February 6th, 2017

Global Outlook 2017: The Trump transition

by Uwe Nerlich At noon on January 20, 2017, Donald […]

by Uwe Nerlich

At noon on January 20, 2017, Donald Trump was sworn in as the 45th president of the United States. Few of his predecessors have so profoundly shaken long-cherished beliefs about domestic and global politics even before taking office. It remains to be seen whether forecasts of disaster will come true, or whether the new administration is an agent of the sort of “creative destruction” that, in a different era, Joseph Schumpeter considered as the precondition for a “new combination” of economic and political factors – a new order.

When Barack Obama took the oath of office eight years ago, his 80 percent approval rating reflected an expectation that he would heal the national fault lines. After weathering a severe economic downturn that dented his popularity, he stepped down with three out of five Americans again satisfied with his conduct as president.

Donald Trump, by contrast, starts off with the lowest approval ratings for a new president in modern times. His campaign’s dominant theme was a pledge to obliterate the Obama agenda and achievements – and that promise President Trump intends to keep. In so doing, he is offering a completely new kind of “vision” to the nation.

Turning point

Mr. Trump won the election by a razor-thin margin, thanks to clever tactics, weak opponents and lucky circumstances. But his victory was the product of more powerful undercurrents that laid bare the hollowness of the political status quo, both in domestic and global terms. There is no going back. The main reason Hillary Clinton lost was that she offered continuity, trying to buck an anti-establishment bias that had become pervasive.

However, there is no shared national sense of what the new era will bring. That will depend on the outcome of social changes and global competition, which will unfold for the most part independently of domestic politics. American society no longer works as a melting pot, while the limits of U.S. global reach have become evident. This is different from earlier turning points in U.S. history – for example, the onset of John F. Kennedy’s presidency, which presented a comprehensive vision of generational change. Even so, we are certainly witnessing a major shift. The world order will be reshaped by the course this new administration sets.

Disruptive change

Given the need to distinguish between the person and the office, Donald Trump may yet be given the chance to grow on the job and explore the possibilities it affords – something the GOP largely denied President Obama during his eight years at the White House.

Mr. Trump is self-consciously aware of his unconventional path to power, as shown by his frequent protestations that “I am not a politician.” Nor does he mistake his “vision” for a comprehensive domestic and global strategy to be consulted with allies and electorates. Instead, the new president considers it a virtue to be a doer. He does not aim for structured change, but for a series of ad hoc deals that over time may transform the domestic and international scene.

Public outrage at Mr. Trump’s rise to the world’s most powerful political office has swept across the world, but perhaps obscures more than it enlightens. The more prudent course seems to be that of German Chancellor Angela Merkel, who has adopted a respectful stance of watchful waiting. While not immune to the pervasive sense of uncertainty, she seems ready to cope with disruptive changes, if and when they come.

Since the working of checks and balances within the U.S. political system may be at risk, it is important to look for the players and processes that may shape policy formation in the new administration. Possible signposts might include:

The president’s message, including his inaugural speech and other public statements
Personnel appointments and early policy decisions
Mr. Trump’s personal style of governance
Broader social and political processes that elevated him to the White House
Global obstacles, competitors and challenges he will face, including the need to keep or restore a common purpose to the alliance with Europe

Trump’s message

Donald Trump’s inaugural address – a central step in the transfer of power – departed markedly from the example set by his predecessors. Since George Washington gave the first such speech in 1789, there has existed a widely accepted distinction between the office, or “station,” and its occupant. Inaugural speeches typically focus on the former, expressing respect for American institutions, optimism about the country’s spirit and destiny, and moral confidence about how to behave when faced by challenges. The latter aspect took on an increasingly international dimension after World War II, when the U.S. became a global superpower.

President Trump’s speech was shorn of most of these traditional features, even if it avoided most of the abusive rhetoric he had used during the presidential campaign. There was little attempt to summon the spirit and grandeur of the nation. The new president began with the miserable state of the union, painting a gloomy picture of a run-down economy and armed forces, both suffering from neglect.

His recurrent “America First” pledge ignored what so many of his predecessors had emphasized – the bonds of cohesion holding the nation together. Mr. Trump’s pledge to give power “back to you, the American people” was a traditional trope, but he gave it a revolutionary spin by deriding government as the Washington “establishment.”

The message was reinforced by the president’s novel method of communications, which focused on new media technologies that allow behavioral micro-targeting and tracking. For example, the use of Twitter for important policy announcements or to threaten or rebuke foreign partners allows Mr. Trump to bypass the ordinary channels of government and orchestrate pressure from below. This looks like a recipe for political chaos, in wait for a savior.

Elective affinities

To be sure, there have been strong personalities in the White House before, including some with certain similarities to its latest occupant. Exactly 200 years ago, President James Monroe took office as an unambiguous nationalist, placing domestic before foreign affairs, building border fortifications and (by our present standards) proving himself a highly effective dealmaker.

But Monroe was also one of the young republic’s most experienced public officials, who saw himself “rather as an instrument than the cause of the union.” The fifth U.S. president enlarged the union by five states, while avoiding foreign entanglements and Europe’s quarrels for two successful terms. And he did so as man without pretense.

Only 12 years later, following one of the dirtiest campaigns in U.S. history, Andrew Jackson became president. He did so as an outsider, backed not by an established faction but by a grassroots movement that he turned into the Democratic Party. That makes Jackson one of the most tempting analogues for President Trump from the union’s formative stages – but it also underscores the latter’s weaknesses. Like Jackson, Mr. Trump is a practical man with high ambitions. But he must govern in a period that requires not just pragmatism, but a guiding set of principles to align the domestic thrust of the U.S. with its central role in global affairs.

Policy formation

When Donald Trump first considered running for president back in 2000, he was guided by ambition, not ideology or circumstance. This displays what Mr. Trump referred to during the election campaign as his greatest asset – his temperament. With no lasting roots in either party, he conquered the GOP as a de facto independent, jumping into the primaries as a clear outsider to overwhelm the 15 contenders with party support. At the time, Mr. Trump was even seen by some Europeans as less abhorrent than extreme Republican conservatives such as Ted Cruz.

Mr. Trump alienated much of the GOP during the primary campaign before thoroughly antagonizing the mainstream media during the general election. He did profit from dominating global coverage in both races, while picking up valuable support from outlets like Fox News. This came at the price of being identified with simplistic, extreme positions on such issues as immigration, healthcare, terrorism and national security, and relations with key rivals such as China and Russia. None of this seems to have hurt him.

Policy formation began in the early stages of the pre-inauguration phase, when the president-elect needed to maintain a degree of consistency without falling victim to a paradox identified by the political theorist Robert Dahl: “the process of discussion itself may preclude choices of the very policies that members of the society would have chosen as a result of their discussion.”

Pre-inauguration politics has three stages: positioning by the president-elect, nomination of candidates for key cabinet and White House positions and their confirmation in the U.S. Senate. Arguably, a new president’s influence is at its peak just before inauguration. He is mostly unopposed and still enjoys great flexibility, especially in choosing top officials who either reinforce his core positions or moderate and broaden them, providing a wider range of options. The need to steer candidates past opposition in Senate confirmation hearings tends to serve the latter purpose.

Impatient pragmatist

In Mr. Trump’s case, any step toward the middle ground would create space between himself and his closest advisors, which the media would quickly move to exploit. The president-elect seemed unperturbed by such inconsistencies, satisfied that each candidate say whatever was needed to get confirmed. In the end, every cabinet officer would follow President Trump’s agenda and vision, presidential spokesman Sean Spicer assured reporters.

The key slogan – making America great again – refers above all to the new president’s economic agenda. During the campaign, Mr. Trump described the U.S. economy in the gloomiest possible terms, shrewdly positioning himself to take credit for any improvements resulting from measures adopted by the Obama position. His number-one priority, job creation, looks hollow with unemployment nearing a 50-year low, and baiting Apple, Amazon and Facebook on the campaign trial meshes poorly with his need for Silicon Valley to help improve U.S. productivity.

Mr. Trump’s interventions so far seem to reflect tactical priorities from his campaign. While he dominates the Republican party, he has antagonized its establishment and discarded GOP orthodoxy that may have provided him with a cohesive strategy. While the new president evoked shock and awe with an early volley of executive orders, he could lose control of policymaking once the legislative process starts.

An example is economic policy, especially manufacturing and trade, where he must contend with the GOP’s dislike for state intervention. The massive infrastructure investments needed to give substance to Mr. Trump’s great America concept could run afoul of Congressional Republicans’ suspicion of government spending. Meanwhile, House Speaker Paul Ryan is doing his own positioning for the 2018 midterm elections – with a mainstream GOP agenda.

Mr. Trump has solidified his image as a dealmaker in a series of wildly successful business books. His confidence is drawn from a long career in real estate and marketing. This experience obviously shaped his approach to international affairs, which combines a fondness for bold, unorthodox thinking and a tendency to dismiss anything that does not massage his ego.

Handling Congress

On his way to the White House, Mr. Trump had an opportunity to observe how a minority within the GOP – the Tea Party – used the obstructive powers of Congress to block the Obama administration. Efforts to seek bipartisan compromises were frustrated as the party drifted further to the right, ultimately forcing the resignation of House Speaker John Boehner, a Republican moderate.

For Trump the candidate, this situation posed a threefold challenge. First, he needed to contain the GOP’s extreme right wing, which posed a direct challenge for the party’s nomination. Second, he had to widen the party’s base by mobilizing large numbers of non-voters, both to ensure Republican wins in both houses and to strengthen his hand against the GOP establishment. Lastly, he needed to build bridges to the Republican leadership in Congress – which he did by choosing Governor Mike Pence as his vice president and former Republican National Committee Chairman Reince Priebus as White House chief of staff.

Cultivating relationships with Senate Majority Leader Mitch McConnell and House Speaker Ryan will be critically important for a successful Trump presidency. As the confirmation hearings showed, opposition from even a few hostile Republican senators – John McCain, Marco Rubio and Lindsey Graham come to mind – could derail crucial initiatives, such as the renegotiation of trade and security treaties.

The critical test will be replacing the Patient Protection and Affordable Care Act, which has been a fixation of the GOP’s extreme right because of the state interventionism it is alleged to embody. Mr. Trump has an interest in involving the Democratic leadership in designing a replacement system, if only to avoid inflaming the opposition. So far, these offers have been rebuffed. But it appears likely that President Trump will continue his dual strategy of courting the GOP majority in Congress, while using new technologies like Twitter to generate grassroots pressure and discipline any maverick lawmakers who dare to defy him.

‘America First’

With the midterm elections looming in 2018, President Trump will want to avoid weakening the Republicans in Congress too much. He might even resort to cautious bipartisanship to prevent a Sanders-type resurgence of radicalism in the Democratic Party. A heavily polarized political scene reduces the scope for a reasonably constructive Trump administration. But the new president may not be interested in that anyway, judging by his early days in office.

Mr. Trump’s own temperament and conduct will be key. Will he insist on having the final say or be ruled by pragmatism, give in to his impulses or seek consensus? These choices will determine whether the chief executive shapes events or loses control.

As the Senate confirmation process proceeded, it became clear that the president was working to preempt dissent within his cabinet. On domestic issues, Mr. Trump held high-profile meetings with CEOs from key industries. He plunged into a series of phone calls and meetings with foreign leaders (including a spectacularly canceled summit with Mexico’s President Enrique Pena Nieto).

In tweets and executive orders, President Trump unilaterally announced plans to scrap or revise international treaties, while giving no sign of taking long-term strategic interests into consideration. Withdrawal from the Trans-Pacific Partnership (TPP) is a case in point, since the move serves Chinese interests, alienates allies and dramatically weakens the U.S. position in the region.

The new administration’s economic strategy – which combines lower corporate taxes, massive infrastructure spending, aggressive development of shale oil and gas, and a pledge to keep social security intact – will be difficult to implement. Answers to many of the key questions are still missing, and conflicts over priorities, resources and bureaucratic turf will be plentiful.

Global implications

President Trump’s “America First” policy has implications for the U.S.’s international behavior, but it is above all about rebuilding American cities and infrastructure. As in the United Kingdom, it involves a reindustrialization drive intended to transform the domestic labor market.

To achieve these goals, Mr. Trump must change conditions at home and abroad. By strengthening the American base (something President Obama also considered his overarching priority), Mr. Trump hopes to buttress the global position of the U.S. This will no longer be achieved through multilateral structures, but by constructing a spoke-like system of bilateral agreements with a reinvigorated U.S. at its hub.

This is very different from the walling-off and self-isolation that many media and foreign observers assumed for a Trump presidency. The contraction of resources available for foreign commitments that began well before the Obama administration may continue. But it is also possible that the Trump doctrine could end up being less of a retreat than Mr. Obama’s “leading from behind” – in which case the international dominance of the U.S. may even increase.

This paradox applies to both the economic and security dimensions of America’s new global strategy. In both areas, multilateralism will become less effective. Europe especially must come up with a new approach, as Brexit demonstrates. While it at first seemed that the UK’s withdrawal from Europe would most affect the security domain, it is now apparent that the economic impact will be far more consequential.

Rethinking trade

Trumpism – set into motion as a political strategy – does not mean a retreat from global affairs. Rather, it is a different approach that begins at home. Its key policy proposals include:

Making the industrial base more attractive to investors via low corporate taxes, radical deregulation and low interest rates
Imposing higher tariffs on imports and giving tax incentives for exports
Punishing companies that shift production to low-wage countries and then seek to re-export to the U.S. (dumping)

Ideally, these protectionist measures should be complemented by steps to reduce trade and payments imbalances, widen market access and ensure two-way streets. Without steps to preserve competition, it may be difficult to win Congressional consent, especially since many Republicans are convinced free traders.

The unraveling of TPP – and possibly of the Transatlantic Trade and Investment Partnership (TTIP) and the North American Free Trade Agreement (NAFTA) as well – will require that substitute bilateral or multilateral treaties be negotiated. Congress has not approved either TPP or TTIP, which was never popular with Democrats, either. Most European Union countries are at best reluctant to join TTIP, in contrast to the 11 TPP signatories on both sides of the Pacific, who may stick with the pact or even invite China to join. That would turn on its head Mr. Obama’s original plan of excluding Beijing.

Renegotiating trade pacts is a long process with uncertain outcomes. That means the new president cannot rely on successes in this area to buttress his domestic agenda in the near term. The sole exception could be a bilateral free trade agreement with the UK. President Trump and Prime Minister Theresa May agreed to open immediate talks during her visit to the White House on January 27. A quick deal could have far-reaching consequences for Europe.

End of multilateralism

Beyond a doubt, the most challenging case will be China. There is a clear consensus that the world’s two biggest economies are so intertwined that an all-out trade war would result in mutually assured destruction. However, the trade question is doubly dangerous because it could be detonated by unrelated diplomatic disputes, such as President Trump’s attempt to blackmail Beijing by renouncing the One-China policy or, even worse, an armed confrontation in the South China Sea.

In this way, the primacy given to domestic economic interests by the America First policy will necessarily involve complex international negotiations, which could easily escalate into political conflicts or even war.

Meanwhile, the new authorities in Washington will be drawing their own conclusions about the emerging global framework. They will reappraise strategic and economic relations with key global players – especially Russia, China, Europe and Iran. With his cabinet still incomplete and thousands of junior posts yet to be filled, President Trump will have to handle multiple political and diplomatic initiatives on his own.

The America First policy espoused by Mr. Trump could eventually strengthen U.S. global dominance. But that would require extraordinary leadership qualities in Washington and other power centers around the globe, to prevent the U.S. from being displaced as the cornerstone of at least a residual world order.

The multilateralism that dominated the international politics of the postwar era is coming to an end. In Europe and the U.S., this collapse first manifested itself as a leadership crisis. Europe, dragged down by a stagnant economy and internal strife, has lost its sense of direction and capacity to act. In the U.S., anti-establishment forces have staged a hostile takeover of the political system, introducing a completely new set of uncertainties to world affairs.

None of the major global powers is in a cooperative mood. Russia is moving into the power vacuums left by U.S. and European retrenchment. China, cautiously but effectively, is extending its global reach, building infrastructure and expanding military capabilities. While the U.S. prioritizes domestic strength, Europe seems unable to hold together. A chronic weakness of the American republic is the provincialism of its politics, and Donald Trump very much belongs to that tradition.

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