2017 — A Thunderous Clash of Politics, Economies and Policies

January 6, 2017

2017 — A Thunderous Clash of Politics, Economies and Policies

Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva.

The Paris agreement, which was adopted in December 2015 and which came into force in record time in October 2016 as a demonstration of international concern over climate change, may face a major test and even an existential challenge in 2017, if Trump fulfils his election promise to pull the US out. Credit: Diego Arguedas Ortiz/IPS.

The Paris agreement, which was adopted in December 2015 and which came into force in record time in October 2016 as a demonstration of international concern over climate change, may face a major test and even an existential challenge in 2017, if Trump fulfils his election promise to pull the US out. Credit: Diego Arguedas Ortiz/IPS.

PENANG, Jan 2 2017 (IPS) – Yet another new year has dawned.   But 2017 will be a year like no other.

There will be a thunderous clash of policies, economies and politics worldwide.   We will therefore be on a roller-coaster ride, and we should prepare for it and not only be spectators on the side-lines in danger of being swept away by the waves.

With his extreme views and bulldozing style, Donald Trump is set to create an upheaval if not revolution in the United States and the world.

He is installing an oil company chief as the Secretary of State, investment bankers in key finance positions, climate sceptics and anti-environmentalists in environmental and energy agencies and an extreme rightwing internet media mogul as his chief strategist

US-China relations, the most important for global stability, could change from big-power co-existence with a careful combination of competition and cooperation, to outright crisis.

Trump, through a phone call with Taiwan’s leader and subsequent remarks, signalled he could withdraw the longstanding US adherence to the One China policy and instead use Taiwan as a bargaining card when negotiating economic policies with China.  The Chinese perceive this as an extreme provocation.

He has appointed as head of the new National Trade Council an economist known for his books demonising China, including “Death by China: Confronting the Dragon”.

Trump seems intent on doing an about-turn on US trade and investment policies, starting with ditching the Trans Pacific Partnership Agreement and re-negotiating the North American Free Trade Agreement.

Other measures being considered include a 45% duty on Chinese products, extra duties and taxes on American companies located abroad, and even a 10% tariff on all imports.

Martin Khor

Thus 2017 will see a rise in protectionism in the US, the extent still unknown.  That is bad news for those developing countries whose economies have grown on the back of exports and international investments.

Europe in 2017 will also be preoccupied with its own regional problems.  The Brexit shock of 2016 will continue to reverberate and several European countries facing elections will see challenges to their traditional values and established order from xenophobic and narrow nationalist parties.

As Western societies become less open to the world and more inward looking, developing countries should revise their development strategies and rely more on domestic and regional demand and investments.

As North-South economic relations decline, this should also be the moment for expanding South-South cooperation, spurred as much by necessity as by principles.

2017 may be the year when resource-rich China, with its huge Road and Belt initiative and its immense financing capacity, fills in the economic void created by western trade and investment protectionism.

But this may not be sufficient to prevent a finance shock in many developing countries now beginning to suffer a reversal of capital flowing back to the US, attracted by the prospect of higher interest rates and economic growth.

Several emerging economies which together received many hundreds of billions of dollars of hot money in recent years are now vulnerable to the latest downturn phase of the boom-bust cycle of capital flows.

Some of these countries opened up their capital markets to foreign funds which now own large portions of government bonds denominated in the domestic currency, as well as shares in the equity market.

As the tide turns, foreign investors are expected to sell off and transfer back a significant part of the bonds and shares they bought, and this new vulnerability is in addition to the traditional external debt contracted by the developing countries in foreign currencies.

Some countries will be hit by a terrible combination of capital outflow, reduced export earnings, currency depreciation and an increased debt servicing burden caused by higher US interest rates.

As the local currency depreciates further, the affected countries’ companies will have to pay more for servicing loans contracted in foreign currencies and imported machinery and parts, while consumers suffer from a rapid rise in the prices of imports.

On the positive side, the currency depreciation will make exporters more competitive and make tourism more attractive, but for many countries this will not be enough to offset the negative effects.

Thus 2017 will not be kind to the economy, business and the pockets of the common man and woman.  It might even spark a new global financial crisis.

The old year ended with mixed blessings for Palestinians. On one hand they won a significant victory when the outgoing President Obama allowed the adoption of a UN Security Council resolution condemning Israeli settlements in occupied Palestinian territories by not exercising a veto.

The resolution will spur international actions against the expansion of settlements which have become a big obstacle to peace talks.

On the other hand the Israeli leadership, which responded defiantly with plans for more settlements, will find in Trump a much more sympathetic President.  He is appointing a pro-Israel hawk who has cheered the expansion of settlements as the new US ambassador to Israel.

With Trump also indicating he will tear up the nuclear power deal with Iran, the Middle East will have an even more tumultuous time in 2017.

Some countries will be hit by a terrible combination of capital outflow, reduced export earnings, currency depreciation and an increased debt servicing burden caused by higher US interest rates.

In the area of health care, the battle for affordable access to medicines will continue, as public frustration grows over the high and often astronomical prices of patented medicines including for the treatment of HIV AIDS, hepatitis C, tuberculosis and cancers.

There will be more powerful calls for governments to curb the excesses of drug companies, as well as more extensive use of the flexibilities in the patent laws to counter the high cost of medicines.

Momentum will also increase to deal with antibiotic resistance which in 2016 was recognised by political leaders meeting at the United Nations to be perhaps the gravest threat to global health.

All countries pledged to come up with national action plans to counter antibiotic and anti-microbial resistance by May 2017 and the challenge will then be to review the adequacy of these plans and to finance and implement them.

The new year will also see its fair share of natural disasters and a continued decline in the state of the environment.  Both will continue to be major issues in 2017, just as the worsening of air pollution and the many earthquakes, big storms and heat-waves marked the previous few years.

Unfortunately low priority is given to the environment.  Hundreds of billions of dollars are allocated for highways, railways and urban buildings but only a trickle for conservation and rehabilitation of hills, watersheds, forests, mangroves, coastal areas, biodiversity or for serious climate change actions.

2017 should be the year when priorities change, that when people talk about infrastructure or development, they put actions to protect and promote the environment as the first items for allocation of funds.

This new year will also be make or break for climate change.  The momentum for action painfully built up in recent years will find a roadblock in the US as the new President dismantles Obama-initiated policies and measures.

The Paris agreement, which was adopted in December 2015 and which came into force in record time in October 2016 as a demonstration of international concern over climate change, may face a major test and even an existential challenge in 2017, if Trump fulfils his election promise to pull the US out.

But Trump and his team will face resistance domestically including from state governments and municipalities which have their own climate plans, and from other countries determined to carry on without the US on board.

Indeed if 2017 will bring big changes initiated by the new US administration, it will also generate many counter actions to fill in the void left in the world by a withdrawing US or to counter its new unsettling actions.

Many people around the world, from politicians and policy makers to citizen groups and community organisers are already bracing themselves to come up with responses and actions.

Indeed 2017 will be characterised by the Trump effect but also the consequent counter-effects.

There are opportunities to think through, alternatives to chart and reforms to carry out that are anyway needed on the global and national economies, on the environment, and on geo-politics.

Most of the main levers of power and decision-making are still in the hands of a few countries and a few people, but there has also been the emergence of many new centres of economic, environmental and intellectual capabilities and community-based organising.

2017 will be a year in which ideas, policies, economies and politics will all clash, thunderously, and we should be prepared to meet the challenges ahead and not only be spectators.

6 thoughts on “2017 — A Thunderous Clash of Politics, Economies and Policies

  1. Actually Donald Trump is in big big trouble – not with the Democrats but with his own Republican party. Trump does not control the Republican party and yet Democrats are going to hold his feet to the fire.. How is he going to get his Agenda passed? Take something simple, if he repeals Obamacare as his Republican wants it, it has to work better or he will find himself criticized by democrats until including some Republican. How is he going to get close to Putin or have a trade war with China if his own party will not back him?

    The optimism and opposition to Trump could be both misguided, what is more likely is paralysis and inertia. Its one thing to up end an election which is media-controlled, it is quite another to change Washington. Trump has already committed a big mistake after winning is not to win over the Media in order to fight his own party first.

    He is also at loggerheads with his Intelligence people. That is the most stupid thing he has done before being inaugurated as the 45th POTUS on Janaury 20, 2017. This guy is at war with everybody except himself.–Din Merican

  2. “..resource-rich China,..”

    This author must be either clueless or blinded by the smog. So i stopped reading the rest of his fable, when i came to this well thought out impasse.

    What we will see is a rollback of the rabid globalization led by greedy, unconscionable and only-for-profit Western mega-corporations/MNCs. This will not be compensated by PRC’s SOEs who will be stymied by Western protectionist tendencies and the possibility of a shooting war over the 9-Dash FUBAR.

    OBOR is a subject of ‘tokking kok’ due to the hefty bill that PRC has to stump out, despite the deep (but getting progressively shallower) pocket of their tottering, brittle economy. PRC might become as ‘protectionist’ and inward looking as the West when (not if) her environmental meltdown, collapsing regional economies and insufficient natural resources – including food security, start to bite back.

    North Korea might just catch ‘Koro’ and go limpid, while ejaculating in atomic spurts. Rodina or Mother Russia’s favored son Putin will be stuffing Puting susu (baby pacifiers) into both Chairman Xi and Twittering Idiot Trump’s foul mouths.

    Malaysia, aka Malusia, may see the terminus of it’s embarrassing impotence and flaccid Madness – between the 3rd and 4th quarter, or just before the next ‘Badget’ – i.e Sept-Oct (GE-14). Honestly, i like many Malusians, am totally nauseated with the political and economic shit-house that we have become. If the comments in M’kini is anything to go by, we are screwed big time. I wondered aloud, where these vapid commentators get their ideas. Someone told me, a hybrid of the Zika-Rabies-Tetanus virus. Who knows..?

    Other than that, my Ozzie grandkids will have to learn bush-whacking skills from the aboriginal tribes. Any questions?

  3. Trump’s Presidency will be very erratic, except for the consistent policies that benefit the rich as well as the corporate chieftains. There will also be shows with not much substance for the white working class masses.

    Important to remember the consistent traits of people with NPD (Narcissistic Personality Disorder). From the Mayo Clinic website :

    DSM-5 criteria for narcissistic personality disorder include these features:

    •Having an exaggerated sense of self-importance
    •Expecting to be recognized as superior even without achievements that warrant it
    •Exaggerating your achievements and talents
    •Being preoccupied with fantasies about success, power, brilliance, beauty or the perfect mate
    •Believing that you are superior and can only be understood by or associate with equally special people
    •Requiring constant admiration
    •Having a sense of entitlement
    •Expecting special favors and unquestioning compliance with your expectations
    •Taking advantage of others to get what you want
    •Having an inability or unwillingness to recognize the needs and feelings of others
    •Being envious of others and believing others envy you
    •Behaving in an arrogant or haughty manner

    Dangerous times are ahead, with a super power and its powerful military machine under the control of this individual.

  4. Having dealt with one narcissist on the job before, another notable trait of NPD is:

    “Having a very vindictive nature” (i.e. will go after you, relentlessly, after perceived slights and perceived insults).

    People with personality disorders are not normal in their thinking and behaviour like the rest of us ! You can see this in the attacks against Megyn Kelly, and the constant telling of falsehoods and outright lies (some of which the NPD person actually believes !)

    Other traits include:
    A short attention span and proneness to boredom i.e. will get bored easily and turn to the next exciting thing (mostly to feed the NPD person’s ego)
    Can also be a sexual predator i.e. not so much for sex but again to satisfy ego needs.

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