Why the new world order will be worse than you think
Money & Macro
0:00 The president of the United States recently shared this photoshopped image
0:03 on social media showing NATO leaders a map where the U.S.
0:07 has taken control of not only Venezuela, but, more shockingly,
0:11 territory from loyal NATO allies that helped
0:14 the US fight several wars in the past decades.
0:17 Specifically, Denmark and Canada.
0:19 To many, this seems like something only a madman would do.
0:23 But according to a viral speech by Canadian Prime Minister Mark Carney,
0:27 this is all part of a bigger trend.
0:30 This is a return to an era of great
0:34 power rivalry that the rules based order is fading,
0:39 that the strong can do what they can, and the weak must suffer what they must.
0:45 And while Carney has a completely different vision
0:47 on how to behave in such a new world order.
0:50 The overall idea that we are moving back to an era of great power
0:55 competition is actually in line with what
0:58 one of the architects of Trump's foreign policy,
1:01 Stephen Miller, recently told CNN's Jake Tapper.
1:05 But we live in a world in the real world, Jake, that is governed by strength,
1:13 that is governed by force, that is governed by power.
1:16 Therefore, it makes sense that Trump's new national security strategy
1:20 literally says they are returning to the so-called Monroe Doctrine,
1:25 under which the US has historically sought to keep
1:28 other great powers out of the Western Hemisphere.
1:32 This means that, according to Miller, the US will now be using its military
1:37 to secure our interests unapologetically in our hemisphere.
1:41 And that's exactly what we've seen in the last few weeks.
1:43 Isn't it?
1:44 Therefore, some, like Doctor Wes Mitchell,
1:46 have said that Trump's actions are in fact rooted in a clear
1:51 and compelling logic grounded in the discipline of grand strategy.
1:56 So what is this logic?
1:57 Well, one word consolidation.
2:00 Venezuela.
2:01 Greenland.
2:01 Canada.
2:02 The US is acting like a great power that is consolidating
2:05 its power in its own hemisphere to recover its strength first,
2:09 which will allow it to ultimately compete with other great powers
2:12 like Russia and China in a new era of great power competition.
2:17 However, according to the authors
2:18 of a recent viral international relations paper,
2:21 Professor Stacy Goddard and Abraham Newman,
2:24 this explanation does not make much sense because actually,
2:28 upon closer inspection, Russia's and China's activities in Venezuela
2:32 and around Greenland are extremely limited.
2:35 On top of that, their resources are way too expensive to truly benefit the US.
2:40 Therefore, they argue that to truly
2:42 understand Trump's attacks on neighbors and allies,
2:44 we need to view the new international order through the lens
2:48 of what came before the era of great power competition.
2:52 The era of competing royal houses
2:54 that cared about personal wealth and personal status.
2:58 To see how that works other than human.
3:01 You know, I think Sisi and I always give the example of, Game of Thrones.
3:05 You know, it's like every almost everybody on earth relates to this show about
3:11 a small group of elites who really don't care about their societies in general.
3:16 They just care about redistributing resources amongst these houses.
3:20 And that is a system that for most of, of human history,
3:24 dominated international relations.
3:26 So could it be that if we view Trump as a neo royalist
3:30 and the refinery and mineral mining owning billionaires around him as his court,
3:35 Venezuela, Greenland,
3:36 and also strangely high tariffs against China's biggest rival,
3:40 India, it will all fall into place.
3:44 So who is right is the new world order we are seeing
3:46 right now a Trump versus Ghani style return to great power politics,
3:50 or rather, the return of the corrupt politics of royal dynasties.
3:54 To find out, I did, on the one hand,
3:57 a massive deep dive into the fundamentals and the history of great power
4:01 politics and how it compares to Trump's
4:03 new national security strategy versus Ghani's speech.
4:06 And, on the other hand, an in-depth interview with Professors Godard and Newman.
4:12 But before we get into which story can explain the New World order best,
4:16 we need to understand what we are leaving behind.
4:20 That is the rise and fall of the rules based liberal international order.
4:25 Newfoundland, Canada, 1941.
4:27 Churchill, arguably still the leader of the most
4:30 powerful empire the world has ever seen.
4:32 Meets his counterpart from the richest nation on Earth, Franklin D Roosevelt.
4:38 Together, they sit down to discuss what
4:40 they see as the ideal international order,
4:43 an order that would never again produce another devastating world war.
4:47 And here they've just agreed on the first
4:50 pillar of the rules based international order,
4:52 which means that nations have borders that should be kept as they are.
4:56 They have a right to self-governance.
4:59 They have a right to trade freely, and they can decide with whom they trade.
5:05 And finally, the seas should be
5:07 kept open to facilitate this international trade.
5:10 Now, the second pillar of the liberal
5:12 rules based international order was economic.
5:15 And for that, we have to go back to Bretton Woods, the United States,
5:20 1944, 44 nations come together to put an end to economic chaos.
5:24 The economic case of the 1930s and 40s.
5:27 This conference sets the stage for the following
5:30 international institutions that will create order.
5:33 Where before there was chaos, the General Agreement on Tariffs and Trade
5:37 that would later turn into the World Trade Organization.
5:40 This meant that tariff should be the same for everyone.
5:44 Then there's the world Bank.
5:45 All poor countries should get loans to develop
5:48 independent of their political allegiance to certain great powers.
5:52 Then there's the IMF.
5:53 Getting loans to save your currency from collapsing
5:56 will now depend on your economic program,
5:58 rather than your political allegiance to certain great powers.
6:03 Finally, the third pillar of the rules based order was the UN,
6:06 a community of states, both strong and weak,
6:09 that all pledged to follow even more rules.
6:12 1944 Dumbarton Oaks, the United States 1945 Yalta,
6:17 the Soviet Union, and finally 1945 San Francisco, the United States.
6:22 These conferences led to the creation of the United Nations.
6:26 Countries that signed the UN charter agreed
6:29 that they would respect number one, human rights.
6:32 Number two, international law.
6:34 Number three, they signed that armed force shall
6:37 not be used safe in the common interest.
6:40 And then finally, that the goal of this new international order
6:44 was to promote the economic and social advancement of all people.
6:48 Very lofty goals.
6:50 And just as with Bretton Woods, this led to the creation of some
6:53 international institutions which theoretically made it
6:56 more difficult for states to act on their own in key areas like war,
7:02 which was only allowed if the UN authorized it and justice
7:07 states were held accountable by the International Court of Justice.
7:11 On top of that, some states went even
7:14 further by signing up to the International Criminal Court,
7:17 which could and did sue leaders from weaker states like Sudan and the Congo.
7:23 But crucially, as Kony admitted,
7:25 we knew the story of the international rules based order
7:29 was partially false that the strongest would exempt themselves when convenient,
7:34 that trade rules were enforced asymmetrically.
7:39 And we knew that international law applied with varying rigor
7:42 depending on the identity of the accused or the victim.
7:45 For example, the International Criminal Court has
7:48 issued arrest warrants against Putin and Netanyahu,
7:50 but they are practically untouchable.
7:53 The IMF was far stricter,
7:55 enforcing painful economic reforms on small powers like Egypt,
7:58 Greece and Argentina than against strong countries like the UK.
8:04 Also, the UN sanctioned small powers like
8:06 Zimbabwe and North Korea for human rights abuses,
8:08 but never strong countries like China, the Soviet Union and the US.
8:12 For similar offenses.
8:13 And despite countries signing up not
8:15 to invade one another except for self-defense,
8:18 both Western and Eastern powers invaded several
8:21 countries during this so-called liberal rules based order.
8:24 Still, we cannot be 100% sure that this was
8:27 because of the rules based order and international institutions.
8:30 And in hindsight, I think we can say
8:33 that the liberal international order looked like a big success.
8:37 There were no new world wars, and even without taking those into account,
8:40 the years from 45 to 2011 had relatively
8:43 fewer conflicts between states than the decades before them.
8:47 We can also see that in the liberal order,
8:49 relations between countries on average got much friendlier.
8:52 We even saw several countries joining a security community in NATO.
8:56 And on the flip side,
8:58 we saw far less countries being in severe or lesser rivalry like France,
9:02 Germany, in the UK, which used to always be at each other's throats.
9:07 Finally, on the economic side, after a massive reduction in global terms,
9:11 we saw an explosion in global trade and more importantly,
9:14 we saw a massive reduction in global poverty.
9:17 And yet, while free trade under the rules based international
9:21 order arguably helped drag millions out of poverty, especially in Asia,
9:26 the bottom 50% of Americans saw their share of income drop remarkably,
9:30 in the second half of the liberal rules based order.
9:33 So it is perhaps no wonder that Americans elected a candidate
9:37 twice that talked openly about blowing up this liberal order.
9:42 But we have to be honest, it was not just Trump that started this process.
9:45 The three great powers actually seem to have been in on it together.
9:50 First, in 2014, member of the UN Permanent
9:53 Security Council Russia annexed Crimea and then in 2022,
9:57 several other provinces from Ukraine.
10:00 Next, when it comes to the economic pillar,
10:02 Trump's 2018 tariff barrage already completely undermined the principle
10:06 of low tariffs that should be equal against all nations.
10:10 Meanwhile, China actively undermined the IMF and world Bank when it
10:14 became one of the biggest lenders to poor and crisis stricken countries.
10:18 Finally, both China and Russia already had a terrible human rights record,
10:23 and honestly, the US lost a lot of credibility in 2003.
10:26 And the Bush and Cheney, when they essentially authorized the use of torture
10:30 in CIA black sites and in Guantanamo Bay.
10:34 Still, Trump now almost announcing new tariffs against a new nation
10:38 every month and threatening to annex territories from its most loyal allies.
10:42 That genuinely looks like the final nail
10:45 in the coffin of the rules based international order.
10:48 So no wonder that Carney said that we are
10:52 in the midst of a rupture, not a transition.
10:55 The liberal, rules based international order is dead about that.
10:58 Almost everyone agrees.
11:00 The real question is what's next?
11:02 Are we heading back to an era of great power
11:04 competition like Carney and the Trump administration seem to believe?
11:07 Or should we think back further, that Trump's chaotic actions are better
11:11 understood through the lens of the emergence
11:14 of new kings and cohorts of billionaire backers such as the Trump dynasty,
11:19 the House of Putin and the House of Modi?
11:22 Chapter two.
11:22 What will the new global order actually look like?
11:28 The first view is that we are now heading
11:30 back to a new era of great power competition,
11:33 where great power leaders like Trump and Putin have
11:36 a very different vision than middle power leaders like Ghani.
11:41 This means that the world will look a lot more like it did in the 18th,
11:44 19th, and early 20th centuries.
11:47 International relations.
11:48 Scholars tend to refer to this order as the Westphalian Global Order.
11:52 After the Treaty of Westphalia in 1648,
11:55 which greatly reduced the power of royal houses
11:58 in favor of nation states and their bureaucracies.
12:01 In this new Westphalian order,
12:03 you may say international institutions like the UN,
12:06 IMF and World Trade Organization lose what's left of their waning power.
12:11 Instead, the world will once again be completely determined
12:13 by the actions of great powers like the US,
12:16 China, Russia, and perhaps India and Europe.
12:19 According to international relations professor John Mearsheimer,
12:22 who famously belongs to the school of thought known
12:26 as realism in such a world order that states can
12:30 never be certain that they won't end up living next
12:34 door to a really powerful state that has malign intentions.
12:40 All of that causes states to do everything
12:44 they can to be as powerful as possible,
12:48 and depending on how powerful they end up being,
12:51 States are then classified as great powers, middle powers, or small powers,
12:55 and they will all play a different variation of the power game.
13:00 First, small powers will either try to survive by claiming neutrality,
13:04 like Sweden and Belgium did in the Second World War,
13:07 or by aligning themselves with a great
13:09 power for protection like Finland and Hungary did.
13:12 Meanwhile, middle powers will either try to play great
13:15 powers off against one another like India has historically done,
13:19 or they will do the same that Ghani suggested in his speech,
13:23 which is value based realism,
13:26 meaning that liberal countries like Canada and Finland, for example,
13:30 for every geopolitical situation they will weigh their liberal values,
13:34 such as the importance of human rights, respecting boundaries and democracy.
13:39 And they will weigh that with geopolitical reality, especially for Canada.
13:43 This is a break with the past concretely,
13:46 whereas Canada's previous Prime minister,
13:48 Justin Trudeau, frequently challenged great powers
13:50 like China on their human rights records.
13:53 Ghani is subtly indicating that Canada may no longer do this.
13:57 If the geopolitical reality is that this would
13:59 get Canada into trouble with a great power simultaneously.
14:03 Currently, in the case of the way forward,
14:05 maybe for a liberal value based mill powers to form coalitions with countries
14:09 with similar values that may help them
14:11 stand up to great powers with different values, such as Trump's America.
14:17 You see, while the Trump team also rides
14:19 in their national security strategy that they believe in realism,
14:23 now they give a version of it a different name flexible realism,
14:28 which so far seems to mean might is right.
14:32 A strong country like the U.S.
14:33 can take Greenland from Denmark,
14:35 because Denmark is a tiny country with a tiny economy and a tiny military,
14:42 they cannot defend Greenland.
14:44 And this is what international scholars mean when they say might is right.
14:48 The US should get Greenland because it is strong enough
14:51 to defend Greenland from other great powers, and Denmark is not.
14:55 But why does a great power like the US need to do this in the first place?
14:58 Aren't they already powerful enough?
15:01 No.
15:01 Say scholars like wertheimer,
15:03 without international commitments to respect borders.
15:06 Even great powers like the US, Russia or China will always fear that another
15:11 great power will become much stronger than them, upsetting the balance of power.
15:16 Therefore, they may even want to dominate your region of the world.
15:21 Is because in that situation,
15:24 there is no other state that is capable of hurting you.
15:29 And this logic leads to so-called spheres of influence,
15:32 where great powers try to deny other great powers the ability
15:36 to threaten them by keeping them as far away as possible.
15:40 In the 19th and 20th centuries, the US tried to keep other great powers out
15:44 of the Americas under the so-called Monroe Doctrine and using similar logic.
15:49 Hitler at some point actually proposed a sphere of influence in Europe,
15:52 which he called the German Monroe Doctrine,
15:55 and people like Professor Mearsheimer have used
15:57 this logic of the Monroe Doctrine to make
16:00 the case that the West provoked Russia into invading
16:03 Ukraine by meddling in its sphere of influence.
16:06 The Trump team has written in the national security
16:09 strategy that they are essentially returning to the Monroe Doctrine.
16:14 Some call it the donno doctrine now, and some, like Doctor West Mitchell,
16:18 have used this type of logic to argue that term strategic
16:22 actions are in fact rooted in a clear and compelling logic,
16:24 firmly grounded in the discipline of grand strategy.
16:28 He says that Russia and China are the US natural great power competitors,
16:32 but that the US no longer has the strength to fight them all over the world,
16:36 and therefore the US is now
16:38 essentially retreating to its own Western Hemisphere.
16:41 Just this is done historically, many times before.
16:44 Venezuela and Greenland are both about
16:46 securing access to vital resources and, crucially,
16:49 about denying them to competitors.
16:52 So what we've seen so far is simply a return to great power competition.
16:56 Everything the US has done so far is just in the national interest.
17:01 Flexible realism is a cynical but not illogical take on America First.
17:06 However, to me there were at least three details about
17:08 recent events that I could not explain with this theory.
17:12 First, capturing Maduro does not seem to have been in US national interest,
17:16 given that the oil there is too expensive to get out of the ground,
17:20 and China did not get that much anyway.
17:23 Second, annexing Greenland and in the process completely
17:26 alienating European allies does not make much sense either,
17:29 given that the US already had almost unlimited military access
17:33 to the island and easy economic access to its minerals.
17:37 Finally, if Trump was truly following a great power style strategy,
17:40 why did he recently tear of the hell out of India,
17:43 which is China's natural rival in Asia?
17:46 This is where Godard and Newman's neo
17:48 royalist theory starts making a lot more sense.
17:51 They claim that what we are seeing today is,
17:54 rather than a system of territorial nation states,
17:57 rather than a system of rule governed institutions.
18:01 What we see is a system of international
18:04 politics that structured around the interest of ruling clicks,
18:08 which include a personalized,
18:10 absolute sovereign, and basically his network of whether or not his family,
18:15 whether or not its financial interests, ideologues that legitimate his rule.
18:19 They call this neorealism because rather than a return
18:22 to great power politics of the Westphalian order,
18:25 it would potentially be more like a return
18:27 to the world order before the Peace of Westphalia in 1648.
18:32 You see, the Peace of Westphalia came about to put
18:34 an end to various devastating wars that plagued the Holy Roman Empire,
18:39 Wars that often came about because of royal succession,
18:43 not the national interest.
18:45 For example, the Dutch War of Independence against
18:48 Spain arguably came about after that suddenly found
18:51 themselves with a new Spanish king that had
18:54 essentially inherited the Netherlands through a series of marriages.
18:59 So in the royalist system, the main actors were not states,
19:03 but rather ruling monarchs and their clicks.
19:06 Therefore, most wars in those days were not about the national interest at all.
19:10 They were about increasing royal wealth and status.
19:15 Similarly, Godard and Newman argue that in the case of Maduro's capture,
19:19 Greenland and the tariffs against India, it's not about national interest.
19:24 It's about this small group of hyper elites,
19:27 these this clique actor kind of clusters interest.
19:30 And so that really drives a very
19:32 different logic of how international politics functions.
19:35 So while Venezuela's oil is too expensive
19:37 to benefit the American oil industry as a whole,
19:40 the specific American refineries that did benefit just
19:43 so happened to be controlled by Trump Mega-Donors,
19:46 such as John Edison from Vidor.
19:49 Similarly, while Greenland's minerals are not worth
19:51 enough for the US to alienate allies over,
19:54 that price may well be worth it to billionaires
19:57 with extensive interest in Greenland like Ronald Lauder,
20:00 who reportedly put the idea into Trump's head in 2018.
20:04 Finally, there's Trump's mega tariffs against India.
20:07 Again, from a great Barr perspective,
20:09 it makes no sense to alienate China's biggest Asian rival.
20:13 But if you consider that Modi very publicly humiliated Trump by stating
20:17 that he had nothing to do with Pakistani Indian fees in the summer,
20:21 Indian tariffs immediately after that incident start making a lot more sense.
20:26 But while neorealism can fill in a lot of gaps in their article,
20:30 Goddard and Neumann do recognize that the Royals
20:33 dynamics have always been in the background.
20:36 After all, even during the height of great power politics,
20:38 the 19th century Belgian King Leopold,
20:40 for example, used the Belgian state to conquer
20:43 and dominate his own personal colony in the Congo.
20:47 And even today, Trump style personal rule is quite common.
20:51 However, the difference between MBS or Orban and Trump is that they
20:55 just don't have the material or status
20:58 capability to transform the international system.
21:02 And that's why Trump is so exceptional, because he has the U.S.
21:05 military and the U.S.
21:06 economy behind it.
21:07 In other words, just as Westphalian style,
21:09 great power politics were always still there in the background during,
21:13 for example, the Cold War.
21:14 Goddard and Neumann argue that royalist elements are and have
21:18 always been a part of the international order as well.
21:21 Therefore, my conclusion,
21:25 my conclusion is that to truly make sense of where the global order is going,
21:30 we need all three lenses.
21:32 If going, you can make international organizations become more powerful again.
21:35 The global order will again become more predictable.
21:39 But if they become weaker, we will either see more great power
21:42 games where small and medium powers like Ukraine,
21:45 Venezuela and perhaps even Canada become pawns
21:48 or battlefields for great powers that continuously
21:51 seek to become more and more powerful because they fear that if they won't,
21:56 they will not remain a great power for very long.
22:00 However, if great powers are governed by autocratic or illiberal rulers,
22:05 then we will increasingly see incidents like Trump's Board of Peace,
22:09 which he plans to stay on even if he is no longer U.S.
22:12 president, where great power influence will
22:14 not be used in the national interest,
22:16 but rather to enrich Personalis leaders and their clicks
22:20 or elevate their social standing amongst a new class of global
22:25 rulers and their courts that compete very much like
22:29 the royal houses of game of Thrones for power and status.
22:32 So, given that Trump will be in power for at least three more years,
22:36 and given that far right populist parties are still lurking
22:38 in the shadows in many other middle powers as well,
22:41 I think it's a safe bet that we will
22:44 be seeing a more volatile international order emerging, which,
22:47 whether it be for personal or national interest, tariffs,
22:50 sanctions and even military strikes and wars, will sadly become more common.
22:56 The economic evidence so far tells us that this will
22:58 make most of us poorer and less secure,
23:01 especially given that, unlike in the 19th century,
23:04 great powers now have weapons that could kill us all at the click of a button.
23:09 Still, it doesn't have to be that way.
23:11 For example, some have argued that at the Congress
23:14 of Vienna after the body was defeated, the return of realism looked inevitable.
23:18 Yet this never happened.
23:20 Similarly, who knows?
23:21 Perhaps Trump's successor will see the value of the liberal,
23:24 rules based international order again, and together with Geithner and others,
23:28 they may build yet another liberal international order from the ashes
23:32 of the one that we just said goodbye to.
23:35 So what do you think?
23:37 Let me know in the comments and if you want to know more,
23:40 I highly recommend you check out three follow
23:43 up analysis from our advertising sponsor, The Economist.
23:47 Specifically, I recommend you check out this detailed analysis about.
23:50 While Trump may have backed down about Greenland,
23:53 it's only the tip of the iceberg of Europe's geopolitical vulnerabilities.
23:57 Indeed, why is it that in the New World
23:59 order everybody seems to be picking on Europe specifically?
24:02 The economist answers that question as well.
24:05 Finally, check out The Economist's take on whether Mark Carney can
24:08 actually help Canada find its place in this new world order.
24:13 I think as these analysis show,
24:15 The Economist delivers insights that help you see the bigger picture.
24:19 This is why I highly recommend you subscribe to The Economist,
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