hnk-dst/index.html#:~:text=South%20Korea%20recently%20broke%20its,is%20down%20to%20just%200.79.
  8. Kelly Ng. “Should China worry about its shrinking population?” BBC News. January 20, 2023. Accessed January 30, 2023, https://www.bbc.com/news/world-asia-china-64329890.

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DevelopmentEconomicsFeaturedPrint ArticleUnited Kingdom

Snakes and Ladders — Liz Truss and Kwasi Kwarteng’s Legacy on the British Pound

written by Max Schaked

Originating in Ancient India and brought to the UK in the late 19th century, Snakes and Ladders is a classic board game that most British children will remember playing growing up. The game is simple: roll the dice to move up through the board; land on a ladder and you’ll be propelled upwards towards victory, but land on a snake and you’ll slide downwards, placing you further from the top. It’s a game of volatility— the highest highs and lowest lows. 

As of July of 2022, the game is afoot: British economic politics morphed into a traditional snakes and ladders board and Liz Truss held the dice. In a game played against herself, would she find the ladders to the top or tumble down snakes to new lows? 

The stage is set — what ensues is the unprecedented and borderline unbelievable story of Liz Truss, Kwasi Kwarteng, and the Great British Pound. Her legacy has undermined Britain’s long-held role as a major economic power. 

The Shortest Prime Minister

On October 25th, a few months after the dice was first rolled, I was sitting on the couch listening to the news when I heard the words:

“Liz Truss has officially become the shortest serving Prime Minister of the United Kingdom.”

This was not, as I originally believed, a jab at Truss’s height. Somehow the more unimaginable happened, as after just 44 days as prime minister, she resigned from office. A month and a half. That’s it. To put that in perspective, the next shortest-serving PM, George Canning, was in office for almost three times as long. The devastatingly insignificant reign of Liz Truss has had a very significant impact on the nation even until today. 

To truly understand the events that unfurled, the story must begin before Truss even took office, during the Boris Johnson Administration. His three-year stint in office was marred by many scandals, most notably in the summer of 2022 when it was revealed that he had known about and tried to cover up the sexual misconduct of lawmaker Chris Pincher, whom he promoted to a senior government position. (1) After the resignation of 50 members of the government in just the span of two days as a result of this ethical shortcoming (among others during his time as PM), Johnson recognized that after years of narrowly avoiding it, he was finally tumbling down a snake. He resigned on July 7th, leaving the Conservative Party the arduous task of electing their new leader and head of government.

Two leading candidates emerged from the dust of resignations and turmoil: Rishi Sunak and Liz Truss. Sunak, the nation’s former finance minister and among the many officials who resigned in July, touted his ability to manage Britain’s economy but was criticized for having been in office when the nation’s cost of living crisis began. Truss, on the other hand, was deeply devoted to conservative policies and linked her economic proposals with more radical tax cuts. (2) In the end, it was the latter’s perceived determination and strength that gave her a ladder and boosted her to the head of government, winning with 81,326 party votes to 60,399. (3) She stepped into office, confident in her prowess and with the goal of a long-lasting legacy of serving the people of Britain for the better and aiding them through the tough winter. 

However, Truss’s unwavering confidence would bring her too close to the sun. The higher up on the board the ladders take you, the more likely you are to cross paths with a snake. 

The Kwarteng Kwanundrum

Truss had many unique policy proposals for what she believed would bring about the betterment of Britain, but amidst economic strife, none were so critical to her campaign as those concerning the economy. (4) Trussanomics, as it was dubbed, proposed large-scale tax cuts while also increasing government spending. After an interview with Nick Robinson during her campaign, the opposition expressed concern that Truss struggled to name any economist who backed the plan or any reasonable way to fund it — in fact, the term “Trussanomics” was first a jab at Truss’s overly optimistic view of her economic plan. Once elected, all eyes were on how exactly she was going to make it happen. 

Then out of the shadows emerges Kwasi Kwarteng. Being appointed Chancellor of the Exchequer (Finance Minister) under Truss is the second-greatest accomplishment in Kwarteng’s life, after having the coolest name known to man. Kwarteng was given the task of taking all of the idealistic and rhetoric-driven policies and converting them into something realistic. His efforts culminated in something known as a “mini-budget,” the largest tax cut in the nation in fifty years. Here are some key aspects of the mini-budget which, interestingly enough, wasn’t a very mini proposal):

  1. Elimination of the 45% additional income tax rate for £150,000 and higher earnings, while basic income tax reduced from 20% to 19%
  2. The price of national insurance, while stated to increase earlier in the year, would stay the same 
  3. Bankers’ bonuses would no longer have any cap
  4. A proposed business tax increase would be scrapped entirely (5). 

Once the plan had been revealed, the main question investors had was: how would the British government fill the hole in its spending budget that was previously occupied by its now-cut tax revenue? The answer: it wouldn’t. In fact, there was an estimated 27.7 billion pounds of the UK’s budget unaccounted for. (6) This, coupled with proposed government provisions for energy costs that winter due to energy crises resulting from the war in Ukraine, greatly disturbed followers of the British economy. The discrepancy would be filled by borrowing, further exacerbating the UK’s already concerning national debt. Kwarteng and the Truss government repeatedly stated that they would not apologize for “economic growth” in the nation, but it wasn’t growth they would have to apologize for.

The snake bit Truss almost immediately. 

The British pound plummeted in value to $1.03, the lowest it has ever been valued against the dollar in history. Once considered stable, British government bonds were sold off en masse — so monumentally, in fact, that the Bank of England itself had to buy 65 billion pounds of those bonds just to keep the market from crashing. The International Monetary Fund proclaimed an “astonishing and nearly unprecedented rebuke against the tax cuts,” stressing that the government reconsider. (7) Markets in turmoil. Money’s value volatile. Mounting political tension. Usually, this pressure is what turns coal into diamonds. Unfortunately, Truss had no money in the budget for diamonds. 

Then Truss and Kwarteng hit the global economic order with something fairly unforeseen:

The two drew back on significant parts of their proposals. While in hindsight this seems natural in the face of large-scale political backlash, it was genuinely surprising coming from two figures who had been so utterly staunch for weeks, defending the effectiveness of their plan. One thing was made clear above all else: Truss was in the endgame now. She quickly began maneuvering to save face. First, she fired Kwarteng on October 14. Then, she hired Jeremy Hunt to replace him. A few days later, Hunt announced the reversal of Truss’s economic plan — two weeks earlier than expected. (8) Liz Truss was motionless and speechless behind him. 

Rishi, Make Us Rich

With no ladders in sight, Truss resigned a few days later on October 25th, her legacy forever tainted by economic havoc. Her successor, the same Rishi Sunak she won against before, is now tasked with stabilizing the economy amid a harsh winter. His allies are hopeful, his opponents are doubtful, but at the very least, he’s lasted more than 44 days. 

Already, Rishi has facilitated an economic comeback by returning consumer confidence, something that resulted in a 0.3% growth in January after months of contractions. Darren Morgan from the Office for National Statistics claims that the growth was one of the timely circumstances, pointing to the return of schooling and The Premier League. (9) Yet, Rishi’s impact cannot be understated. In contrast with Truss, he is calm and collected — a seasoned economist and government official who knows not only what works but how and why it works. Though he is the youngest ever Prime Minister, his experience will likely be the final ladder that brings the nation’s economy back. So, what is the future of Britain? Will they ever emerge from the pound’s severe stint? That’s all in his hands now.

Endnotes:

  1. Press, The Associated. “Embattled UK Prime Minister Boris Johnson Resigns.” NPR,, 7 July 2022, https://www.npr.org/2022/07/07/1110226702/boris-johnson-resignation-prime-minister-uk.
  2. Kirby, Jen. “The UK’s next Prime Minister Will Be One of These Two People.” Vox, Vox, 20 July 2022, https://www.vox.com/2022/7/20/23271450/uk-conservatives-rishi-sunak-liz-truss. 
  3. Team, The Visual Journalism. “How Liz Truss Won the Conservative Leadership Race.” BBC News, BBC, 5 Sept. 2022, https://www.bbc.com/news/uk-politics-60037657. 
  4. “What Policies Will Liz Truss Pursue as Britain’s New Prime Minister?” The Guardian, Guardian News and Media, 5 Sept. 2022, https://www.theguardian.com/politics/2022/sep/05/what-policies-will-liz-truss-pursue-as-britain-new-prime-minister. 
  5. “Kwasi Kwarteng’s Mini-Budget: Key Points at a Glance.” The Guardian, Guardian News and Media, 23 Sept. 2022, https://www.theguardian.com/uk-news/2022/sep/23/kwasi-kwarteng-mini-budget-key-points-at-a-glance. 
  6. “What Was in the Mini-Budget and What Is the Government’s New Plan?” BBC News, BBC, 17 Oct. 2022, https://www.bbc.com/news/business-62920969. 
  7. Ioanes, Ellen. “Why Liz Truss Was UK Prime Minister for Only Six Weeks.” Vox, Vox, 18 Oct. 2022, https://www.vox.com/world/2022/10/18/23409881/united-kingdom-liz-truss-trussonomics-political-crisis-explained. 
  8. Person, and Kylie Maclellan William Schomberg. “New UK Finance Minister Hunt Reverses Truss’s Economic Plan in Dramatic U-Turn.” Reuters, Thomson Reuters, 17 Oct. 2022, https://www.reuters.com/world/uk/new-uk-finance-minister-faces-market-verdict-after-gutting-trusss-plans-2022-10-16/. 
  9. Jordan, Dearbail. “UK Economy Rebounds as Rishi Sunak Says Confidence Is Returning.” BBC News, BBC, 10 Mar. 2023, https://www.bbc.com/news/business-64904333.
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EuropeGeopoliticsHuman RightsHumanitarian AidInternational LawMilitaryPrint ArticleRussiaSecurity and ConflictUkraine

New Lesions Next to Old Scars: An Analysis of Atrocity Prevention Tools Created from the Yugoslav Wars and their Application to War in Ukraine

written by Annabelle Werner

We passed a small red sign that cautioned passersby of unexploded ordnance, which was just one of the fading reminders of war scattered across the idyllic Bosnian countryside. Back in Sarajevo, a mural criticizing UN Peacekeeping bordered a chic restaurant showcasing a grand piano in the window. Modern stores encroached on the occasional dilapidated, bullet-riddled building that had been left untouched. Most evidently of all, pristine white gravestone markers appeared in many small villages, signaling the final resting place of murdered Bosnian Muslim families. The ghastly scars of genocide were raised in some places more than others.

The dissolution of the Socialist Federal Republic of Yugoslavia (SFRY) in 1991 catalyzed a series of wars that would span 10 years, and the people of the Balkans would grapple with post-conflict reconstruction in the decades after. Meanwhile, the international community was left to debate how the few atrocity prevention mechanisms in place had failed so grievously. The UN “safe areas”, or areas designated by the United Nations Security Council (UNSC) to be free from “armed attacks or hostile acts”, would become the sites of massacres. The UNSC became so stuck in perpetual deadlock that the only foreseeable way to peace was to break international law in the form of a NATO bombing campaign. Further, some were asking if there was even an obligation at all to protect citizens of foreign governments. 

In time, new understandings of international criminal and humanitarian law were developed in a dogged commitment to justice. Conceptions of sovereignty, obligations to protect civilians, and gendered aspects of humanitarian law (i.e., considering rape as a weapon of war) were re-conceptualized in favor of expanding such protections. An expanded awareness of how to prevent atrocities emerged. 

War has once again returned to Eastern Europe. Disturbing reports of forced transfers of Ukrainian civilians to “filtration camps” to suppress resistance have surfaced. Mass graves have been discovered in Izium. There have been reports if torture, rape, and the execution of civilians by Russian soldiers in Bucha. And civilian sites have been targeted in Kyiv, Dnipro, and Zaporizhzhia in retaliation for advances made on the warfront. A few questions arise from seeing war come back to Eastern Europe: Do any parallels exist between the international crimes committed in Sarajevo and the Donbas? How will the international doctrines that were developed following the genocides of the 90s apply to the challenges of the Ukrainian-Russian war?

It may prove constructive to investigate the difficulties of applying the international community’s current mechanisms and obligations that developed from the painful cessation of the SFRY to today’s frightening conflict with a nuclear state. 

Reflection: Sarajevo in the 90s

The former Socialist Federal Republic of Yugoslavia was a communist state that dissolved into a series of bloody secessionist conflicts. It was composed of many Slavic ethnic groups with diverse cultural and religious backgrounds under the rule of Josip Broz Tito. With the fall of communism in the late 80s and early 90s, the SFRY was plunged into a period of political and economic turmoil. Ethnic tensions were stoked by nationalistic rhetoric. Following Tito’s death in 1991, wars for independence and sovereignty broke out as ethno-nationalism fueled intense violence on all sides.

Bosnia and Herzegovina faced the worst of this violence, specifically against the Bosinaks or Bosnian Muslims. Bosnia’s central location made the territory desirable, and its population was one of the most diverse in the region: 43% Bosnian Muslims, 33% Bosnian Serbs, and 17% Bosnian Croats among other nationalities. In 1992, a referendum on independence resulted in favor of secession. The vote had been boycotted by Bosnian Serbs, who were against severance with the SFRY, and these results catalyzed brutal armed conflict. The Yugoslav People’s Army (JNA) and the Serbian Army overpowered resistance quickly, and these actors conquered 60% of the state’s territory. The Bosnian Serbs declared this area an autonomous zone known as the Republika Srpska and wanted to create an “ethnically pure” state. The capital, Sarajevo, underwent the longest military siege in modern history; over the course of 1,425 days, 11,541 people lost their lives.

Water and supply lines were cut off as Bosnian Serb forces encircled Sarajevo, utilizing the surrounding mountains. Snipers targeted civilians so frequently, one boulevard (Zmaja od Bosne Street and Meša Selimović Boulevard) was designated as “Sniper Alley” in which Serbian forces would shoot down at any man, woman or child from the tall buildings that lined the street. The worst massacre committed on a single day was in the Markale Massacre when Serbien forces killed 68 civilians and injured 140 while they were trying to buy bread. 

Outside the city, an ethnic cleansing campaign brought death to each village. Violence was committed on all sides during the war, and ultimately Croats, Bosinaks, and Serbs were found guilty by international tribunals. In the Republika Srpska, a few hours east of Sarajevo, the Bosian Serb forces had murdered Bosinaks in each town. The worst of this violence culminated in genocide when Serb forces executed 8,000 men and boys in the fields outside of a UN designated safe area and town called Srebrenica. 

The International Criminal Tribunal for the former Yugoslavia (ICTY) sentenced 90 war criminals to prison, and its successor, the International Residual Mechanism for Criminal Tribunals, is finishing the last trials from the war. Further, advocates of international criminal law harnessed this momentum to not only establish a temporary court to prosecute atrocity crimes committed within this conflict’s jurisdiction, but also a permanent court to try the most powerful, the international criminal court (ICC). 

Bosnia and Ukraine

A few months shy of the thirty-year anniversary of the Siege of Sarajevo, Putin declared a “special military operation” in the Donbas region, escalating the conflict that had begun in 2014 with the annexation of Crimea.

The conflicts in Bosnia and Ukraine are incredibly different. Ethno-nationalism was clearly at the center of the former SFRY’s dissolution, an intense internal division that emerged in the aftermath of the fall of communism and chaos as the post Cold War world order fought to settle. Now, world order is transitioning once again. Some researchers will state that Putin’s nihilistic invasion is rooted in his resistance to NATO expansion and desire to return Russia to a more exalted role on the world stage. Yet, lurking the background of these rather neat, realist observations is the systematic use of power to wipe out Ukrainian nationality in favor of Russian political control and cultural identity.

International criminal law (ICL) clearly asserts that an unprovoked invasion of a sovereign state is one of the four most serious crimes, specifically known as the crime of aggression. The other principle international crimes include war crimes, crimes against humanity, and genocide. Each definition has overlapping crimes, but the latter three are generally conceptualized as increasing in severity, each harder to prove than the last. As the war in Ukraine continues, driven by Russia’s desire to dismantle the Ukrainian nation-state, we have seen evidence of terrible international crimes being committed.

In Sarajevo, there were indiscriminate shelling attacks, the targeting of civilians, and forced transfers of women and children that were committed in order to reduce the ability for ethnic groups to repopulate. There were massacres throughout Bosnia, and these ultimately culminated in ethnic cleansing and genocide. 

In the Donbas, there have been reports of indiscriminate shelling attacks, including using banned cluster bombs, and the targeting of civilians. Russian has backed separatists in Donbas for years, contriving a story about the fictitious need to protect an at-risk population of ethnic Russians from Ukrainian nationals. This region is especially vulnerable to further crimes. “Filtration camps” have also appeared, holding able-bodied men against their will in order to “filter” out support for the Ukrainian state. These crimes of attacking Ukrainian civilians have been understood to be laced with the purpose of deteriorating the Ukrainian sense of national identity and will to fight. 

Former and ongoing Russian military involvement in Crimea and Syria remains morally repugnant and illegal under international law. But that involvement at least bared some sort of resemblance to a politically motivated agenda rooted in security risks or establishing state interests in an ongoing war. In contrast, there is a lack of a concrete political answer for Moscow’s invasion and continued attacks in Ukraine. Some have argued that the original plan was for the Russians to depose of the Kyiv government and quash hopes of the state joining NATO, and when this failed Moscow unleashed warfare on other parts of the state. Officially, the Kremlin has said the “operation” is to protect ethnic Russians and “de-nazify” Ukraine, although it is absurd that a process of “de-nazifying” would mean a war against a Jewish president. These disturbing motives, rooted in dismantling the Ukrainian state or even the expansion of Russian empire, makes the war in Ukraine an unequivocal violation of Article 52, the international law that prohibits the use of force. Further, the invasion is a clear violation of an international crime known as the crime of aggression which is prosecuted by the ICC. Evidence of war crimes have been collected, and human rights watchdogs are nervous about the potential escalation of these crimes. 

Ultimately, the genocide in Bosnia was committed to eliminate an ethnic group (the Bosniaks) and create an affiliated Serbian state. The international crimes committed in Sarajevo were about brutality and retribution. Today, there is a desire to destroy Ukrainian national identity through war and terror, and there is evidence of war crimes in cities like Izium and Bucha where crimes such as killing the elderly out of revenge. Another example of retaliation against civilians is when Russia bombed critical energy infrastructure in Kyiv along with parks and universities after the Ukrainians blew up the Kerch bridge to Crimea last month. These elements of retribution against civilians on the grounds of nationality should be a clear warning sign for escalation of atrocities and persecution. 

Moscow claims to not want to govern Ukrainian territory, but after their initial attempt to replace the government in Kyiv failed, they seem to be playing by the rules of realpolitik: believing there is no choice but to escalate.

The Difficulties of Applying Atrocity Prevention Doctrine and Tools 

It is clear that any unilateral or multilateral force meant to halt the Russian invasion of Ukraine would lead to World War III. Such a situation would also most likely involve nuclear warfare, thus ensuring catastrophe. This effectively rules out the use of multilateral humanitarian intervention, but not necessarily other atrocity prevention tools that are consistent within the Responsibility to Protect (R2P) framework.

Out of the Yugoslav Wars, and of the Rwandan genocide, emerged the idea of the Responsibility to Protect. Simply stated, it is the idea that sovereignty can be revoked if governments systematically attack their own populations or others, thus asserting that anyone, regardless of their nationality or lack of nationality, should be afforded protections against international crimes. 

R2P has faced immense criticism from both sides of the political spectrum. Some argue that sovereignty is untouchable and that nothing, not even the failure to protect one’s civilians from international crimes, or the execution of atrocities against others, is grounds to revoke it. Others argue that it provides legal justifications for weaker states to be exploited by war hawks from the global North. For example, a multilateral force would never invade China for committing international crimes but could feasibly invade most of the global South. Essentially, the overlapping arguments against R2P is that degrading state sovereignty is wrong. 

However, the spirit of R2P is that every human deserves protection from international crimes at the hands of their own state, or that of an aggressor, through appropriate and necessary means. Multilateral humanitarian intervention is the most extreme example of the third pillar, and the other pillars of the doctrine are asserting that 1) states should not exterminate their own people and 2) states have the responsibility to assist other states in meeting that responsibility. Assisting states in preventing atrocity prevention can take many forms, including public diplomacy, developmental aid, or prosecutions of perpetrators, and all are consistent with R2P framework as long as these actions are appropriate and necessary means to protect other human beings from atrocities.

The idea that the international community should care about the Ukrainian people, and not because of their state’s economic value to global industry but on the grounds of a shared humanity, is an idea that emerged from the post-conflict reconstruction following the Yugoslav Wars. What this article now seeks to investigate is which atrocity prevention tools could potentially apply within this framework.

First, ensuring physical, legal, and economic protections of refugees is imperative. Millions have already evacuated Ukraine, and many other European states quickly mobilized to take in these individuals and families. However, it is also important to note that at this point in the war, if the safest evacuation route is through Russia, that state should fulfill their international obligations to grant Ukrainians refugee status and adhere to proper protocols where they can choose to leave Russia with no strings attached.

Other important mechanisms include fact-finding missions to collect evidence on the crimes committed. This information can inform policymakers on the international stage throughout the conflict, and when the war ends, it can provide an accurate understanding for prosecutions and historical narrative writing. Grappling with difficult truths will also build resilience against propaganda and revisionist history in future. But for the present, other tools security assistance can be an unconventional form of atrocity prevention. This can include “aid that promotes another state’s defense” can “degrade potential perpetrators’ capacity to commit atrocities”. Arming vulnerable parties in the form of ammunition and medical supplies could further this goal. The U.S. has given a remarkable $18.2 billion dollars to Ukraine since 2021.

Additionally, mediation can be another atrocity prevention tool. This role is usually conducted by neutral third parties, as the US did in negotiating the Dayton Accords. The U.S.’s aid to Ukraine and the Biden’s public statement calling the atrocities across the globe “genocide” will most likely confound its potential to mediate, but that doesn’t mean that the U.S. couldn’t help generate diplomatic strategies. Because ultimately, a diplomatic end to this war will involve a solution that both restores Ukrainian sovereignty as well as finds a way for Russia to “save face” enough for them to leave Ukraine. The U.S. could help sift through various bargaining tools to generate solutions that could walk this fine line. 

Finally, let’s briefly examine another well-known atrocity prevention tool, UN Peacekeeping (UNPK). Specifically, the lessons learned in Bosnia and why these forces cannot protect civilians in Ukraine. UNPK can be a tool to prevent conflict by physically embodying a political symbol of international monitoring. However, they are not equipped to, nor have the mission of, fighting wars. They are not standing armies. This non-military status allows these troops to exist in contentious situations and prevent escalation, but if the opposing armies are going to imminently attack both peacekeepers and civilians, the troops become stuck in a catch-22. Staying would result in being overpowered, yet a withdrawal of the UNPK forces who are guarding civilian sanctuaries can lead to brutal massacres. Historically, this has happened in both Bosnia and Rwanda. The lesson learned from the 90s is that the UNPK cannot keep peace in the face of a standing army that is intent on committing international crimes. 

The issue of using UNPK to monitor civilian zones is clearly off the table and has been since 2014 with the first sign of concrete military action. And considering Putin’s original goal for the war was to push against NATO prominence and expansion, mobilization of collective security forces now would clearly escalate this situation into a world war with many nuclear states. Even the funding and military equipment sent to aid the Ukrainians must be done with political nuance. But that doesn’t mean there aren’t other tools to help protect civilians.

Overall, the doctrine of R2P that emerged following crimes in Bosnia is not obsolete just because there isn’t a US led military coalition entering the war. Atrocity prevention tools can take other forms, and the current strategies are partly informed by the lessons learned from the past. 

The Precipice of a Cold Winter

Every act of military support is confounded by the threat of escalation to war with a nuclear power. Will a cold European winter force more support on behalf of the EU to Kyiv despite this risk? What other tools are available to the international community to put an end to this war? These are questions that the international community – particularly Western nations – will have to answer in the coming months to ensure Ukraine’s survival and the end of Russia’s interminable assault on Ukraine’s identity. Because the evidence collected thus far of potential war crimes, combined with Moscow’s intent on destroying the Ukrainian national identity, only emphasizes the warning signs of terrifying potential atrocities. And it may not be a morally pure solution, but the U.S. should consider possible consolations where the Russians could save face before the crimes against Ukrainians escalate and the war further ravages the country. 

It’s been three decades since Bosnia was devastated by war, and the state has spent those years in the arduous task of reconstruction. Optimistically, there have been massive economic gains. The country has risen to the status of an upper middle income country, and there is the potential for the state to eventually gain EU membership. 

Also in Bosnia, the World Health Organization states that “ten percent of Bosnia’s population, or 400,000 people, have been diagnosed with PTSD”, but “associations who help people suffering from PTSD, however, claim that the true number is close to 1.7 million people, nearly half of the country’s population.” It becomes clear that these advances have been made atop deep, chafing lesions.

Today, new scars are being wrought on Eastern Europe. When the dust settles, this war will also have deeply affected the international political landscape – and the generation who suffers such violence first-hand – for years to come.

November 20, 2022 0 comment
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AfricaCrisis ReliedFeaturedHuman RightsPrint ArticleSecurity and ConflictWomen's Rights

As the Anglophone Crisis Worsens in Cameroon, Women Continue to Organize for Peace

written by Annabelle Werner

Annabelle Werner’s article is additionally featured in The Generation’s Spring 2022 Digital Print Edition: Women. Coming June 2022.

While the Anglophone Crisis rarely surfaces in the international news cycle, millions of Cameroonian civilians are caught in a deadly stalemate between the armed separatist groups and national security forces. 765,000 people have been displaced since the conflict began nearly five years ago.1 Terrible atrocities are being committed by both sides, including the burning of villages, school shootings, improvised explosive devices (IEDs), sexual violence, and extrajudicial killings.2 Schools were shut down for nearly three years for fear of attacks and are only now hesitantly reopening. 

To aggravate this quagmire, water scarcity due to climate change in the Far North region has invigorated intercommunal tensions. Herders and farmers as well as various ethnic groups are vying for dwindling resources. This past December, the UNHCR declared a level 2 (out of 3) emergency in the region when 112 villages were burned to the ground, 15,000 people became internally displaced, and 85,000 people fled to Chad;3 a state that already hosts nearly a million refugees and internally displaced people (IDPs).4 This violence compounds the Far North’s existing suffering from a war against Boko Haram that has killed over 3,000 people and displaced nearly 250,000.5

Scholars such as Henry Ngenyam Bang and Roland Azibo Balgah have predicted that the state will devolve into a “Complex Disaster Emergency”(CDE), or a type of disaster scenario that is of a “multi-causal nature…[and holds] the propensity to interrelate political, economic, social, and environmental factors including internal armed conflict”.6 

It can be difficult to find hope when the region faces a litany of such complex and devasting violence. However, a shred of optimism may be found in one marginalized group that is organizing for peace and rebuilding community relations at the grassroots level: women may be the peacebuilders Cameroon so desperately requires.

But to further understand the recent violence Cameroon faces and how women may be able to facilitate desperately needed local reconciliation, specifically in regard to the Anglophone Crisis, let’s return to the beginning of the active conflict. In 2016, dissonance over language and political autonomy stirred peaceful protests headed by lawyers and teachers. The unrest was rooted in the repression of the Anglophone minority and an unsolved question of autonomy that began under colonization. The British had carved out 20% of Cameroonian land while the French occupied the other 80%. The smaller Anglophone regions were demarcated from the other eight Cameroonian provinces as the British and the French established differing legal and education infrastructures consistent with these separate metropoles. The clearest difference was language. 

In the decolonization process of 1961, the two Anglophone regions were quasi-autonomous but were eventually joined under the same state, the “Republic of Cameroon”. There were decades of “Negative Peace”7 rife with tensions between the Anglophone regions and the French majority, with the Northwest and Southwest regions arguing that Yaoundé was employing repressive tactics and erasure of their culture, such as requiring there to be solely French-speaking teachers at schools where no one spoke French. In 2016, the state security forces met peaceful protestors with violence in an attempt to quash dissent against the government. About a year later, a militant secessionist group called the Ambazonia Defense Force was formed.  Civilians are now caught in the crossfire between militant groups who burn villages and enforce “ghost town” protests in order to gain power through terror, and the government that has used state security forces to commit crimes against civilians. The state also continues to ignore and minimize the conflict with the secessionists, thus perpetuating the crisis.

Across Cameroon and humanitarian crises elsewhere, it holds true that women and girls are affected differently by armed conflict than men. They are always at risk of gender-based violence in times of peace, but sexual violence can be turned into a weapon in times of war. Women and children also make up the displaced at high rates, making the gender distribution among adults at refugee and IDP camps almost all women. For example, during intercommunal violence in Cameroon last December, 98% of the adults in IDP camps were women. 

This gender distribution reflects the terrible realities of conflict and survival. As men leave their families to fight, women take on the responsibility for both economic stability and childcare. They must make difficult decisions to flee, or even to stay in dangerous conflict zones to assume the burden of caring for vulnerable persons in the community who can’t relocate such as the elderly, disabled, and sick. Further, if a woman’s village is destroyed and she flees to the bushes, she would be subject not only to the dangerous natural elements and hunger but also to sexual violence by warring parties. If she flees to the city, her vulnerable position may make sex work the only viable option for survival. Thus, women suffer from conflict differently and typically assume the responsibility for the survival of the family and community during war.

But these burdens do not equate to a decrease in agency or their ability to affect political outcomes. Because while the Cameroonian cultural context has entrenched patriarchy, and women have typically been conceptualized solely as nurturing mother figures (like many cultures), these views of women as motherly and peaceful have allowed them to “organise undisturbed”.8 For example, in 2019, “more than 700 women from different cultural groups gathered in the Yaoundé Conference Centre to urge the government to put an end to the killings in the Anglophone regions”.9 Scholar Ivoline Kefen Budji describes how women utilized “sounds of mourning” to create stress and move peace talks forward.10 As they “wept, screamed, ululated, and sang dirges”, one woman explained to the media: 

“These are the women of the North-West region who have been in pain for the past three years, and because we heard that the prime minister is coming here today we decided that we should come out and cry aloud because the flow of blood has been too much. There is pain! We don’t sleep! There are incessant killings every day. We think that as women we have to do our own part of the job by coming out to cry, to tell the powers that be that they should try to put an end to this.’”11

Women have also organized diplomatic groups comprised of representatives from across the entire country. These reconciliation strategies include the formation of the Southwest and Northwest Women’s Task Force (SNWOT) which is a women-led group in Cameroon that fights against all forms of violence and the Cameroon Women’s Peace Movement (COWPEM) which is an assembly of women from all ten regions of Cameroon and various diasporas aimed at advocating for women’s right to participate in decision-making at all levels.

Women have taken up such roles as organizers and peacebuilders across the country, but they also face barriers to further leadership roles that could further thwart Cameroon’s chances for stability. One scholar, Zoneziwoh Mbondgulo-Wondieh, began her research to discover if/how gender operated during the Anglophone crisis, and if the substantial amount of women’s participation in the protest movement brought gender inequality into the agenda.12 Ultimately, Mbondgulo-Wondieh concluded that while human rights issues were discussed during this period of social reflection, gender equality was not an issue that was highlighted.13 If Cameroon pushes gender equality into the agenda, it could serve as a life raft for ensuring the survival of entire communities.

Thus, while women experience marginalization and are caught in a terrible crossfire between separatists, national forces, and intercommunal conflicts, they have continued to organize and demonstrate their agency in facilitating community and regional reconciliation. They have communicated and negotiated between large, militarized actors, and could be the best diplomats to reduce intercommunal tensions at the grassroots level. The problems Cameroon faces are sobering, but women could play an important role in putting out “small fires” as well as shaping long-term solutions. 

Endnotes:

1. International Crisis Group. “Cameroon”. (n.d.). Accessed May 6, 2022. https://www.crisisgroup.org/africa/central-africa/cameroon 

2. Jess Craig. “Violence in Cameroon’s anglophone crisis takes high civilian toll”. Al Jazeera. April 1st, 2021. Accessed May 6, 2022. https://www.aljazeera.com/news/2021/4/1/violence-in-cameroon-anglophone-crisis-takes-high-civilian-toll

3. United Nations. “Cameroon: Intercommunal clashes continue to displace thousands”. UN news. December 17, 2021. Accessed May 6, 2022. https://news.un.org/en/story/2021/12/1108242 

4. United Nations High Commissioner for Refugees. “Clashes in Cameroon’s far north displace more than 100,000 people”. December 17, 2021. Accessed May 6, 2022. https://www.unhcr.org/news/briefing/2021/12/61bc54734/clashes-cameroons-far-north-displace-100000-people.html

5.International Crisis Group. “Cameroon”. (n.d.). Accessed May 6, 2022. https://www.crisisgroup.org/africa/central-africa/cameroon

6. Henry Ngenyam Bang & Roland Azibo Balgah. “The ramification of Cameroon’s Anglophone crisis: conceptual analysis of a looming ‘Complex Disaster Emergency’”. Int J Humanitarian Action 7. January 24th, 2022. Accessed May 6, 2022. https://doi.org/10.1186/s41018-022-00114-1

7. Gladys M Ashu. “The Impact of the Anglophone Conflict on Women and Children and Their Advocacy For Peace in Cameroon”. Gender & Behaviour Vol. 18 Issue 1. January 1st, 2020. Accessed May 6, 2022. p 14830. https://eds.p.ebscohost.com/eds/detail/detail?vid=2&sid=4d24cd5b-d71f-4df4-8492-d193a6f07555%40redis&bdata=JnNpdGU9ZWRzLWxpdmU%3d#AN=144348065&db=a9h

8. Comfort Ero & Ellen Johnson Sirleaf. “Women are suffering in Cameroon’s war, but they also hold the key to peace”. International Crisis Group. March 9, 2022. Accessed May 6, 2022.https://www.crisisgroup.org/africa/central-africa/cameroon/women-are-suffering-cameroons-war-they-also-hold-key-peace

9. Gladys M Ashu. “The Impact of the Anglophone Conflict on Women and Children and Their Advocacy For Peace in Cameroon”. Gender & Behaviour Vol. 18 Issue 1. January 1st, 2020. Accessed May 6, 2022. 14842. https://eds.p.ebscohost.com/eds/detail/detail?vid=2&sid=4d24cd5b-d71f-4df4-8492-d193a6f07555%40redis&bdata=JnNpdGU9ZWRzLWxpdmU%3d#AN=144348065&db=a9h

10. Ivoline Kefen Budji. “Utilizing Sounds of Mourning as Protest and Activism: The 2019 Northwestern Women’s Lamentation March within the Anglophone Crisis in Cameroon”. Resonance: The Journal of Sound and Culture, 1(4). December 1, 2020. Accessed May 6, 2022. 443. https://doi.org/10.1525/res.2020.1.4.443

11. ibid. 

12. Zoneziwoh Mbondgulo-Wondieh. “Women and the Anglophone Struggle in Cameroon. In Gender, Protests and Political Change in Africa”. July 4th, 2020. Accessed May 6, 2022. 144. https://doi.org/10.1007/978-3-030-46343-4_7

13. ibid.

June 2, 2022 1 comment
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FeaturedPrint ArticleSociety and CultureWomen's Rights

The State of Women’s Soccer in the World

written by Andreas Papoutsis

Andreas Papoutsis’ article is additionally featured in The Generation’s Spring 2022 Digital Print Edition: Women. Coming June 1st 2022.

There is still much more work ahead to achieve gender equality in the world of soccer. In the United States alone, more than 70% of professional soccer athletes are men, one of several indications that suggest participation among amateurs and youth can be hardly close to even among genders.1 For women looking to enter the sport, whether it be in the grand pursuit of a professional career or merely for leisurely purposes, a stark difference in pay rates for men’s and women’s national teams is a head scratcher considering the sport’s reputation as a game that welcomes egalitarianism.

The debate for equal pay reared its head most forcefully in the United States, with stars such as Megan Rapinoe advocating on behalf of female athletes everywhere, only to be met with harsh criticism from certain factions of the American public. After years of activism and drawn-out legal proceedings, courts in the United States ruled that the national soccer federation must pay both teams, regardless of gender, equally for representing their country in international competition.

Where does the United States stand in terms of progress on the matter? The agreement to offer equal pay to female athletes made the United States just the eighth country to enact such a policy, joining Ireland, Australia, the Netherlands, Norway, New Zealand, England, and Brazil. FIFA officially recognizes 168 different women’s soccer federations, meaning only 3.5% of female professionals representing their countries earn the same pay as men. In fact, FIFA recognizes 211 men’s soccer federations, meaning entire regions only have infrastructure and pathways to international athletic competition and recognition for men.

Of the other seven countries that beat the United States in the race to offer female athletes equal pay, many of them have been known to afford women more equality in several aspects of life beyond soccer. In the U.S. News and World Report rankings of the best countries for women to live in, Norway checks in at third, the Netherlands at fifth, New Zealand at eighth, Australia at 10th, Ireland at 13th, England at 14th, and Brazil in 42nd, whereas the United States checks in at 18th.2 With that being said, there seems to be a pretty direct correlation in determining which countries are most likely to offer equal pay to female soccer players, which is bad news for the current state of affairs since many of the world’s countries lag distantly behind in women’s rights. Since living standards for women typically correlate with a country having more infrastructure for women’s athletics, it is therefore all the more concerning that the United States, which is in the top 10% in terms of the rankings, falls so far behind in providing women with access to the same sporting opportunities it provides its men. In other countries where women experience even more unfavorable standards of living, their access to sports like soccer is restricted to an exponentially larger degree. The gross lack of sports infrastructure for women across the world is also a direct harm to women’s standard of living. A Rasmussen poll found that 82% of American parents viewed sports as important to the development of their children.3 Without equal access to opportunities across sports, many young girls are robbed of crucial development opportunities that are abundantly afforded to their male counterparts.

Outside of the global north, women’s access to the sport is often far more reduced. In 2013, Uganda’s government pulled its U-20 women’s soccer team from world cup qualification matches because of a supposed lack of funds.4 If the men’s team were in a position to contend for a spot in the World Cup, it is difficult to imagine that the government wouldn’t have done more on their behalf. In Iran, women face substantial barriers in accessing the sport where Muslim clerics have often dictated that women should not even be allowed to attend games, making it substantially more difficult for the sport to grow among the female population. Only recently have women been allowed into stadiums, while women competing for the national team often face hostility and discrimination that transcends the issue of equal pay.5 Khalida Popal, a woman who sought to create women’s soccer leagues in Afghanistan, was forced to seek asylum in Denmark after receiving countless extremist threats.6 In Brazil, it wasn’t until 1979 that women’s soccer was even legally sanctioned; cultural narratives up until that point suggested the sport was incompatible with “female nature”.7 In countless other countries across the world, women face extensive cultural (and oftentimes legal) barriers to access a sport that derives its beauty from being accessible to humans from all walks of life.

On the domestic level, pay discrepancies can be even more severe. Even in the United States, a sizable amount of professional female soccer players are paid no higher the poverty line. The minimum six-month salary for a woman competing professionally in the NASL is $6,842 whereas the poverty line in the United States is demarcated at $11,880 per individual. A blue-collar worker earning minimum wage would generate more than some female professional soccer players. Such low salaries understandably reduce interest in the sport and foment a discriminatory environment for prospective female athletes. For context, the minimum salary in Major League Baseball is $500,000 per year. The lack of fair pay at the club level only amplifies the harsh effects of financial discrimination seen at the international level. For the women have been able to break through such pervasive cultural and legal barriers to earn selections to their national teams (assuming their country sanctions one), and represent their nations in the World Cup Finals, they too find themselves at a great pay disadvantage to their male counterparts. In the men’s World Cup, competing teams fight for their share of a prize pot of roughly $400 million, while the women’s teams are forced to scrap for a pot of just $30 million.8

In the United States, however, the women’s national soccer team generated more revenue than their male counterparts, strengthening their argument for equal pay from both an ethical and economic perspective. In 2016, US Women’s soccer generated revenue of $50.8 million in comparison to $49.9 million produced by their male counterparts. If anything, it’s confounding that they aren’t paid more than their male counterparts.9 The counterargument to the equal pay initiative suggests that women athletes should earn pay equivalent to the size of the fiscal market associated with their sport, and since female sports don’t generate nearly the same revenue as male sports, they should not be paid equally. The 2018 men’s World Cup Final brought in over 1.1 billion television viewers.10 The women’s World Cup final, by comparison, drew in a total of 263.6 million viewers. While the women’s numbers might fall short in comparison, they are by no means anything to scoff at. Over the course of the entire women’s World Cup, roughly 414 million viewers tuned in. The UCLA-Gonzaga Final Four thriller, by comparison, saw about 15 million viewers.  It speaks to the immense growth of women’s sports and the cultural revolution that has taken place, albeit too slowly in most places and at a snail’s pace in other areas.

The economic argument, however, must be interpreted in context. Men’s sports typically do, on average, generate far higher viewership than women’s sports. But women’s sports also suffer from a lack of exposure to several media markets. When UCLA women’s basketball squared off against UConn in the first ever women’s basketball game broadcast on ABC, they broke the record for the most-viewed regular season women’s college basketball game of all time. The match brought in 839,000 viewers, which was 302,000 more than the amount who tuned in for a top ten men’s matchup between Villanova and Baylor the following day. Villanova and Baylor are two of the most venerated programs currently in men’s college basketball; to eclipse their viewership ratings by a wide margin speaks to the potential women’s sports possesses. Hence the economic argument should be understood in the context of inequitable exposure to media markets. When women’s sports are broadcasted on television and advertised across different mediums, they generally have no problem in attracting fans or viewers.

I would suggest that the ethical argument trumps the economic argument anyway. 

 Representing your country should not be viewed differently on the basis of gender. It takes immense sacrifice on the part of female athletes to represent their nations at the highest levels of the sport, and the message sent by paying them woefully less than their male counterparts is deeply damaging to young girls and young women seeking to pursue a career or even a hobby in soccer.

What can be done to remedy the problem? That would require a complex solution, since the issue of gender inequality is one that transcends soccer and intersects nearly every fabric of society. But the easiest first step that can be taken is for other soccer federations to follow the lead of countries like Australia and guarantee equal pay to female athletes who represent their country at international soccer competitions. FIFA should also step in and incentivize federations to make equal pay a hallmark of their governing structure. One such way to do so could involve penalizing countries that are clearly apathetic to the notion of gender equality, whether that be through financial penalties or outright bans from male competitions until some verifiable progress is shown that a given national federation is taking steps to ensure a more equal landscape for a sport that prides itself on equality. If a country’s soccer federation refuses to pay women equally for their service in competition, perhaps their men’s teams should not be afforded access to the glory of competition either.

The beauty of the sport lies in its ability to not discriminate across socioeconomic spectrums. That same equality should be demonstrated across genders.

Endnotes

1.“Professional Soccer Player Demographics and Statistics in the US,” Zippia. https://www.zippia.com/professional-soccer-player-jobs/demographics

2.“Best Countries for Women,” U.S. News and World Report. https://www.usnews.com/news/best-countries/best-countries-for-women

3.“Americans Say Sports Are Important For Kids,” Rasmussen Reports. July 20, 2017. https://www.rasmussenreports.com/public_content/lifestyle/sports/july_2017/americans_say_sports_are_important_for_kids

4.Oryada, Andrew. “Uganda Withdraws Team From U-20s Women’s World Cup Qualifiers,” Uganda Radio Network. November 27, 2013. https://ugandaradionetwork.com/a/story.php?s=58478

5.Merhi, Karim Abou. “Women allowed to attend soccer game at Tehran stadium, a first in nearly 3 years,” The Times of Israel. January 27, 2022.

6.Lourim, Jake. “How Close Is The Rest Of The World To Catching The U.S.?” FiveThirtyEight. June 11, 2019. https://fivethirtyeight.com/features/how-close-is-the-rest-of-the-world-to-catching-the-u-s/

7.Ackerman, Xanthe & Asquith, Christina. “Soccer is Still Out of Reach for Half the World’s Women,” Time Magazine. July 8, 2015. https://time.com/3949377/world-cup-women-global-equality/

8.Weber, Joe. “The Status of Equal Pay for Women Soccer Players Worldwide,” Girls Soccer Network. September 22, 2021. https://girlssoccernetwork.com/the-status-of-equal-pay-for-women-soccer/

9.Hess, Abigal Johnson. “US women’s soccer games now generate more revenue than men’s – but the player still earn less,” CNBC. June 19, 2019.

https://www.cnbc.com/2019/06/19/us-womens-soccer-games-now-generate-more-revenue-than-mens.html

10.Glass, Alana. “FIFA Women’s World Cup Breaks Viewership Records,” Forbes. October 21, 2019. https://www.forbes.com/sites/alanaglass/2019/10/21/fifa-womens-world-cup-breaks-viewership-records/?sh=40e6191a1884

May 31, 2022 0 comment
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EconomicsInternational TradePrint ArticleTechnologyWomen's Rights

Covid, Automation, and their long-term effects on Women’s Work

written by Joshua Potter

Joshua Potter’s article is additionally featured in The Generation’s Spring 2022 Digital Print Edition: Women. Coming June 1st 2022.

Automation has been ever since the Industrial Revolution , and due to recent events it will affect women more than ever. The COVID-19 pandemic accelerated many trends due to its destructive nature, and one such way is through massive automation effects around the globe due to lack of labor. Particularly throughout the United States, millions have quit their jobs in the phenomenon dubbed “The Great Resignation.” Due to the current labor shortage, the pandemic may be accelerating the trend of automation to tackle these issues and drastically change labor relations for years to come. . However, one of the issues with this increase will be the effect that it has on women, as they stand to lose the most in an ever increasingly automated world. 

One of the keys to understanding automation’s effects on women labor is to exhibit how automation is starting to introduce itself to all occupations. In previous years, blue-collar workers were most at risk of losing their jobs to automation in factories or to self-checkout lines, but now this trend has spread to white-collar work as well. But recent research indicates that white-collar jobs are increasingly being taken over by machines — maybe not by robots directly, but certainly facing pressures from artificial intelligence (AI) and machine-learning solutions. Just as robots are now displacing blue-collar workers, advances in artificial intelligence are beginning to displace accountants, lawyers, and other service-based professions.1 This is nothing new, and historically automation increases more during a recession since humans cost more to employ.  Machines are designed to serve us in numerous ways, they don’t need paid time off, scheduling changes, or health insurance .  It has been estimated that up to 45 million Americans will lose their jobs to automation by the year 2030.2  Unfortunately, women will lose many of these jobs.

A big reason for this trend is because of the occupations where women work, and that’s why it is estimated that women are twice as likely to be replaced by automation than men. These figures are even higher when considering BIPOC (Black, Indigenous and People of Color) women. One of the reasons for this can be traced back  to the demographic history  of working women in the 20th century in the United States. During the second world war, millions of men went overseas for the war effort, and male dominated work such as working in the factories went to women.3 Due to the labor shortage, this allowed millions of women to leave the home and enter the workforce. However, the majority of these women were demobilized and these jobs went back to men once the war ended. Because of the baby boom that occured around the same time, women were needed for a variety of positions such as clerical work and frontline service jobs, and they continue to dominate these positions today. In 2017, the Bureau of Labor Statistics found that 22 million people are employed in office and administrative tasks, and the majority are women.4  Unfortunately, these are the same positions that can be replaced by automation, and in the near future we may see millions of women struggling for work. 

This trend isn’t specific to the United States either. A study by the International Monetary Fund found that over 26 million women from over 30 countries could lose their jobs to automation within the next 20 years.5 This is likely due to the fact that women have been excluded from certain industries for years, and they have to look for clerical positions that can be replaced with advancements in technology. Even if white collar jobs are being eliminated, men in those positions will have more skills and connections that would give them a better  chance to find work, while women are left behind. We must ensure that no one is abandoned in our ever-changing society, and other countries are already leading the way.

If we know that women are more susceptible to losing their clerical positions, then why don’t they join other industries? One reason is because many women are still the primary caretaker for children and handle most household tasks in the United States.6 Furthermore, childcare is expensive throughout the country and due to the cost many mothers have to stay home instead of being in the workforce.7 Increasing childcare benefits or subsidizing child care altogether could allow more women to further their education to obtain different types of jobs. However, this isn’t the only reason. This is  because many professions are male-domainated. For example, construction is a massive industry with over seven million workers, but few women work in this industry.8 This is due to a lack of recruitment by employers, as well as stereotypes that it is “man’s work.” However, there are many other careers but are male dominated; such as Software Developers, Aerospace Engineers, Aircraft pilots, and many others. Even when women can break into blue-collar work, they are often looked down upon. When women worked at electrical plants in the 1960’s and 70’s, women were placed at the lowest level in the blue-collar hierarchy, with newly hired men placed above them. They also had worse pay and fewer highly skilled positions.9 Sexism in the working place is unfortunately nothing new, and because of societal pressure it is one of the major reasons why women risk losing to automation. We are seeing that more traditional trends of men being breadwinners is decreasing as is marriage rates and child born, but since this is a societal view only time can change these viewpoints. However,  we can look to other countries to see how to manage the transition from human to automation work. 

South Korea is one of the most heavily automated countries in the world, and its robot density has been increasing rapidly since 2015.10 In combination with the pandemic, some South Koreans have been struggling looking for work, and few groups have been hit harder than women working in the service industry. The labor rate for the country is not optimistic, as the rate for women stands at 53% in South Korea, compared with 73% for men.11 However, the country is taking steps to mitigate some of the issues that rapid automation has created. For example, the government plans to expand it’s employment insurance policy to over 20 million people in the country, as well as provide stipends for younger people that are struggling to find work in these trying times.12 Nonetheless, it is difficult to predict whether or not this will be enough to offset the loss of income as people look for work. 

An important aspect of this discussion has to do with where the growth in automation is taking place.13 It’s no coincidence that eight out of the ten countries with the highest robot destiny also have some of the highest average per capita wealth on the planet.14 While countries such as South Korea have the means to offset changes in their labor demographics, developing countries and the women in them will be hardest hit. One of the big reasons for this is that many of these countries rely on manufacturing, and with advancements in technology these jobs can be automated easier, leaving people without work.15 This is not the only industry at risk, and in worst-case scenarios, whole economies will be left vulnerable. Developing countries’ risk of job loss from automation ranges from 55-85%, which is higher than the 57% risk in wealthier OECD countries.16  Without proper support, the effects of this could be devastating, leading to violence and political instability. Furthermore, the industries that are most vulnerable have a majority of working women. For example, a Mckinsey study found that over half of retail and food service positions can be automated.17 This would lead to millions of women losing their jobs in the coming decades, and would also mean the loss of financial security for many women. Not only that, but this would contribute to the ever widening growth gap that is happening around the globe. While developed countries will be in a better position to provide for women affected by these changes, they will be affected everywhere. However, changes can be made to alleviate some of the issues created by widespread automation. 

Something that we can do to ensure that women can still find jobs is to make it easier for them to have the education and training needed to switch careers. Many educational programs are designed to prepare people for a certain type of job, but that is inefficient if that position will cease to exist down the line. One idea is to allow education to become more flexible, and allow women to only focus on what they need to do. One way for this to occur would be to have training programs primarily online, and due to the pandemic pushing all of us further online this change will not be as difficult. Also, nanodegrees or micro credentials provided by online education platforms such as Udacity and Coursera can be used for mid-career adjustments at low cost.18 There are numerous options available, but its critical reform is made as soon as possible. The longer we wait the more women will struggle if they are let go and can not find any work.

While this paper brought up possible consequences of automation for women, this does not have to be the case. With proper reform and policy, automation can be used to lessen the amount of labor needed for certain tasks, and ensure a safer working environment. For this to happen, meaningful change has to occur and women need more support to make sure that they are not further left behind. Automation  can lead to a more equitable world, but only time will tell if this is accomplished. 

Endnotes

1.  Busch, Jason. “White-Collar Jobs Are Increasingly Being Automated.” In Business Madison, 18 Oct. 2021, https://www.ibmadison.com/white-collar-jobs-are-increasingly-automated/#:~:text=Research%20suggests%20artificial%20intelligence%20and,more%20easily%20automated%20than%20others.&text=Professionals%20with%20college%20degrees%20and,felt%20relatively%20safe%20from%20automation. 

2.  Carey, Kevin. “Do Not Be Alarmed by Wild Predictions of Robots Taking Everyone’s Jobs.” Slate Magazine, Slate, 31 Mar. 2021, https://slate.com/technology/2021/03/job-loss-automation-robots-predictions.html. 

3.  “Striking Women.” Post World War II: 1946-1970 | Striking Women, https://www.striking-women.org/module/women-and-work/post-world-war-ii-1946-1970. 

4.  Kinder, Molly. “The Future of Work for Women.” New America, 25 Feb. 2019, https://www.newamerica.org/work-workers-technology/shiftlabs/blog/future-work-women/. 

5.  Majumdar, Romita. “Working Women More Vulnerable to Automation than Men, Says IMF Report.” Business Standard, Business-Standard, 22 Dec. 2018, https://www.business-standard.com/article/economy-policy/working-women-more-vulnerable-to-automation-than-men-says-imf-report-118122200699_1.html. 

6.  Brenan, Megan. “Women Still Handle Main Household Tasks in U.S.” Gallup.com, Gallup, 20 Nov. 2021, https://news.gallup.com/poll/283979/women-handle-main-household-tasks.aspx. 

7.  Whitehurst, Grover J. “Russ”. “Why the Federal Government Should Subsidize Childcare and How to Pay for It.” Brookings, Brookings, 9 Mar. 2022, https://www.brookings.edu/research/why-the-federal-government-should-subsidize-childcare-and-how-to-pay-for-it/. 

8.  “U.S. Construction Employees 2000-2021.” Statista, Statista Research Department, 19 Jan. 2022, https://www.statista.com/statistics/187412/number-of-employees-in-us-construction/. 

9.  Blum, Linda M. “Constrained Choices: Women’s Interest in Women’s Work.” Between Feminism and Labor: The Significance of the Comparable Worth Movement, University of California Press, Berkeley, Ca, 1991, pp. 132–140. 

10.  Wessling, Brianna. “10 Most Automated Countries Worldwide.” The Robot Report, 15 Dec. 2021, https://www.therobotreport.com/10-most-automated-countries-wordlwide-in-2020/. 

11.  King, Sam, and Jeong-Ho Lee. “Korean Workers Need to Make Space for Robots, Minister Says.” Bloomberg.com, Bloomberg, 13 Apr. 2021, https://www.bloomberg.com/news/articles/2021-04-13/south-korea-workers-need-to-make-space-for-robots-minister-says. 

12.  King, Sam, and Jeong-Ho Lee. “Korean Workers Need to Make Space for Robots, Minister Says.” Bloomberg.com, Bloomberg, 13 Apr. 2021, https://www.bloomberg.com/news/articles/2021-04-13/south-korea-workers-need-to-make-space-for-robots-minister-says. 

13.  Wessling, Brianna. “10 Most Automated Countries Worldwide.” The Robot Report, 15 Dec. 2021, https://www.therobotreport.com/10-most-automated-countries-wordlwide-in-2020/. 

14.  Papadopoulos, Anna. “Richest Countries Globally with Average per Capita Wealth.” CEOWORLD Magazine, 26 July 2021, https://ceoworld.biz/2021/07/26/richest-countries-globally-with-average-per-capita-wealth/. 

15.  Khor , Martian. Automation, Robots and the Threat of Economic Disruption in Developing Countries, The Third Resurgence , 2017, https://www.twn.my/title2/resurgence/2017/319-320/cover01.htm#:~:text=Recent%20studies%20are%20showing%20that,the%20already%20great%20global%20inequalities. 

16.  Khor , Martian. Automation, Robots and the Threat of Economic Disruption in Developing Countries, The Third Resurgence , 2017, https://www.twn.my/title2/resurgence/2017/319-320/cover01.htm#:~:text=Recent%20studies%20are%20showing%20that,the%20already%20great%20global%20inequalities. 

17.  Manyika, James, et al. “A Future That Works: Automation, Employment, and Productivity.” McKinsey & Company, McKinsey & Company, 3 May 2018, https://www.mckinsey.com/featured-insights/digital-disruption/harnessing-automation-for-a-future-that-works/de-DE. 18.  Cerf, Moran, et al. “3 Practical Solutions to Offset Automation’s Impact on Work.” Singularity Hub, 7 Apr. 2019, https://singularityhub.com/2019/03/11/3-practical-solutions-to-offset-automations-impact-on-work/.

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