Garanti
PROF. RAGHURAM RAJAN
Professor of Finance at the University of Chicago
PROF. TIMOTHY GARTON ASH
European Studies Professor at the University of Oxford
We are undergoing a crisis caused by the global change
When we were designing the Garanti Future Summit (Garanti Gelecek Zirvesi), we initiated our efforts by focusing on the main tendencies triggering this change and concentrating on the "big picture" in order to trace the momentous changes across the globe. The second edition of the Garanti Future Summit, which was held on April 4, 2012, showed that we are on the right track. This second summit was organized in an environment where the developments, which lent credence to the forecasts made during the first edition of the Garanti Future Summit organized on June 9, 2011, set the agenda. Prof. Kishore Mahbubani of Singapore, speaking at the first summit, mentioned that China, Asia and other shining stars would continue to gain clout in the global economy and Financial Times Chief Economics Commentator Martin Wolf emphasized that it would be very difficult for the West and especially Europe to emerge out of the financial crisis.
During the period between these two summits, it has become increasingly clear that the US and especially Europe would not overcome their economic woes that easily and consequently, the future of democracy in Europe, the cradle of democracy, has become a hot topic across the continent. While the capacity of the US and Europe, which have had great difficulties in handling the crises they face, to steer global order have become increasingly weakened, the fact that the emerging countries, led by China, are not yet ready to fill the gap has shown to all that it would be very difficult to establish a new global order and a new discourse shaped around the notion of "leaderless world" has emerged. However, it was not long before it has become increasingly clear that it would be not very easy to reach global solutions in an environment where unemployment and inequality are on the rise across the globe and the threat of global warming and starvation are ever-present.
A deep analysis by Rajan
Prof. Raghuram Rajan, a former Chief Economist of IMF and the first guest speaker of this year's summit, made a deep analysis, which especially got to the bottom of the causes of the crisis faced by the western countries. While explaining that the US and Europe, which are both saddled with heavy debt, would face great difficulties to overcome their economic problems, Rajan also mentioned that the way the democracy is run in the US and across Europe proved an obstacle to necessary reforms.
Rajan argued that the ongoing crisis had not been a crisis of the global capitalism but global financial system. However, Rajan also argued that countries needed to go beyond the reforms across the financial system and had to make far-reaching reforms in the real economy and way democracy is run. Especially the southern member countries of the European Union, which made up the weakest link in the EU, had to initiate comprehensive reforms. The main problem to be concentrated upon, according to Rajan, was the fact that the democratically-run countries had always cut corners and focused on the short-term and refused to initiate the reforms and achieve structural transformations which are necessary for the healthy operation of the system.
Arguing that the period during which the US and the west were the main driving forces behind the global economy had ended, Rajan said that "emerging countries", led by China, which had begun to experience a period of rapid growth during the aforementioned period had to give priority to developing their domestic and regional markets from that time on. However, when giving priority to the domestic market, it was of critical importance that these countries maintained strict fiscal discipline and never grew complacent. Rajan also warned that Turkey, with a very low saving ratio and high current account deficit, had to give priority to tackling these problems.
Garton Ash looking for a new paradigm
Timothy Garton Ash, historian and the second guest speaker of this year's summit, argued that a global order could only be established with the development of global and collective behavior patterns and that the world was still away from achieving this goal. Contrary to the widespread expectation that the entire globe would adopt the goals and objectives set by the west in the aftermath of the end of the Cold War and tearing down of the Berlin Wall and that they would accept democracy and market economy as the sole model, Ash argued that the world faced a completely different picture that day.
The emergence of China, which had applied the principles of capitalism prescribed by the west without giving up on its political system, as the second largest economy of the world and sole rival of the US, had called into question the viability economic model advocated by the west, which had once seemed matchless. However, Ash also argued that the political system pursued by China would face serious challenges in the coming period and developments in this country would determine the future of democracy elsewhere.
Conceding that Europe was grappling with extremely serious problems, Ash said that Europe's transformation into an important global player depended on the continent's attitude towards Turkey. If the European Union gave up its narrow-minded attitude towards Turkey and recognized the advantages it would gain with Turkey's full-membership in the EU, argued Ash, it would transform itself into an important global player; however, it was also important that Turkey had assumed a positive approach this possibility.
Is global order a utopia?
The ideas generated during the second edition of the Garanti Future Summit showed that the transition from the global crisis to a global order would never be easy. While the population of the world is approaching 7 billion and majority of this population is increasingly eager to receive a share from the global resources by participating in this global game, it is very difficult to know today how the balance between this demand and readily available supplies and an order, where citizens of the world can interact in harmony with each other can be established. It is a possibility that we may focus on the question whether a "global order" is a utopia or not during the future editions of the Garanti Future Summit.