Turbulent politics and the shift in global power dynamics: why context is everything
This week marks a month since Donald Trump’s return to the US presidency, reflecting a broader global trend of more inward-looking, reactionary politics. IIED’s Subhi Barakat examines the underlying causes of this trend and the implications for efforts to achieve a fairer, more sustainable world.
Voting session in the European Parliament (Photo: European Parliament, via Flickr, CC BY 2.0)
As an organisation with an international footprint that works on globally relevant issues, we at IIED can’t be effective unless we understand the broader context in which we operate, how that context is changing and, crucially, why it is changing.
Indeed, most people reading this will have registered the volatility and uncertainty that we see in politics, in economics and in society generally – at both the domestic and international level.
Take, for example, the flurry of actions and announcements from the first fortnight of the new US administration. They include: withdrawing from the Paris Agreement on climate change, the World Health Organization and the United Nations Human Rights Council; proposed tariffs affecting most of the world; freezing and possibly closing the US Agency for International Development (USAID); and intentions (or bluffs) to incorporate Canada as a 51st US state or take over Greenland, Gaza and the Panama Canal.
Each of these is a significant policy shift. The fact that they’ve all come at the same time could have massive global implications. For example, broad-based, economy-wide tariffs can cause a cascade of trade wars and a global recession. Rapid global decarbonisation and preparedness for the next global pandemic will be harder in a recession – not to mention the implications of US withdrawal from the climate and global health regimes itself.
Uncertainty and ambiguity
The often jaw-dropping developments from the US naturally grab the headlines. However, the trend towards more inward-looking and reactionary politics that motivates some of these decisions is not just limited to the US. One only has to look to the rest of the global North to understand this.
Consider, for example, the rise of right-populist and reactionary political movements in the UK, Germany, the Netherlands, France, Italy, Hungary – and the list goes on. And this isn’t just a global North phenomenon; India, Argentina, Brazil and others in the global South have been moving in the same direction.
As the relevant domestic dynamics play out, there is a sense that political institutions in many countries are fracturing. Some are being replaced with new political formations that are fomenting politics of resentment and division.
And as domestic politics become more isolationist, international engagement becomes more transactional. The resulting environment becomes more ambiguous as alliances, agreements and priorities can and do shift overnight, with little to indicate that coherent principles or policy underly consequential decisions.
The underlying trends
These are the ripples on the surface: very consequential ones. Beneath these ripples are powerful underlying currents that have been building slowly over decades, but that are often less visible.
Consider that China’s GDP based on purchasing power parity (PPP) surpassed the US’s GDP in the early 2010s. Consider also that in 2018, BRICS countries’ share of global GDP based on PPP surpassed the share from G7 countries. This is an important inflection point and the gap between BRICS and G7 countries has only grown since then, with the BRICS alliance having expanded to include Egypt, Ethiopia, Iran, United Arab Emirates and Indonesia, with further expansion in consideration.
It is also worth considering that emerging markets and developing economies (EMDE) have accounted for the majority of annual global GDP growth over the past decade and that this trend is expected to continue for the foreseeable future. If we exclude US growth, the gap between EMDE and advanced economies is even more stark, with Europe in particular showing signs of economic stagnation.
Lastly, consider the BRICS settlement system initiative, which could challenge the traditional US dollar-based SWIFT international settlement system and which would amount to a very credible “de-dollarisation” movement.
Shifting global power dynamics
What these and other trends imply is a shift in global power dynamics. As economic power and influence has moved to EMDE countries, we’ve seen relative stagnation and decline in advanced economy countries. The seeds of these trends possibly started with the large-scale decolonisation of the 1960s and 1970s. And they have merely accelerated in the last 2-3 decades as formerly colonised countries became more assertive in international politics and economics.
It’s too early to tell what these trends mean in the long run. One possibility is more protectionism that results in de-globalisation and less integrated global financial systems, trade and supply chains. Another possibility is ‘balkanisation’: ie a fragmented political and economic landscape with competing spheres of influence, alliances and rules that are often hostile to each other.
In the foreseeable future we should expect more global tension between advanced economy and EMDE countries – as well as more volatility and direct competition between these blocs, since there’s currently still relative parity between them.
What this means for IIED’s work
These trends have implications for organisations like IIED, because the issues we work on are much harder to solve without global collaboration and coordination. Simply put, we need fit-for-purpose multilateral institutions and a strong bias in favour of cooperation to solve global challenges.
Unfortunately, increasingly unilateral measures and zero-sum transactional politics in recent years has undermined multilateralism – both as an ideal and as a practice. This in turn has resulted in an escalating crisis of faith in multilateral institutions such as the World Trade Organization.
We’re now speeding ahead to climate and biodiversity breakdown, and record levels of inequality; what’s more, we’ve failed to prevent wars in Ukraine, Sudan and the Democratic Republic of Congo, and even genocide in Gaza. The global institutions simply haven’t delivered.
What’s clear is that the context in which we’re operating is changing rapidly, with far-reaching implications for how we deliver our mission and who we work with.
The implications include a growing trend for countries to fold international development budgets into foreign affairs departments and align development programmes more explicitly with foreign policy priorities. Another emerging trend is the increasing role of private actors in funding and delivering development programmes, and in global governance generally.
Meanwhile, we need to connect the dots between climate, energy, trade, technology and development agendas if we have any chance at understanding the complexity of the system we have to work in.
The challenge ahead is to strengthen and rebuild (in some cases from the bottom up) multilateral institutions that are both legitimate and effective. These institutions will need to adapt to the changing context without losing the principles and values that underpin the missions they need to deliver.
This won’t be easy, but if we can do that – in partnership and collaboration – we’ll see more of the outcomes that remain critical for moving us towards a fairer, more sustainable world.
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