Ian Bremmer – 90 Days In: Clues for the Future.
Ian’s Bremmer presentation goal was to present the structural reasons that is going on that ties all of these things together.
We are entering a “geopolitical recession” – his new term.
The last time we had a bust cycle in the geopolitical environment was World War II (a geopolitical depression).
Since then, it effectively has been an era of what he calls Pax Americana (Marshall Plan, Japan-U.S., Soviet Union falls apart… leading to an American-lead global agenda) – That’s all kind of just unwound.
Globalization is continuing but Americanization is not.
There was a large group of Americans saying, “Do not be the world’s police force.”
There is another group saying “We don’t benefit from globalization.” NAFTA didn’t help us, Trans Pacific Partnership… not going to help us. Might help the economy, might help Wall Street but it won’t help me.
The U.S. really used to need the Middle East for energy. Suddenly, we’re the swing producer. How much do we really need to care about what’s happening in places like Saudi Arabia and Iran?
So there are these structural reasons why we are entering into a global geopolitical recession: economically, technologically and from a defense perspective… a lot of Americans are saying we don’t want that global role.
We no longer want to support this multi-lateral global architecture that, by the way, we created after WWII.
And then you have the fact that the most important global alliance the U.S. has in defending this global architecture is the Transatlantic Partnership that is at its weakest point because of Brexit, because of the populism, because of the unprecedented refugee crisis across Europe, because of the unprecedented terrorist threat across the continent of Europe.
For all of those reasons, which was making the U.S.-lead globalization stronger suddenly was unwinding.
Then we have China. China rising. Second largest economy in the world is the one country in the world today of size with a global economic strategy. Building global economic architecture… one belt – one road, the Asian Infrastructure Investment Bank, the China Development Bank, which is large in what they invest than the World Bank and the IMF put together.
This is all useful from a global economic perspective but they don’t co-exist easily or happily with U.S.-lead institutions. Because of course the Chinese are not trying to support rule of law, they are not trying to support liberal democracy, they are not trying to support global free markets.
They are not interested in multilateral rules, they want bilateral deals where they can have more influence one on one.
Economic Nationalism, Security Nationalism
For all of these reasons, you would have expected the U.S.-lead global system was going to unwind and indeed I (Ian) had been saying that for the last six years. It came faster than I expected.
The election of Trump, with an explicit endorsement of an America First policy (which is not isolationist)… but it rejects we are doing these things for allies and says we are doing these things for us. It’s actually a very Chinese like foreign policy.
The election of Trump made a lot of people who were questioning under the Obama administration if the U.S. had their backs now say to themselves we need to actively hedge.
Ok – now a new chapter in the geopolitical world but who is going to replace the U.S. in the leadership role. If anyone were to, it might be Angela Merkel but their answer to that question is “no.” There is nobody.
Is anyone going to replace the U.S. as the world’s policeman? If anybody were, I guess it would be Putin. So in other words the answer is “no.”
Is anyone going to replace the U.S. as the global architect of trade? If anyone were it would be Xi Jinping. He gave a speech in Davos that sounded like it came from a U.S. representative. So it would be China but nowhere close to the role that the U.S. had been playing so the answer is “no.”
This means we are in an environment that leadership doesn’t exist, so to the extent that we have a shock, the same degree of safety we might have in place isn’t as strong.
Ian provided an example of the World Health Organization that is only getting half of the funding it received five years ago, you are probably not going to respond as effectively to the next global health outbreak (e.g., Ebola).
If the U.S. and China don’t have the same level of engagement, you probably won’t respond as effectively to the next H1N1 outbreak.
Name your crisis, health, economic, war… the geopolitical resilience is much less than it used to be.
So that is one set of things to help us understand why we are seeing the headlines today. But there is a second set of things – if this one is not top down macro but actually bottom up from the people:
We have an increasing large set of people who look at their government and say, “not fit for service.”
Not legitimate, not effectively representing me. The social contract is broken.
Seeing it in England, the U.S., France, Spain, Italy, etc.
How are you letting these refugees in when you’re not taking care of me.
Some is coming from technology worker replacement.
All of the established governments are getting weaker, except Germany due to the relative success of their middle class. No election concerns from far right movements there…
The big point here is that you have a structural weakening of governments in most of the developed countries (“not fit for service”) at the same time the U.S.-lead global order has unwound.
This at the same time you have strong leadership in China and India with Modi. Globalization is still working for them… for now. Though Ian believes within 10 years as technology replaces workers, they will experience the same angst workers in the U.S. feel globalization has done to them today.
The above concludes Bremmer’s big picture macro view as to why over the next year we are going to continue to see more and more of these geopolitical headlines that will support increased instability and volatility. This is not because of Trump. This is systematic not causal.
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