Welcome to the new “Cold Peace” era
This column was previously published in L’Opinion on July 10th 2019
The trade war between Washington and Beijing is a new form of confrontation between the two superpowers. It constitutes a threat for Europe, but also a historic opportunity.
Raymond Aron’s remark about the post-war era — “War Impossible, peace unlikely” –suddenly rings true once again. The last G20 will have convinced the USA that an open war of technology can only have disastrous consequences. The global interdependence of players in the semi-conductor industry reminds one of that of the investment banks in 2008. If Huawei is brought down, just as Lehman Brothers was ten years ago, it would cause a global recession, and the situation would be worsened by the current level of indebtedness, making such a recession unmanageable. Peace is just as unlikely, now that the USA has become aware of China’s rise to power. And China means to pursue its course, for “no one can stop the wheels of history,” as Ren Zhengfei, Chairman of Huawei, recently said.
For a few years, there is a window open to European companies. They can attempt to restore the power balance by offering China the means to get rid of its dependency on American technology
So, for several decades to come, we see ourselves condemned to living in a new era of “Cold Peace”. This is in contrast to the time of the USSR when economic exchanges between blocs were limited, for the forced-march globalization of the last twenty years has led to a level of exchanges that, even if they were to slacken, preclude war and favor an artificial, deceptive peace that will be disrupted by numerous micro-battles in the future.
Decline. What position can Europe then take in this new climate? The appointment of Christine Lagarde at head of the European Central Bank seems to confirm the continuation of the Japanization of Europe that has been going on since 2012 — by means of a zero-interest policy that guarantees the economic decline of a wealthy, aging region that lacks defense as well as reform of member states borrowing at negative interest rates. The fear is therefore that Europe would be plundered by both belligerents, whether by extra-territorial taxation or the forced transfer of technology.
On the other hand, the bold choice of a former German Minister of Defense as president of the European Commission could be judicious in this era of undeclared war. Ursula von der Leyen will have to commit herself to underlining that, for any European group with global ambitions, this Cold Peace could turn out to be a source of new opportunities. Europe’s new non-aligned status makes it possible for it to trade with both ecosystems, and, clearly, in numerous areas, China still needs Western productivity growth, which can no longer solely depend on American technology.
It is opportune for Europe that this Cold Peace has come ten years too soon for China, which is falling victim to a timing error by President Xi Jinping: he is in too much of a hurry in straying into an overly aggressive offensive to advance the “New Silk Roads” and the “Made in China 2025” plan. Therefore, for a few years, there is a window open to European companies. They can attempt to restore the power balance by offering China the means to get rid of its dependency on American technology. Thirty years ago, Europe came out on top at the end of the Cold War; it is up to us to make ourselves the unexpected winner in this new era of Cold Peace!
