The Trump Effect on the Rules of Engagement

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Donald Trump’s victory in the US presidential election could mark the end of the established global economic order. 

For many decades, and more so than any other nation, the US helped shape the world we live in. Directly or otherwise, Washington nurtured the institutions that helped establish the international economic rules of the game. The International Monetary Fund and World Bank were children of Bretton Woods. What eventually became the EU would never have happened in the absence of the Marshall Plan. NATO’s success in keeping the peace in large part reflected the deep pockets and military reach of successive US governments.  

Mr Trump’s victory may in time be seen as part of a new American narrative, one associated with disengagement from the rest of the world. The US may be heading back to its isolationist past, associated with the 1917 Asiatic Barred Zone Act and Congress’s subsequent refusal to sanction US membership of the League of Nations. If so, the rules of international engagement are going to change.

Admittedly, disengagement would probably have happened without Mr Trump. After all, the US economy’s share of global economic activity is declining, as indeed is its share of the world’s population. President Barack Obama’s pivot to Asia was, in one sense, a reflection of this new reality. Mr Trump, however, may choose to turbocharge withdrawal, if only because he has promised the American people he’ll disengage from many of the institutions and agreements that have shaped the postwar era. 

Those institutions include, most obviously, NATO and the North American Free Trade Agreement. Add to them the recently signed Paris Agreement on climate change and the Trans-Pacific Partnership and it quickly becomes apparent that, if Mr Trump sticks to his commitments, the world will look very different in a few years’ time. 

For some parts of the world, Mr Trump’s election will be seen as a mixed blessing. Beijing will doubtless be worried about the threat of trade sanctions given Mr Trump’s threat to label China a “currency manipulator”. On the other hand, if — as seems increasingly likely — TPP is now dead in the water, China will have the opportunity to construct an alternative trading arrangement in Asia. Indeed, with Asia’s Regional Comprehensive Economic Partnership, it may be a case of “here’s one I prepared earlier”. Consistent with its Belt and Road strategy, it could just be that a newly isolationist America will create precisely the vacuum that China could happily fill. 

Others may also be left with more room to manoeuvre. Mr Trump’s victory may lead to a more “accommodating” approach to Moscow. Vladimir Putin may no longer have to worry about the threat of a US no-fly zone over Aleppo. And perhaps he will feel more confident in imposing Russia’s will on its near neighbours. 

All this leaves Europe facing a real quandary. To appease Mr Trump and his unease about America’s contribution to NATO, European members of the military alliance may have to raise their financial contributions — and they are hardly awash with cash. Yet, if Mr Trump is comfortable with a newly confident Russia strutting its stuff, Europe will be more vulnerable than for many a year. Meanwhile, if Asia becomes China’s economic playground, Europeans may wonder whether they need to pivot eastward, possibly hastening the demise of the Atlantic alliance. That’s especially true for the UK, now desperately looking for new export opportunities given the uncertainties over its relationship with the EU. 

If all this sounds rather Orwellian, that’s because it is. In 1984, the world was dominated by three empires, Oceania, Eurasia and East Asia. Perhaps fiction is about to become fact. And in this new Orwellian reality, Europe may find itself abandoned by one empire and deeply unsure about its relationship with the others. America’s protective embrace may at times have been suffocating but, if the US lets go, Europe will really miss its transatlantic ally.



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