In a world marked by virtual insanity and unconventionality, an easy option is to go about your work gently and discreetly, remaining focused, aware all the time that someone is looking over your shoulder or that danger is on its way.
In the three institutions that John Maynard Keynes identified, early, as the putative cornerstones of world governance — the World Trade Organisation (WTO), IMF and World Bank — there are murmuring fears of a storm named Donald Trump that is on its way.
Since his return to the presidency Trump has focused more intensely on domestic issues than he has on global affairs — other than his tariff wars as if that was not enough. Trump’s tariff wars are, purportedly, to promote businesses, manufacturers and industries in the US. He has not, yet, turned his attention fully to the institutions of global governance and global finance upon which the multilateral system rests and which are the embodiment of the globalism that is so fiercely opposed by his base.
Possibly in anticipation of what may come, of the “turmoil one man has unleashed on the world”, as described by Prospect Magazine editor Alan Rusbridger, the three organisations have gone quiet on the global political economy and global finance. Officials within the cornerstone institutions seem to have gone about their work in place, like rodents on an exercise wheel.
Sticking to that analogy: like the experimental rats and the wheel, the institutions of global governance can run but they may not be able to get away from Trump. Nor can they ignore (or forget) the immense bargaining power and epistemic capacity US negotiators hold in the WTO in particular. What they can do, in the meantime, is take the advice of Mamie, Jean-Paul Sartre’s mother, and continue “gently [and] be discreet”.
He will probably start with the US Federal Reserve before turning his attention to the IMF, World Bank and WTO, and when he does he will probably disrupt the relatively stable global financial markets.
The IMF, on its part, has turned to making rather bland humdrum statements, proposals and suggestions. Speaking at the China Development Forum meeting in Beijing last month, IMF deputy MD Nigel Clarke gave a talk that was for the most part meaningless, stale and unimaginative and probably about three decades late. He told the Chinese about the value of structural reforms (and what this could do for growth), as if China were still stuck in the years before Deng Xiaoping, or before the horizontal and vertical expansion of liberalisation of the 1990s. It felt a bit like watching someone advise Usain Bolt that it was necessary to tie his shoelaces before taking his first step.
To the extent that there was even the slightest reference to what may come, Clarke made the sophomoric claim (sophomoric, given the audience) that “patterns of trade and capital flows are shifting. AI is rapidly advancing. Trade is no longer the engine of global growth it used to be. Divergences across countries are widening. And governments worldwide are shifting their policy priorities”.
In the WTO, staff have been focusing on committee work avec précaution, one senior official told me at the end of last week. He explained that everyone knew that the power of the US would be flexed once Trump turned his attention to the WTO. In the meantime, the officials try to go about their work, in committees, without drawing too much attention to themselves but constantly looking over their shoulders. For now, they proceed gently and discreetly.
To be sure, Trump will turn on the main institutions of global governance eventually. He will probably start with the US Federal Reserve before turning his attention to the IMF, World Bank and WTO, and when he does he will probably disrupt the relatively stable global financial markets.
In the weeks immediately after Trump’s inauguration Federal Reserve chair Jerome Powell acknowledged that there was “some elevated uncertainty because of, you know, significant policy shifts on tariffs, immigration, fiscal policy and regulatory policy... [The Fed] is very much in the mode of waiting to see what policies are enacted.” For now, they continue to proceed gently and discreetly.
It’s a difficult statement to make, but Trump simply does not care about global finance. He also seems to be uninterested in global trade, except where bilateral trade bumps into whatever may be discerned as his ideological bent. Trump is not exactly the best-informed person on global political economic or global finance. He seems to vacillate between ignorance and naiveté and seems, sometimes, to be remarkably unsophisticated when one considers the office he holds.
While he has surrounded himself with loyalists, many of whom are copper-bottomed “America First” folk, the US presidency and the entire bureaucracy — that very “deep state” he has so often decried — have considerable power to remake trade and finance policies on a whim. The danger is that the rest of the world will not sit by idly when faced with Trump’s unilaterally actions.
Trump’s policies, from his time as a businessman, are highly confrontational, marked by winner-takes-all (and devil take the hindmost) attitude, and he understands power. None of this makes the world a safer place.
• Lagardien, an external examiner at the Nelson Mandela School of Public Governance, has worked in the office of the chief economist of the World Bank as well as the secretariat of the National Planning Commission.
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