USA 2022
INTERVIEW
BARON LOBSTEIN, Economic Section Chief at the U.S. Embassy in Belgrade
Businesses Seek Stability & Transparency We still see great interest among American companies in investing and doing business in Serbia, but businesses are now naturally asking difficult questions about the future of trade relations and supply lines, in light of Russia’s war in Ukraine and broader economic uncertainties
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aron Lobstein Economic Section Chief at the U.S. Embassy in Belgrade, is set to leave Serbia soon, bound for another post. We took the opportunity to speak with him about the most pressing issues confronting economies across the world, including Serbia, at this moment. This inevitably meant discussing the war in Ukraine, sanctions against Russia and the broader implications of these developments for the Serbian economy.
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World leaders today talk mainly about the failures of globalization (broken supply chains, food and energy price inflation and an intellectual property (IP) regime) and advocate solutions like reshoring, nearshoring or ‘friend-shoring’ production. How strongly is this view represented in U.S. government and business circles? In my view, and in the view of most U.S. policymakers, the international rules-based
system remains the world’s best hope for lasting, broad-based, global prosperity. Globalization has not failed, but economists agree it has shown limitations. A global economic order must be governed by rules that provide for fair competition and consequences for abuse. And supply chains are only as good as the logistics networks that keep them functioning. In times of crisis, such as Russia’s war of aggression against Ukraine, as well as during surges of demand or supply, these supply chains come under strain. When countries respond by retreating from the global market—or by introducing export controls on key commodities—these actions only worsen economic shocks for the rest of the world. Of course, countries must provide for their economic security. This means having reserves or alternative sources of key resources in the event of emergencies or disruptions. To take one timely example, Germany, Serbia, and many other European countries are now learning the hard way that their excessive dependence on Russia for natural gas and oil was a mistake. We have long advocated for countries to diversify their sources of energy supply and, ideally, build up domestic production of renewably-sourced energy to boost self-sufficiency. Also, we learned during the Covid-19 pandemic—from Serbia’s example—that having multiple sources of vaccines and testing equipment is critical during a disease outbreak. This is not an argument against globalization, but in favor of diversity of supply and careful planning. Where are ‘friend-shoring’ production locations for U.S. companies and
