The breakdown of a coherent US foreign policy and the global trade war are the most significant factors currently shaping global geopolitics, according to Philippe Dauba-Pantanacce, Senior Economist and Global Geopolitical Strategist from Standard Chartered Bank.

‘We are witnessing a shift to a less US-centric world orderand a more multi-polar one. This transition is fostering instability and is accompanied by the increasing appeal of alternate political models. We are also witnessing a backlash against free trade, which is increasingly viewed by some segments of voters as the embodiment of everything that is wrong with globalisation and a tool that only profits a self-serving elite,’ said Mr Dauba-Pantanacce. 

Addressing members of the Chartered Institute for Securities and Investment (CISI) in Jersey on Tuesday, Mr Dauba-Pantanacce noted that there have been many instances where US foreign policy has had contradicting voices coming from different branches of government — for example, between the White House and the State Department — or different assessments between the President and the US intelligence agencies. 

‘Strong leadership, readability and predictability, which are key in the formulation and efficacy of international relations, have been rare throughout this Presidential administration to date, creating issues for allies and enemies of the US.

‘Trump’s global trade war has also forced a shift in global dynamics; the US’ friends and foes alike are trying to find ways to counter together what is viewed as a danger to global prosperity. While the worst-case scenario cost of this trade war would certainly be economically damaging, its mechanical effects only might not present a systemic threat to global growth. But a shift in investor sentiment and behaviour could have a significant and damaging long term impact on the world economy, with investors more cautious when investing in both emerging and developed economies,’ he said.

There are other factors that are also influencing global geopolitics, such as the rise of China and Trump’s aversion to multilateralism.

‘Since the end of WWII, the US has been a key architect of globalisation, multilateralism, and the rules-based global order of which it was a major beneficiary. The US has played a central role in defining and constructing the existing international economic order and its political institutions. In the Trump era, the US is reversing this course. The President has rejected multilateral deals and has threatened to pull out of existing ones under his vision of world trade as a zero-sum game. This is creating tenser relations with allies and leaving global governance in crisis.

‘There is also a rise of post-truth politics and conspiracy theories, which are often hosted and shared online, and have a significant impact on democratic elections. These characteristics are leading to increased political instability and risks in developed economies — something which was only seen previously in emerging markets,’ he added. 

In the near term, markets will be closely watching the upcoming US mid term. Should the Republicans lose the House of Representatives, the US President’s policy agenda could be substantially constrained. 

‘Right now, many of the President’s initiatives could be aimed at shoring up Republican voters’ support,’ concluded Mr Dauba-Pantanacce.

Mr Dauba-Pantanacce is responsible for global geopolitical economic analysis, assessing global risks and their economic implications. He is in regular contact with policy makers and multilateral institutions and participates in think-tank projects.