Trump and Brexit: ‘This is really an attempt to reverse the last 35 years of accelerated globalization’
Janice Gross Stein is the founder of the Munk School of Global Affairs at the University of Toronto and is the Belzberg Professor of Conflict Management in the department of political science.
She is a Fellow of the Royal Society of Canada and a member of the Order of Canada and the Order of Ontario. She’s written two books, Networks of Knowledge and The Cult of Efficiency and she’s co-authored several books, including The Unexpected War: Canada in Kandahar.
Stein delivered the Massey Lectures in 2001 and was awarded the Molson Prize by the Canada Council for her outstanding contribution to public debate. She has honorary doctorates of law from four universities. She makes frequent TV appearances as an international affairs expert.
Diplomat magazine: The question on everyone’s minds at the moment, and likely for the foreseeable future, is what does a Donald Trump win mean for Canada and the world. What are your thoughts?
Janice Stein: Trump’s presidency will be enormously disrupting for everyone around the world. Canada, which is the United States’ closest neighbour — we export 75 per cent of our goods and services to the U.S. market — shares a continent with the U.S. We share our air spaces and our oceans. There’s no country more vulnerable to American disruption than Canada.
Trump will certainly be a disruptive president. It’s impossible at this point to assess the level of disruption because there are checks and balances built into the U.S. system, but all the signs suggest this is a president determined to disrupt many institutions domestically and internationally. This will have an impact on Canada — on trade, on the environment, on competitiveness. If Trump succeeds in lowering taxes in the United States, that will make Canada less attractive to American and other international investors. A Trump presidency could have an impact on virtually every issue in our bilateral relationship, from trade, global supply chains and the environment, to broader multilateral issues where the U.S. becomes less attractive to people and the door opens wide for Canada to attract global talent.
DM: So there may be a couple of small pluses in there?
JS: There may be several pluses, one clearly being the enhanced capacity to attract global talent, from students, to professionals and skilled immigrants, Canada has just become a much more attractive place for many people as the U.S. diminishes in attractiveness for many. That’s a huge plus.
It’s also conceivable that, for the first time, the U.S. will be able to break out of the legislative gridlock and move ahead dramatically on big infrastructure spending. That will benefit Canada as well because we have such integrated economies, very large intra-firm trade and interconnected supply chains.
Economists are correct that there’s a short-term gain for Canada if the U.S. economy moves into a period of higher growth as a result of the stimulus the new spending provides. Canada always benefits from a growing U.S. economy. But ultimately, how can Trump square the circle of higher spending and lower taxes? How can he avoid very large deficits? The answer to that question is unclear to any serious economist who looks at Trump’s plans.
High spending and low taxes is a Keynesian solution in response to a depression or a recession and it makes a great deal of sense. But the U.S. is at close to full employment. That’s generally not the right time to inject a massive stimulus into the economy. Trump is trying to create jobs among voters who have been left behind by the recovery. Infrastructure spending is a very good way to do that because it creates jobs for workers that are not as skilled as high-value manufacturing requires.
The longer-term strategy in the United States under Trump is worrying because it is not sustainable over time. It’s always been difficult for the Canadian economy to march out of step with the American economy because we’re one-tenth their size. They’re so important to us so we, more than anyone, are in the eye of the storm.
Trump is a domestic president. He’s not that interested in international politics. To the extent that anyone can say anything about his policies, it appears he will focus largely on domestic issues. That’s what interests him.
But international challenges usually come quite quickly. The world is unforgiving. What happens to North Atlantic defence? I doubt he’ll go ahead with his more radical plans to reform NATO, but certainly Canada is going to have to increase its defence spending. That will skew other budgetary spending for our government.
How Canada increases that spending, how it gets the maximum benefit for Canadians, how it gets the maximum benefit in terms of spinoff knowledge and skill development is going to be a very large issue for the government. It has to be, given the size of the likely expenditure on defence.
DM: You are confident he’ll insist on NATO partners increasing their defence spending?
JS: I am confident because this isn’t a new argument that we’re hearing from Donald Trump. President [Barack] Obama, on his last trip to Canada, spoke in his polite way on the necessity for Canada to do more. This request from the United States crosses parties and crosses presidents. I think we’ve run out of excuses.
DM: Anything else Canada should be watching in the context of a Trump win?
JS: China is a huge beneficiary of a Trump presidency because it consolidates China’s strategic dominance in Asia. Trump signaled his disinterest in engaging and countries are already adjusting — from the Philippines to Malaysia. We’ll likely see more of that.
The role that the United States had as an over-the-horizon balancer is likely to diminish. Trump appears willing to treat Russia as a great power and to look for ways to work with Russia. When Obama first became president, he too looked for a “reset” of the relationship between the U.S. and Russia. The “reset” failed after Putin decided to annex Crimea. This president does not appear to care about the annexation of Crimea.
There could be some real benefits from a better U.S.-Russia relationship. It’s conceivable that they will be able to work together to de-escalate the war in Syria, to dampen the fighting. Putin may move now, before Trump becomes president, to consolidate Assad’s control over Aleppo. That would give President Assad control of the spine of central Syria and the rebels would largely be reduced to a much less significant force in the eastern part of Syria. That would be a strategic defeat for those, like the United States and Saudi Arabia, who have backed the rebels. Such a victory for Assad seems to be imminent and could lead to reduced fighting and diminished refugee flows over the next 18 months.
On the other hand, I think our friends in Latvia, Lithuania, Estonia, Poland and Hungary are very anxious. They’re returning to a world that they know all too well and that did not serve them very well in the past.
DM: Marine Le Pen, president of France’s National Front, was one of the first people to congratulate Donald Trump on his win. Can you comment on the rise of the right in Europe? And how did this play into Trump’s win?
JS: We have to distinguish between the rise of the right and populism. We’ve long had parties on the right, in the U.S. and in our own country and certainly in Europe. What we’re seeing now is very different. We’re really seeing a populism that began in Europe in the wake of the global recession, which devastated economies, pushed up unemployment and made inequality within European states and between European states much greater than it was before.
We saw it in Brexit, where it’s clear that was a reaction against the established order. In this case, it was a reaction against immigration, globalization, trade — all of these. The Trump election is very much connected to what is happening in Britain and Europe.
The second point that’s worth thinking about is that this is not purely, or even largely, economically driven. It’s not fuelled by people who are unemployed necessarily or by the poorest of the poor. If you look at the voting data, to the extent that it’s reliable, Trump voters were middle-class. Yes, some were from Rust Belt states, but many were not. Most were from higher immigration-receiving areas. This is as much about what’s called ‘white identity’ as it is about economic grievance. It’s about a loss of control; it’s about reclaiming identity; it’s about reclaiming sovereignty. It’s very similar in Europe and the U.S.
If we look at Brexit voters, they’re very similar to Trump voters; they’re generally not in the larger cities, they were in smaller cities and rural areas, they were in areas that have received high levels of immigration relative to the population. We know that Brexit voters who voted yes weren’t the poorest and they weren’t necessarily from areas of high unemployment either. For Brexit voters, part of this was a worry about the future — that their children will not have the same opportunities and enjoy the same kind of life that their parents did.
There’s populism of the left and populism of the right — and this is clearly populism of the right — but it’s very distinct from right-wing political movements and right-wing political parties. This is really an attempt to reverse the last 35 years of accelerated globalization, opening economies, deepening trade, mobility, immigration, movement of populations. It’s a sense that the world is slipping out of control and away from people and the culture and traditions that they know.
DM: Switching gears completely, you wrote a book on Canada in Kandahar. What are your thoughts on Canada’s current international engagements and what Prime Minister Justin Trudeau and Foreign Affairs Minister Stéphane Dion seem to be planning for Canada in terms of peacekeeping?
JS: We don’t really know yet — they haven’t told us where they’re going to deploy forces. There’s a commitment to peacekeeping in Africa and that’s about all we know. And you know, that could take many forms. Certainly in Mali and in the Congo, there are very troubled peacekeeping missions already deployed. In the Malian case, the mission works alongside France, which is engaged in a robust combat operation against Islamic State forces. In the Congo, there’s been a long-standing civil war and the peacekeeping forces in the Congo have a really troubled history. The foreign minister and the prime minister are thinking hard about where they will make a difference.
One of the things that is generally understood is that peacekeeping operations have been less than successful in the last decade. There have been abuses of human rights by peacekeepers, they’ve been poorly led, they’ve failed to protect civilians — these are long-standing issues in UN peacekeeping, but they’ve gotten worse and it’s worth thinking about whether Canada could not make a greater contribution by thinking hard about leadership in New York, on peacekeeping and on improving logistics and communications. So we’ll have to wait and see.
In the context of a Trump presidency, he’s made a pretty strong attack against NATO members who don’t do their share and don’t spend proportionally to their size. And Donald Trump isn’t the first person to make that allegation. When President Obama was in Ottawa, he was complaining about our level of defence spending as well. What we’ll see in the future, one way or the other, is an increase in military expenditure in Canada. It’s not going to be enough to say we’ve deployed forces; we’re going to have to make a more robust increase in defence spending. That’s difficult when defence spending is competing with other priorities.
The new president south of the border has a very different set of priorities than the Trudeau administration. And, if the past is any guide to the future, because we’re small and they’re big, it tells us that we adjust our priorities — not the other way around. That’s just life when you’re small and someone else is very, very big.
DM: We’ve heard of them, of course, but can you give a couple of examples of UN peacekeepers breaching human rights?
JS: They brought cholera to Haiti and did not accept responsibility for four years, and engaged in rape in the Democratic Republic of the Congo. The Secretary-General has acknowledged that the rapes occurred.
DM: If you’re looking broadly at 2017, what are the three places you’re most concerned about in the world?
JS: I worry a lot about Europe. There’s a constitutional referendum in Italy, there are elections in France. Europe is struggling to preserve the gains that it’s made and to preserve the cohesion that has served it so well over the last 60 years. A destabilized Europe, a divided Europe, is in nobody’s interest. I would pay a lot of attention to Europe. It’s a very important part of the world.
Asia matters to everybody and we’re going to have to see what the Trump administration does with traditional alliances. But if there is a growing sense that the United States will be less present, less engaged, less reliable as a guarantor to Japan, to South Korea, to other Asian allies, that’s a potentially destabilizing factor.
You can never ignore the Middle East because if you try to ignore the Middle East, it doesn’t ignore you. The war in Syria is likely to continue. What difference, again, a Trump presidency will make is yet to be seen. Is there opportunity to work more closely with Russia, because [Trump] clearly has reached out to Russia? Will there be opportunities there to move forward and at least diminish the scale of the violence that is rippling out over the whole world?
Secondly, what happens when Mosul falls and Raqqa falls? Both of those cities will fall in 2017 and the Islamic State will lose its control over this territory. It will become again a networked organization that launches attacks of violence throughout Europe as well as throughout the Middle East. And how does the Trump administration, as well as others in Europe who are now deeply preoccupied with their own problems, respond to that?
DM: Other than Iraq and Syria, can you talk about what you think will happen in the Middle East over the next year?
JS: The other country I would watch is Egypt. Egypt is a hugely important country. It is the largest Arab country by far — 90 million and growing — so its size dwarfs everyone else.
The government of President Abdel Fatah el-Sisi has just done something that no other president of Egypt has done, which is float the Egyptian currency. The currency is slowly losing its value against international currency, which means that imports will be more expensive and a lot of them are things that Egyptians rely on — many are living at subsistence level. So it’s cooking oil, gas, flour — these are absolutely critical to survival in Egypt and if the prices go up, there could be riots. Under [Anwar] Sadat, there were riots in the streets over the diminution of subsidies. This [floating of currency] is what the International Monetary Fund has insisted upon as a condition of a loan to Egypt, so that it reduces its deficit, but it’s a very risky strategy and it’s potentially destabilizing. It’s not inconceivable that this government could be overthrown as a result of — again — street protests against rising prices of staples.
DM: How do you assess Yemen, Israel and the Palestinian conflict?
JS: Yemen is in the middle of a terrible civil war. The Obama administration was supportive of the Saudi crown prince, and especially the king’s son, who is pursuing the war. We’ll have to see whether the Trump administration continues that policy. Saudi Arabia would feel very isolated were American support to be reduced. That might, in fact, enable a quicker end to the civil war, but again, so much in the Gulf, more broadly speaking, depends, in the larger sense, on the United States as a security guarantor. These next 15 months are going to be absolutely critical as the [new administration] figures out the new world order.
The Israel-Palestine conflict is deadlocked. It has remained deadlocked. I see nothing in the international environment or in the domestic politics of either country that would lead me to think that the deadlock is going to be broken in any way.
DM: What are your thoughts on the new world orders we keep reading about with respect to China and Russia?
JS: I’ll break that up into littler pieces. I think the liberal international order that the United States built after World War Two is stressed because it was built on stable currencies, open borders and international trade, which really accelerated at the beginning of the 1980s. But history shows us globalization increases and then decreases, that it’s not a linear movement forward. Often it’s interrupted by major wars and we have 30- or 40-year breaks. That’s what happened from 1914 to 1945 and that’s what stopped the last great wave of globalization.
So the popular protests that we’re seeing in the United States and all across Europe tell everyone that leadership has to be more focused on domestic issues, has to be more attentive right across the economic and social spectrum, has to think much harder than it has about the domestic costs and benefits of trade. Populism has happened in Canada, too. We are not immune. The election of Rob Ford, the mayor of Toronto, was a populist protest.
It tells government that it has to invest more significantly in helping the segments of the population that cannot cope well with the pace of technological change, as jobs shift out of the industrial sector to the post-industrial sector. These haven’t been high priorities of government in the last 30 years. There have not been serious investments made. And the hope was that globalization would lift all of those [segments of the population affected by globalization], but trickle-down affluence has not really happened. And any government in the liberal, post-industrial world would be foolish not to pay attention to these issues.
Do these stresses and strains in the liberal order provide opportunities for Russia and China? Of course they do, because when governments turn inward because they’re forced to turn inward, that provides space for Russia and China.
DM: Are we witnessing the decline of the U.S. as an undisputed superpower? Will we see it in our time? What happened in the U.S. to cause the shift in power?
JS: I don’t think the United States is a declining superpower. The U.S. still has the most dynamic economy in the world and the strongest military by far. It remains the youngest developed country in the world. China is aging much more quickly than the United States and the gap between them will grow.
I think we may be witnessing the beginning of the end of the liberal international order that the United States and its allies built at the end of the Second World War. The first phase of that, a rules-based international order, was developed from 1948–49 until the late 1970s and promoted inclusive economic growth and modern welfare states in the developed world. There was also an inclusive politics that tried to bring in those who were marginalized. Those outside the developed world, however, did not do as well.
That period ended with stagflation, a period of inflation, but also very low growth. Out of that came the first assault on that international order, led by [then U.S. president Ronald] Reagan and [then-British prime minister Margaret] Thatcher that sparked the most intense period of globalization that we’ve known. They created a neo-liberal international order — global free trade, deregulation of the economy, integrated global supply chains and increased mobility of labour that produced huge gains in global economic growth, especially in Asia. China lifted at least half a billion people out of poverty, if not more, when it became a factory to the world. At the same time, however, the U.S. lost at least one million manufacturing jobs to China during this period, and inequality grew within developed economies. The financial crisis in 2008 brought this period of accelerating globalization to an end. The roots of Trump’s presidency really begin in the great recession of 2008. His is an America-First strategy, a visceral opposition to global free trade and a much more protectionist agenda.
Long before the election, trade had begun to diminish as a share of global economic growth. For the first time this past year, global trade did not grow as a proportion of the world economy. Trump has been talking about an issue that is already in the past. The challenge for people who are excluded from good jobs in the American economy is not trade, but technology. Trump’s protectionist instincts could well signal the beginning of the end of the neo-liberal international order. This is not the first time in history that globalization has retreated. It has always moved in fits and starts.
DM: What should Canada take on as its role in the world at this point?
JS: We tell ourselves we’re a trading nation, but we’re not, because 75 per cent of our exports still go only to one market. That’s not the pattern of a global trader. Only four to five per cent of our exports go to China. What can we do to improve our performance as the United States becomes more protectionist?
First and foremost, Canada can never, ever ignore the United States. This is not the first time a prime minister will have to deal with a president whose views are very different from his own. Canadian prime ministers have generally been good at not giving unnecessary offence when their views differ from those of a president, although there have been exceptions. On the other hand, it is very important — and I think our prime minister will be very good here — that we continue to promote our values, that on issues that are important to Canada globally, such as climate change, we speak our mind.
I think it is important to remember that this was a very close election. Trump does not have a strong mandate to embark on a radical program. Many of the people who voted for him did so for economic reasons and because government doesn’t work for them anymore. That’s an important message for every government in the developed world to hear. How do we make our governments more responsive?
Finally, a very sobering lesson is the terminal danger of smugness. Elites often think that they know better than everyone else and dismiss those who disagree with them as uneducated or uncultured, as unwise or unworthy. The kind of disrespect that some liberal elites show voters who disagree with them is a terrible mistake.