Foreign Policy Blogs

Has the Great Displacement Begun?

Has the Great Displacement Begun?

The most striking change in development of nation states in the last year has come from the shift Germany has made back towards an energy strategy that pulls itself away from Russia, seeking to balance traditional energy needs with future environmentally friendly projects. While Germany and much of Europe is still heavily dependant on Russian oil and gas, along with energy supplies from Russian allies in the War in Ukraine, the continued conflict along with the expected increase in violence may finally push Western Europe into full displacement mode.

I was greeted this week with an email from a law firm that is discussing moving manufacturing plants from China to Mexico, and all of the company implications in making such a move. There is talk of how China’s future prospects may not be as bright as a few short years ago, and that Mexico may be a more productive and secure location for international companies. Many companies are displacing their production in order to service the United States and the Americas, along with easier shipping routes to European and other markets coming through Mexico to ship abroad. With years of high tech manufacturing and an education system focused on STEM that concentrated on producing engineers that many say may give more production value than even China, Mexico will benefit greatly in the next decade. Considering the security challenges coming from China to the United States and their Pacific allies, North American trade may reduce those concerns and be managed easier within the region.

Mexico had always been challenged by the trend in the early 2000s for large companies to move manufacturing to China. The 1994 NAFTA agreement placed much of America’s manufacturing in Mexico, and while it still remained since then, many new contracts bypassed Mexico for lower cost production in China since the mid 2000s. Mexico’s challenge was to bring back the opportunity it had in the 90s, focusing on education and producing a young and capable population that would be able to capitalise on any future endeavours. With the re-establishment of NAFTA under the USMCA, the United States and Mexico re-designed their relationship for this future.

The displacement of China, Russia and their allies is being met with new security arrangements as well. The association of Australia, the UK and United States in the Pacific was formed (AUKUS), along with closer ties with Japan, South Korea and Taiwan in order to counter any of China’s expansion policies in the region. Displacing Russia’s exports has brought Russia and China closer together, at the same time, US pressure on China economically and the draining away of international companies from China’s manufacturing base may shift production towards Mexico and other likely locations for displacement.

It might be the case that in as soon as five years from now, countries will have to choose to displace their economies with Western countries, or narrow themselves to countries associated with Russia and perhaps, China, depending on the future security situation in the Pacific. India may be able to become the beneficiary of this tread as with a growing population, good educational standards and fair relations with both the West and Russia. India’s location in the world can take energy supplies from Russia without much pushback from the West due to India’s own understandable security needs, while displacing some manufacturing from China in the process. India may likely become a main broker of security needs for many in the region, along with Central Asia and even the Middle East.

Brazil may be able to benefit in ways Mexico will if they gear themselves towards local manufacturing and export. While generations of Brazilian leaders have pushed to industrialise the country and pull away from being a solely agro-exporter, Brazil’s youth took to focus on high tech and IT and now produce some of the most advanced products in the world, mind you in small numbers compared to its population. If Brazil can avoid allowing foreign nations to manipulate its growth prospects, while bypassing divisive politics and securing productive allies in the process, Brazil may be able to become the southern hub for exports to growing economies in Latin America as well as Africa and Europe. Policy is crucial to Brazil’s future, but they have recently taken some steps that might discount them in the near term.

Canada has seemed to placed themselves in a position to counter the Great Displacement, to their own detriment. Despite both Germany and Japan coming personally to Canada to ask for their assistance with their energy needs, Canada refused to offer any meaningful help to their direct Allies. Without North American oil and gas, Russia benefits greatly as it maintains Europe’s dependance on their Russian energy, thus prolonging the war in Ukraine. Non-displacement of oil and gas also and gives Iran more capabilities to send weapons to Russia and fund the attacks on their own people along with other innocents in the region. When many Canadians of Persian descent were murdered by Iran when they shot two missiles at an airliner close to Teheran, Canada’s leader met with Iran’s Foreign Minister just over a month later and allowed the regime to use the event as a propaganda win. Since then, almost nothing has been done to seek justice for the victims and their families by the same Government.

The AUKUS arrangement left out Canada, one of the largest Pacific powers, it seems for reasons that might become clear over the next few months. Canada’s Government has targeted Canada’s intelligence service and diligent journalists when it as found out that the current Government may have benefitted from China interfering in Canada’s elections. The release of the information had no effect in countering now known interference in Canadian democracy, but released the hounds on honourable intelligence officers and journalists for protecting their community. As it stands, there is no response to eleven districts being manipulated by China’s Consulate in Canada. One district in Toronto is knowingly seated with two Ministers who won with China’s support. The Prime Minister has done nothing about it, thus no democratic rights are given to the people in the area directly, or answers to the rest of their nation.

As great powers shift away from the norm since the 1990s, the countries that are taking the initiative to align themselves for a new possible era will likely be the most successful, especially if money and employment are shifted away from China towards their people. Countries like India will be able to manage the shift as their power and location makes their future choices an obvious one, benefitting their population even if done through diverse ties to opposing markets. Countries that avoid choosing the benefits of displacement, or put the needs of the opponents of their allies before the needs of their neighbours and their own people, will be discounted from a bright future. If you live in a district that has no trustworthy representation in your country, you might be in the latter category. The choice is often aligned with how democratic your nation has been recently. If you can choose who represents you without significant manipulation, you are likely on the right path.



Richard Basas

Richard Basas, a Canadian Masters Level Law student educated in Spain, England, and Canada (U of London MA 2003 LL.M., 2007), has worked researching for CSIS and as a Reporter for the Latin America Advisor. He went on to study his MA in Latin American Political Economy in London with the University of London and LSE. Subsequently, Rich followed his career into Law focusing mostly on International Commerce and EU-Americas issues. He has worked for many commercial and legal organisations as well as within the Refugee Protection Community in Toronto, Canada, representing detained non-status indivduals residing in Canada. Rich will go on to study his PhD in International Law.

Areas of Focus:
Law; Economics and Commerce; Americas; Europe; Refugees; Immigration