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WHY 2017 COULD BE BETTER THAN YOU THINK

At the end of the year, the prediction game becomes a top sporting event in the publishing industry, with everyone throwing their predictions on the wall to see if they stick. I’ll throw mine too but I’ll do it in reverse. I shall bet against most other people’s predictions.

Let’s start with populism: that’s a basic trend everyone has identified in recent events, from Brexit to Trump – a new trend trumpeted as the end of neo-liberal democracy as we have known it since World War II. We are into another era, the new age of populism, nationalism, nativism, racism, identity politics, return-to-our-roots culture, anti-globalization, xenophobia, you name it. Dictionary.com has made xenophobia the word of the year. In short, everyone sees populism as a major feature that will govern what happens politically in 2017 (see #2017Predictions).

But what if everyone was wrong?

Consider this: The surprise Austrian Presidential election result.

The defeat of Norbert Hofer, the populist far-right candidate (with shades of neo-Nazism), so certain to win on the wave of Trump’s victory, was entirely unexpected. This was good news, indicating that the Brexit and Trump effect in Austria wasn’t as strong as predicted. But the news did not stay long on our screens: It was instantly dwarfed by the catastrophic Italian referendum that pulled down Prime Minister Matteo Renzi (it happened on the same day), widely interpreted as another confirmation of people rising and voting against the establishment. Bad news makes for much better copy than good news…

Or consider this: Marine Le Pen and her National Front Party.

She keeps getting all the attention every time someone talks about elections in France (scheduled this spring). She’s against the Euro and Europe, she’ll take France out of the EU – after Brexit, expect Frexit. Besides she’s blond and sexy with shades of Lesbianism, a modern Marianne. Her father (the founder of her party) recently said that “homosexuals are like salt in the soup. Too little, it’s bland. Too much, it’s undrinkable.” No doubt, he knows what he’s talking about.

And it’s easy to overlook minor problems like Putin financing her party in 2014 to the tune of some €11+ million. So far, nobody is saying whether new “loans” have popped up since – but trust me, when she starts running next year, somebody is sure to dig up something. As we all know, Putin is very busy these days meddling in other people’s elections.

But this overlooks another, much less sexy event: the rise of François Fillon who, in internal party elections, easily displaced Juppé and Sarkozy, once considered serious contenders.

Here you have a true man of the traditional French right with deep roots in rural France (always a big weight in French politics). A Catholic, he lives with his Welsh wife in a 12th century manor house in the Sarthe countryside (near Le Mans) with their five children and, as any other Le Mans resident, he loves car-racing. Moreover, he has the government experience Marine Le Pen doesn’t (39 years in politics and he’s served as PM for Sarkozy). And, yes, he is a believer in the European Project, he won’t take France out of the Euro.

Known as the Gallic Thatcher, he will strive to change the way the EU is run, pushing it away from the supra-national course it has followed so far and in another, more national direction, giving space to national demands. And here’s another surprising fact about Fillon: he has good relations with Putin and he prioritizes putting an end to the Syria war, even if it means coming to an agreement with unsavory characters (like Bashir Al Assad).

And here is where I’m willing to stick my neck out: barring any unexpected event, I predict Fillon will be France’s next President. A recent poll gave him 66 percent of the vote, easily beating Marine Le Pen (she got 34 percent).

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 In the Photo: Prime Minister Vladimir Putin meets with French Prime Minister Francois Fillon during his visit to France June 2010 Photo Credit: CC3.0 Government of the Russian Federation Archives 

And that could be a real game changer. Because, as is likely, Merkel will barely eke through the September elections in Germany to win her fourth term as Chancellor. Or if she loses, whoever wins won’t have the stature of Fillon.

That places Fillon in the driver seat as the main partner in the German-French alliance that has governed the EU over the past 30 years (and stopped governing it with French President Hollande’s weak show).

And that is likely to spell an early end to the Syrian war – and the start of a solution to the refugee problem as many Syrians will want to return home. Also likely: the lifting of the sanctions against Russia.

My bet is that anti-European populist/rightist parties will be stopped not only in France but in other countries too, including in the Netherlands and Italy, if Fillon’s unique political program – satisfying national demands while pushing for a stronger EU – is followed by other major centrist parties. A likely bet that would put paid to all the doomsday theories (including Noam Chomsky’s) that the EU will fall apart as a result of the “failed neo-liberal policies” of the last 30 years.

And Fillon’s push for a stronger “EU of nations” would lead to a turnaround in the EU policies pursued so far: instead of trying to harmonize every possible area of public life in every member country, it would mean focusing on the common areas that really matter: the Euro (to be managed like the US dollar), security (to solve, in priority, the immigrants problem), defense (to rely less on America) and foreign policy (to stop Putin and Trump from running the world). The rest can be left to local administrations.

Let’s turn now to another common trope: the devastating effect of Trumpism on the world.

Based on Trump’s campaign promises, the list is long and overwhelming, from climate change to building a wall against Mexico, starting a trade war with China and cuddling up to Putin. But do you know of any candidate who’s ever been true to his campaign promises? Trump is likely to be no exception. And with his cabinet choices of billionaire buddies, he’s already shown how far he’ll move away from his promise to the disenfranchised white middle class. And he’s made Wall Street (and Goldman Sachs) happy: our banker friends can’t wait for deregulation and tax cuts.

What about the Carrier episode securing 800 jobs that (might) have headed south to Mexico, his tweets against Boeing’s Air Force One and Lockheed Martin’s F 35? His threats to the One China policy? His nomination of an Ambassador to Israel who rejects the two-state solution to the Palestinian conflict, wants to move the American Embassy from Tel Aviv to Jerusalem and sits on the right of Netanyahu’s government? His packing the coming administration with climate deniers?

If Trump carries through, all this will be disruptive, but will he carry through? His business model is to essentially let go after making a first move. As a businessman, he has never followed through – not even in the way he’s managed his brand: He sells, then runs away. Remember, he’s a deal-maker, not a manager.


Related article: TRUMP’S BUSINESS MODEL


He’s likely to do the same as President. Drop 140-character bombs on Twitter, and let it go. It will cause concern and anguish, no doubt about that, but the damage won’t be as big as expected. The industrial-military complex will make sure its interests are not harmed, Trump’s buddies don’t want to lose money. Besides, Congress will act as a brake, it always does – even in this case, with Republicans holding the majority in both houses. Moreover, Trump is not really a bona fide Republican and almost all his cabinet picks are business people, not Republican Party old hands.

And Trump, even with the help of his climate-denier friends in strategic places like the Environmental Protection Agency or Commerce, cannot reverse the course of basic economic trends. Globalization and green energy are here to stay, for example, it now costs less to make electricity from wind and solar than from fuel-powered plants. In a capitalistic system, when a new technology (or product) is cheaper, it inevitably displaces the older more expensive one. Add to the mix California’s stand on the climate fight: the biggest state in the Union is quite capable of generating strong political cross-currents within the United States that will blunt action from the Trump’s administration, whether regarding environmental regulations or, for that matter, immigrants.

Over the long term, our future will be “sustainable” or it won’t be. That’s what Agenda 2030 and the Sustainable Development Goals are about, and they can’t be stopped. At best, the Trump presidency will be a mere parenthesis in the march of History.

Another thing: Trump is good at running away. And covering himself. Upon winning the election, he immediately settled the suit against Trump University for $25 million (a modest sum considering that he can probably write it all off his taxes), saving himself from embarrassing exposure.

As the (largely) sole owner of 111 companies in 18 countries, the chances of conflicts of interest arising in the course of his presidency are obviously high (his numerous lawsuits don’t help). He’s aware of this, and this is why he recently announced plans to shutter his controversial foundation. No doubt, he’ll do more to protect himself. This is a man who is intent on winning and when he sees he might lose, he pulls away. People talk of impeaching him, but I really think that won’t be easy. And even if it happens, the process will take most of the four years of his term to sort itself out.

trump-tower-mike-steele In the Photo: A payment from Mr. Trump’s Foundation to Florida Attorney General Pam Bondi has been under investigation Photo Credit: Flickr/Mike Steele 

Before closing, let me address one of the most intriguing proposals that have come up in recent years: the notion that we are moving to a tri-polar world: USA – Russia – China.

Yes, Trump likes Putin, yes, he’s willing to stand up to China and change the One China policy. Does that add up to a new world order? I don’t think so. That’s overlooking several other rising trends in the political and economic sphere.


Related article: THE TRUMP DOCTRINE


One, the EU may have lost Britain with Brexit, but as I have argued above, with Fillon as the probable next French President, the EU is likely to find itself in a stronger position on the international scene, perhaps even able to (finally!) speak in one voice. Also, Trump’s humming and hawing over NATO, implying America is spending too much, means European NATO members will have to become serious about investing in their own defense – something Fillon advocates. So expect the EU to flex its military muscle too.

That hat may be too optimistic for 2017, but over the medium term, starting in 2018, a rise of the EU cannot be excluded, and at best, this might make our world into a quadri-polar one: USA – Russia – China – EU.

China’s future is more complex than most people allow for. Everyone expects a slowdown in its growth rate in 2017 (probably to 6 percent, high for any other country but for China, very low). On the domestic level, this would be tantamount to a recession with dramatic consequences.

How well will the Communist Party manage the challenge? It’s anyone’s guess. It has turned more authoritarian lately and is clearly girding itself for a fight. But the fight is likely to be difficult, even if Trump has conveniently removed the threat of the Trans-Pacific Partnership (TPP) promoted by Obama. Now that it is (likely) to be off the table, China no longer faces a preferential trade agreement that would have turned all its neighbors against it (i.e. all 12 Pacific rim countries, led by the US), leaving it out of the trade game.

But other players are rising in East Asia, notably Indonesia (expected to “join the elite ‘trillion dollar economy’ club next year”) and the Philippines pushed by Duterte, a relentlessly combative, nationalistic, populist President. So, even if Japan remains on an inert trajectory (as it has done since the 1980’s), China will need to deal with a fast-changing backyard, including Trump’s likely support of Taiwan.

Could all this lead to a trade war with the US and even, God forbid, an actual war? There are signs that China is flexing its military muscle, it has just deployed for the first time a carrier fleet in the South China Sea, sending it just 90 nautical miles from Taiwan’s shores. Worrisome, to be sure, but as I have argued above, one needs to take into account Trump’s character, his tendency to run away. At his age, one does not change.

The upshot? 2017 could still be better than you think, that is, if you thought 2016 was a bad year. If you voted for Trump, you may be disappointed that he will not bring back jobs to Middle America – but nobody can stop globalization, not even Trump, these are basic economic trends baked in capitalism’s structure and its single-minded pursuit of profit.  But he will certainly give a push to Big Business with deregulation and lower taxes. And that should help the economy in the short run, at least until it hits full-employment and an inflation wall. See how happy Wall Street is, the biggest year-end rally yet.

Be happy too. Or if you can’t because you’re the worrying type, embrace hygge (pronounced HUG-EE), the Danish way to happiness (Danes are supposedly the happiest people on earth): forget the news, huddle with close friends in a cozy place, light a candle, eat comfort food, listen to your favorite music and welcome in 2017!


Recommended reading: “PWC’S ECONOMIC PREDICTION FOR 2017” 


EDITOR’S NOTE: THE OPINIONS EXPRESSED HERE BY IMPAKTER.COM COLUMNISTS ARE THEIR OWN, NOT THOSE OF IMPAKTER.COM.
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There are 7 comments

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  1. Christina Carson

    An excellent article allowing for conceivable alternatives to an otherwise bleak new year. Plus, as is always the case with Ms. Forthomme, it is written with her gift for clarity, so that those on the outside of economics and politics can comprehend her route and follow the conclusions she drew.

    • Claude Forthomme

      Thank you, I really appreciate the thoughtful comment – and yes, I try my best to be as clear as I can. I get very annoyed when someone makes a complex argument using big words, to me, that’s lacking respect for your readers! Also, I don’t believe there is anything at all that cannot be explained clearly. I agree with Boileau’s famous principle: “ce qui se conçoit bien, s’énonce clairement, et les mots pour le dire arrivent aisément.” Hum, yes, the words to say “what one conceives well” do not always come easily (chuckle), not as easily as Boileau would have it…

  2. Graham Peirce

    Excellent! Reading this article has been a very encouraging way to start 2017! As always, thought proving, rationally developed and penetrating, it certainly forces one to review one’s own interpretation and conclusions of recent events. And such a relief from the eternal and frequently irrational and provocative tweets.
    I would probably have given more emphasis to Germany’s future impact within the EU, and am more sanguine about the short-term negative impact of Donald Trump and the longer term polarization within the USA. But that may be a matter of degree rather than eventual outcome.
    Thank you!

    • Claude Forthomme

      Thank you, and yes, I suppose one could be more sanguine, but when it comes to Germany, I really think Merkel is in trouble, and even if she wins, she won’t be the firebrand she used to be. She’s been in there too long, and if Fillon wins the Presidency (and I honestly believe he will), she will be facing someone who’s tough and who’s had a long political experience (39 years, including a stint as Prime Minister in the Sarkozy government). That’s why I believe the German-French alliance will be revived, but it will tilt in favor of France.

      And that means a lot. In particular it would mean a change in Euro policies (including towards Greece)…


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