SCOTT TIMCKE | Prepare for an expensive global economy

For decades the global economy rested on assumptions so deeply embedded that we stopped noticing them. Energy would be affordable. Ships would move freely. Supply chains would function. Goods could be produced wherever labour was cheapest. Those assumptions made modern globalisation possible. They may now be disappearing.

The disruptions to maritime routes and growing instability around global energy supplies are not temporary geopolitical shocks. They signal a deeper shift in the conditions under which the global economy operates. The world we built depended on cheap fuel and secure seas. Increasingly, neither can be taken for granted. This matters enormously for South Africa.

Our instinct is to treat international crises as foreign problems. A Middle East conflict belongs to diplomats; disrupted shipping is a logistics matter; higher oil prices are an inflation concern. But these are expressions that belie the vulnerability of an economy exposed to geopolitical disruption.

The post-Cold War global economy was extraordinarily efficient. Companies sourced components across continents, manufactured where costs were lowest and moved products worldwide with speed. But efficiency is not resilience. The system functioned because the 1945 security architecture held. Sea lanes were patrolled; fuel was abundant and cheap; insurance costs were manageable; major powers maintained the machinery of trade. That architecture is now collapsing. Those conditions no longer hold.

Cheap drones compound this change. The capacity to threaten shipping and critical infrastructure no longer belongs only to states with sophisticated military industry sectors. Weak actors can disable a port for months. They can fragment supply chains at will. They impose costs on global commerce that even wealthy countries struggle to absorb. For countries like South Africa, already vulnerable to supply shocks, the exposure is compounded. From here on, a product’s price will include insurance against geopolitical disruption. The result is a world simultaneously less efficient and vastly more expensive.

The response is neither panic nor autarky. South Africa cannot retreat from the world. But we should stop assuming the old order will simply reassert itself after an election or two. If energy supplies and shipping routes are becoming less reliable, the government must think in terms of decade-long adjustment. That requires reducing dependence on imported fuel, accelerating renewable energy investment and strengthening domestic productive capacity.

For countries like South Africa, already vulnerable to supply shocks, the exposure is compounded. From here on, a product’s price will include insurance against geopolitical disruption. The result is a world simultaneously less efficient and vastly more expensive.

Some practical interventions are straightforward. Lower speed limits reduce fuel consumption. Investment in public transport diminishes reliance on private vehicles. Faster solar deployment can make the economy less vulnerable to fossil fuel shocks. Industrial policy can build domestic capabilities in energy, transport and essential goods. None of this is radical. That is precisely the problem. At times it feels like South Africans are waiting for catastrophe before doing what the moment already demands. By then, the costs will be multiplied.

South Africa cannot control Middle Eastern geopolitics or guarantee international shipping security. But it can reduce exposure to imported fossil fuels. These are forms of national economic insurance. We can decide how exposed we want to be.

Markets allocate resources but they cannot secure shipping lanes, prevent wars or guarantee cheap energy. The choice is clear. We can continue hoping that the old order reasserts itself or recognise that the era of geopolitical stability is ending.

The consequences of unpreparedness will not be distributed equally. While they would prefer not to, wealthier households can absorb higher fuel and food prices. Poorer households cannot. The real question is not whether South Africa can prevent the world from becoming more dangerous. It is whether we will prepare before inequality at home becomes unmanageable.

• Timcke is a senior research associate with the University of Johannesburg’s Centre for Social Change and an affiliate of the Centre for Information, Technology & Public Life at the University of North Carolina at Chapel Hill.