The new world disorder and the fracturing of the west

The geopolitical situation remains tense, although the world economy is improving

President Xi Jinping of China and President Donald Trump with their wives during an opera in the Forbidden City in Beijing, in November. Of the world’s strongmen, Xi Jinping has emerged the strongest - the leader of a rising superpower.

President Xi Jinping of China and President Donald Trump with their wives during an opera in the Forbidden City in Beijing, in November. Of the world’s strongmen, Xi Jinping has emerged the strongest - the leader of a rising superpower.

 

We have reached the end of an economic period, that of western-led globalisation, and a geopolitical one - the post-cold war “unipolar moment”. This is what I argued almost exactly a year ago. The question was whether the world would experience an unravelling of the US-created, post-second world war liberal order into deglobalisation and conflict, or a resurgence of co-operation. A year into the presidency of Donald Trump, we should return to this point. In brief, unravelling is even more likely.

Experience has underlined the special character of Mr Trump’s presidency. On a daily basis, he violates the behaviour and attitudes the world expects of a US president. But the exploitation of office for personal gain, indifference to truth and assault on institutions of a law-governed republic are all as one should have expected. A liberal democracy only survives if the participants recognise the legitimacy of other participants. A leader who calls upon his officials to prosecute erstwhile opponents is a would-be dictator, not a democrat.

Pluto-populism

Character is one thing; actions quite another. So far, Mr Trump has governed mainly as a traditional Republican “pluto-populist”, delivering policies to the plutocracy and rhetoric to his angered base. Yet his characteristics are still to be seen, in his consistently mercenary attitude to US alliances and narrowly mercantilist views of trade.

The Trump presidency has weakened the cause of liberal democracy (democracy that rests on a neutral rule of law). In former communist countries of eastern Europe, the style of plebiscitary dictatorship (euphemistically called “illiberal democracy”) characteristic of Vladimir Putin’s Russia seduces admirers and encourages imitators. Tayyip Recep Erdogan’s narrow victory in the referendum on presidential power moved Turkey further in this direction.

Yet the UK’s 2016 Brexit referendum has not, so far, attracted imitators inside the EU. In France, Emmanuel Macron stemmed the populist and xenophobic tide. But the German elections have weakened the country’s ability to respond to Mr Macron, while the forthcoming Italian elections might prove disruptive not just for Italy, but for the whole of the eurozone.

China as superpower

Arguably, the most important of all the political developments of 2017 was in China. Here Xi Jinping has apparently established supremacy over the Communist party and reinforced the supremacy of party over state, and state over the Chinese people. Of the world’s strongmen, he has emerged the strongest - the leader of a rising superpower.

In 2017, then, autocracy was on the rise. The “democratic recession” continues.

What, meanwhile, has happened to global co-operation? Here, too, we saw significant developments. One was the decision of Mr Trump to pull out of the Trans-Pacific Partnership, in which US allies, notably Japan, had invested so much, and to renegotiate the North American Free Trade Agreement. Another was the administration’s decision to pull out of the Paris climate agreement.

In the opposite direction was the rhetorical attempt of Mr Xi to pick up the mantle of globalisation. On balance, the forces against co-operation made progress last year, as did those against democracy. That is not surprising when the world’s leading country has a president who sees conflict as the norm.

Implications

These developments have to be set against longer-term trends. Most important, the position of today’s high-income countries, though still enormously powerful, is in relative decline. China’s military spending is rising sharply, relative to that of the US, even though it remains at just 2 per cent of gross domestic product. The share of high-income countries in world output has fallen by about 20 percentage points since the beginning of the century, at market prices, and their share in world merchandise trade has fallen by 17 percentage points.

Here are a few implications.

First, these political developments have fractured the west as an ideologically coherent entity. Close co-operation among the high-income countries was largely a creation of US will and power. The centre of that power currently repudiates the values and perception of interests that underpinned this idea. That changes just about everything.

Second, modern western ideals of democracy and liberal global markets have lost prestige and appeal, not just in emerging and developing countries, but in the high-income nations themselves. While no alternative economic system has yet won the day, the appeal of xenophobic populists and authoritarians (often the same) has risen.

Third, managing the world economy, the global commons (notably climate) and security issues, demands co-operation between high-income and emerging countries, above all China. The old days of domination by the leading high-income countries are over. Securing co-operation among such diverse countries is extremely hard.

Finally, there is a real risk of conflict between the US and China, as Harvard’s Graham Allison argues in his book, Destined for War. Optimists will argue (rightly) that economic interdependence and nuclear weapons make war insane. Pessimists will respond that humanity has a huge capacity for blundering into disaster. Maybe the generals who surround Mr Trump will fail to keep him under control. Maybe they will even promote a ruinous war over North Korea.

If 2017 underlined the geopolitical stresses, it also saw a healthy global economic upswing. How do these things relate? That will be my topic next week.

– Copyright The Financial Times Limited 2018

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