Why the world can no longer buy peace with McDonalds burgers

The militarization of McDonald’s in the Russian-Ukrainian war has left neutrals in this conflict, such as India, asking themselves a question: how to immunize the state and the economy against such a scenario that could happen to us?

The vividness of the images of the Russian-Ukrainian war – burning tanks, razed cities and dogfights – is both startling and a bit of deja vu. Televised wars, which began with the First Gulf War, are now commonplace. The Indians tasted it up close and personally in Kargil.

Lost in the vivid and tragic images, there was an interesting one – that of the huge McDonald’s branch in Moscow serving its last burgers and shakes before closing. It was eerily illustrative of the final nail in the coffin of a 30-year-old mirage of McDonald’s peace lines overcoming political rivalries between nations. Thomas Friedman voiced this in his 1999 bestselling novel Lexus and the Olive Tree and said that no country with a McDonald’s franchise can go to war. Friedman doubled down on this thesis a few years later, in his blunt title The World Is Flat. The McDonald’s hypothesis was essentially a pop articulation of post-Cold War American hope – that the world has embraced “winning side” values ​​and will now prioritize making money over fighting to solve political conflicts.

Instead of the Friedman world of McDonald’s influencing politics, we return to the scenario where McDonald’s follows politics.

The closing of McDonald’s in Moscow has another message. Not only are its golden arches insufficient insurance against wars, but McDonald’s itself, as a metaphor for American economic power, can be armed in a war.

While the Big Macs are obviously insignificant, the war in Ukraine has seen the political West (the United States and its treaty allies in Europe) unleash the potential of a vast arsenal of economic weapons. From currency settlement systems like SWIFT, to US dollar holdings as a global reserve, to far-reaching trade sanctions, Western ownership of many parts of the global commons architecture has become abundantly clear. The longer-term question for neutral countries in this conflict, such as India, is: how to immunize the state and the economy against such a scenario that could happen to us?

India has seen this playbook, on a smaller level, lately. Since the early 1990s, India has sought to manage its territorial disputes with China by keeping border issues frozen at the status quo level while focusing on trade and commerce. It worked for a few decades before it stopped working. Acute political disputes over the contested Line of Actual Control have become regular over the past decade. And even as trade boomed – China is India’s biggest trading partner and where we have the biggest trade deficit – the armies of both countries spilled blood on the Galwan peaks in 2020 for the first times since 1967. Hence, India has resorted to limited economic meters. , limiting Chinese investment in certain sectors and banning certain Chinese digital platforms. In a nutshell, the Sino-Indian case is a good case study of how economic logic has not triumphed over political differences and how the parties involved seek to manage their own side of the equation.

The scale and impact of US sanctions, which utilize key elements of the common global economy, is on a whole other level. There has been a flurry of commentary on how countries can protect themselves against such militarization of the economic commons. Alternative financial messaging systems (to SWIFT) are relatively easy. Replacing the US dollar as the world’s reserve currency is much less so. What other country would agree to relinquish control of its own money supply as the United States has done by allowing global institutions to issue financial instruments in Eurodollars, that is, bonds denominated in US dollars but issued outside the United States and sold to primarily non-US investors? Several alternatives were discussed – the rupee-ruble trade is a likely solution. A regional monetary union would be a longer-term project. Gold as an alternative has been suggested. Some have even suggested using commodities like oil – cryptocurrencies too – as a reserve reserve. But none of them are scalable and some are not even feasible. Commodities and cryptos, for example, are too volatile to be a store of value or a transactional medium of exchange. And all of them have a basic characteristic: they are political instruments first and then economically efficient instruments. Which brings us to the heart of the matter: politics.

Instead of the Friedman world of McDonald’s influencing politics, we return to the scenario where McDonald’s follows politics. The first signs were visible long before the Ukrainian war. India has pulled out of the flagship Regional Comprehensive Economic Partnership trade deal, the world’s largest, not least because of China’s presence and influence in the grouping. US President Joe Biden has launched a massive initiative to diversify US supply chain vulnerabilities, particularly in China. The world didn’t turn out to be flat at all – it remains curved, with politics providing sharper edges to curves.

Therefore, the imperatives for India fall heavily on the political side even as alternative economic chains are explored. Economic choices will be much more informed by politics. For example, instead of building up huge foreign exchange reserves at high fiscal cost, as we have always done to help weather large external economic shocks, is it better to trade a US dollar swap line with the US Fed, a facility available only to some of America’s treaty allies? Instead of traditional trade deals, are there new opportunities in making coordinated supply chain arrangements like giant oil storage whose operations are coordinated with, say, America? Is there still merit in attracting foreign savings into Indian bonds, given how quickly they have become a weapon against Russia?

In short, the luxury of letting India’s large and growing market take care of policy choices automatically no longer exists. Markets must be equipped to make political deals, the rest of the economy will follow. It’s a new world. Indian politicians will have to get on with it.

(The author is the managing partner and chief IT officer of ASK Wealth Advisors. The views and opinions expressed in this article are personal.)

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