Prices geopolitics – Geopolitical future

There are two analytical principles that deserve to be repeated before diving into the rates series that the Trump administration published last week. The first is that we have entered an unranted world order, a state in which a geopolitical era passes to the next. All the things that were some in the past have become uncertain – the storm before the calm that I have applied to American politics.

The second is the distinction between geopolitical imperatives and geopolitical engineering. Geopolitical imperatives oblige nations to act in certain ways (and predictable). Geopolitical engineering is the way in which nations manage their geopolitical imperatives, a process which requires balanced the domestic policy of a nation between those who welcome the new reality and those who oppose it. The result is predictable, even if the process by which it emerges is less, apart from the result dictated by geopolitical reality.

In this spirit, the current geopolitical reality is as follows: the world order which had been in place throughout the 20th century has been eroded, and a new era is in engineering. We are in a period when the standards of the last century are no longer relevant. It is an infrequent and disturbing time, but throughout human history, it was a normal anomaly.

The order of the last 100 years has started with the Empires of Western Europe, which have used their access to the Atlantic Ocean to dominate a large part of the rest of the world, in particular the non -European parts of the eastern hemisphere. Eastern Europe was widely excluded from imperial power. The United Kingdom has taken the share of the lion of imperial wealth, followed by France, Spain and the Netherlands. The fact that the continent was so fragmented in independent states made war inevitable.

This European century included three distinct phases. The first was Germany’s attempt to restructure its imperium and therefore Europe, leading to the First World War. The second phase was the Second World War, which led to a weak and divided Europe but to an upward power in the Soviet Union and the United States. Their respective needs to access the Atlantic and to control the Atlantic Europe led to the third phase, the Cold War. The United States and the Soviets have spread Europe, the first taking the West and the second taking the east. The conflict that followed presented a confrontation in Europe along the East-West Division and, above all, a war by world proxy for the remains of the European Empires. Direct wars, proxy battles and secret and open operations were carried out in Africa and Asia, the Middle East and South America, always contained by the geopolitical reality of mutual destruction provided by nuclear war.

At the heart of the American Cold War strategy, the creation of an economic system that benefited Washington at Moscow costs. The economic advantages of the Alloy with the United States prevailed over the advantages of the Allification with the Soviets. Moscow could offer support to the regimes that led a country but not to the country itself. The United States could do both. Washington used its vast wealth to manage Western Europe and the so-called third world. He designed a strategy to liberalize and facilitate trade throughout the Capitalist West led by the United States. This strategy included prices, which allowed the recovery of European and emerging economies of the Third World to access the American market. Free trade – as a principle if not a reality – was therefore a major weapon of the Cold War, which helped to rebuild Western Europe and undermine the Soviet Union. It was not cheap, but the United States was able to pay the bill. Its wealth has enabled its economy to operate effectively despite unbalanced prices and foreign aid. It also managed to succeed; American interior prices have remained low due to the low costs of imported goods, produced as by cheap labor. He was a win-win for the United States and his client states.

In some respects, the Cold War described the fall of communism. Russia has remained a military power and the United States continued its military and economic war strategy. But the war in Ukraine was the real nail in the coffin of the Cold War. The limits of Russian military and economic power forced Washington to reconsider its imperative to resist Russia by defending Europe and, in fact, the very value of the economic dimension of the Cold War. The transfer of industrial production to the zones of the European Alliance has created a system of dependence in the United States in matters of foreign production.

In simple terms, this means that the suspension or disturbance of exports from these countries, especially China, could undermine the American economy. The countries on which the United States depended were subject to internal forces such as strikes, insurrections, coups, etc. Financial costs and benefits for the United States in this relationship have changed and the risks of dependence increase as relocation increases. For example, China could choose to give up the economic advantages of exports to the United States in favor of the political or military advantages of the weakening of American production. Strikes or troubles in Europe could do the same, even without the intention of harming in the United States.

Free trade – or trade in which prices strengthen the finances of other countries and weaken the buyer’s economy – can become so extreme that the risks prevail over the advantages. The financial dimension can be positive or negative for a nation, but the availability of manufactured goods depends not only on the advantages for exporting countries but also on the geopolitical (and stability) ambitions of these countries. China is a historically unstable country. Other countries are more or less. The danger of a nation which is unable to continue to send essential products to the United States due to ambition, war or instability is amplified insofar as it is based on imports to stimulate its own economy.

Availability and low prices are not guaranteed in international trade. The United States has created a system which was in theory beneficial but in reality vulnerable to internal events in exporting countries. However, accompanied by accelerating financial imbalances, the system has become obsolete. It is therefore not surprising that as the Russian threat consists, the United States modifies its strategies, including on trade.

We go from a process of imperatives generated by geopolitical realities to the engineering of a new reality. Financial issues are part of the economic process, as are military issues are part of the geographic process, and both are part of geopolitics. The recent increase in prices is part of the relegation of the financial system. While the large geopolitical analysis has disconcerting elegance, engineering has a more detailed reality. Consider a river and the engineering of a bridge over it. The river course is predictable. Engineering is more complex and sensitive to error. When we examine the recent actions of President Donald Trump, the river must be crossed, but the construction of a bridge is complex and uncertain – and vulnerable to error. Thus, a plan to redefine the system must be designed, although the result of Trump’s initial actions is uncertain, even if their intention seems clear.

Its intention is to shock the system, and I suppose to open the door to more precise engineering, although it must be demonstrated in history, then either codified as the previous system, or quickly rejected as an economic failure. There are many economic interests in the American economy sectors where the immediate advantages prevail over long -term risks, as well as in the sectors where financial reality has already had a great impact. Trump clearly tries to do as much as possible in his first 100 days – before the end of the honeymoon period. With about 20 days to play, and with the Democrats who recover from the shock of the defeat and the uncertain but still loyal Republicans, Trump can conclude that long -term planning and the coalition building are impossible. But as the other presidents before him did, he acts quickly and radically, hoping to revise later if necessary. It is an engineering case, acting at an unexpected speed in an apparently inconsistent manner, restructuring when it is forced to withdraw by a strong opposition on a national and international level, but having established the strategic principle of the negotiations which will lead the result.

The imperative is to go beyond the trade system that Russia’s weakness made it obsolete. This behavior is not unprecedented and it has not been mentioned from thin air. But engineering is the place where uncertainty lives. The unknown world is trying to find a new anchor.