The Banking Executive Magazine, Issue 154, October 2021

New Geopolitical Economics globalist project is in Brussels,” US populist agitateur Steve Bannon de- clared contemptuously in 2018. This was in fact true: the primacy of com- mon rules over state discretion is part of Europe’s DNA. But the European Union, too, is now waking up to the new reality. Already in 2019, Euro- pean Commission President Ursula von der Leyen spoke of leading a “geopolitical commission.” The question is what this renewed geopolitical focus actually implies. Most foreign-policy experts envision international relations as a power game. Their implicit models often as- sume that one country’s gain is an- other’s loss. Economists, on the other hand, are more interested in promot- ing the gains that cross-border trans- actions or joint action yield to all parties. Their benchmark concept of international economic relations en- visions independent actors voluntar- ily entering into mutually beneficial arrangements. In a 2019 article, Sullivan and Kurt Campbell (who now directs Asia pol- icy at Biden’s National Security Council) outlined a plan for “compe- tition without catastrophe” between the US and China. Their scheme combined across-the-board trade reciprocity with China, the formation of a club of deeply integrated market democracies (access to which would be conditional on economic align- ment), and a policy sequencing in which competition with China would be the default option, with co- operation conditional on China’s good behavior. They also rejected any linkage between US concessions and cooperation in the management of global commons such as climate change. This would be a clear strategy, but the Biden administration has not yet indicated whether it intends to pur- sue it. US middle-class economic woes and the resulting enduring do- mestic reluctance to open up trade contradict geopolitical aims. Amer- ica’s intentions hard to read. Foreign- policy types may have prevailed over economists, but domestic politics reigns supreme, and clear-minded- ness is not what is guiding action. Source: Project Syndicate – WUAB Research Department the BANKING EXECUTIVE 20 ISSUE 154 OCTOBER 2021