The New International Populist Order

One could claim that we are not witnessing “The End of History” foretold by Fukuyama but rather “The Clash of Civilizations” described by Huntington.

There is only one thing worse than looking back 100 years to seek solutions to the challenges facing today’s society: doing so and intending to find those solutions in initiatives and attitudes that failed even back then, after leading the world to one of its worst disasters. That is precisely what the New International Populist Order, which is catching on at top speed with the aid of Donald Trump, is about, to the preferential benefit of China and Russia. The “America First” policy – which is forcing the single existing global power into national withdrawal – together with the personality of a president who has a huge ego and yet is easily manipulated as evidenced by the handling of the North Korean issue, is tearing up the traditional Atlantic alliance between Europe and the U.S., while opening up positions for contenders who are straining to replace the U.S. as an international power.

Even if we acknowledge that there has also been a flip side to the globalization of the economy, in such a way that, together with the tremendous decline in poverty among former developing nations, inequality in developed countries has increased, and we acknowledge the feelings of vulnerability and even fear of the future that have overtaken a significant number of Americans and Europeans, offering a nationalist populism that builds walls against the outside world and damages democracy as a promising solution is much more than a mistake: it is greatly deceiving and will cost us dearly, and sooner rather than later.

Immigrants are not the problem (and therefore, although immigration must be regulated, forbidding immigration solves nothing), and trade deficits are not solved by unleashing trade wars that impose tariffs which disregard the profound changes that have taken place in international economic relations in recent decades. Let us take a closer look at this. When commerce was an exchange of finished goods (for instance, wine for shirts), a tariff-based policy might have made sense in order to defend national production and balanced divestments. Later, as transactions increasingly expanded to include components, intermediate goods and differentiated products, it no longer made sense to curb the imports needed in order to manufacture one’s own exports. Now, however, when a fair share of trade takes place within the global value chain (auto parts that get manufactured in different places and are assembled somewhere else), thinking of tariffs as a solution means failing to understand what constitutes the bulk of the current global economy.

Trade Balance

Furthermore, in recent decades, the trade balance has been losing relative weight in the face of trade in services (for instance, tourism) and balance of capital (investments and loans). So, while the U.S. is running a trade deficit with China, it has a trade surplus in the services balance, and more importantly, China is the world’s first holder of American public debt, proving that today’s bilateral economic relations are much more complex than President Trump appears to understand. Hence, what is increasingly relevant is the whole of the balance of payments, which is only in deficit when the country spends more than it saves, similar to what occurred in Spain at the time of the housing bubble. This explains why a tariff is no solution to such an imbalance.

What we are currently experiencing is the rise of neopopulism and its political values in the U.S. and in Europe. For years we have been writing that international relations were changing as a result of a shift in economic power from the Atlantic to the Pacific. Most authors have identified Asia’s strength as the foundation for the coming world order.

However, despite this being relevant, I believe it is an analysis that overlooks the main change that has been taking place during the last decade: the end of the paradigm established through the 1945 global postwar era, based on respect for universal human rights, and its replacement by a new paradigm based on tribal values, in which the populism in every country in the world has its foundations.

Therefore, the traditional principles of the West (rationality, individual freedom, democracy and multilateralism) are not prevalent in international relations, but quite the opposite. One could even claim that we are not witnessing “The End of History” foretold by Fukuyama in 1992, but rather “The Clash of Civilizations” described by Huntington one year later. We have already watched that movie. And it ends very, very badly.