On Ian Bremmer's visit to Chile
"2017: The Sum of All Fears” talk featuring Eurasia Group President & Political Risk Expert Ian Bremmer - organized by Scotiabank Chile and Diario Financiero newspaper - became one of those events experts and non-experts cannot possibly miss. Not only because Ian Bremmer is a most remarkable political scientist, columnist for TIME magazine, and Professor at NYU. At Eurasia Group, a political-risk consultant firm, experts cover issues of geopolitical importance for business and opinion leaders, the media, the government, and politicians. Ian Bremmer has become a voice of reason into an increasingly unstable world, which seems to thrive against the previous precepts ruling the market and politics in the recent decades. Professor Bremmer has termed this political turn as the Geopolitical Recession, and as such, it could last longer than an economic one. Country Risk Chile was at the talk and will attempt to explain the importance of his talk for a better understanding of the global scenario and for Chile.
(For more information on Eurasia Group see his Global Political Risks 2017. )
The Talk:
At Casa Piedra, Santiago, his introductory words intended to leave no doubt. Ian Bremmer opens fire with this warning:
“I am not a Democrat…. I am not a Republican... I am a political scientist”
In this way, Eurasia Group President begins his in-depth analysis on America First precepts under President Trump, and the implications of an inward-looking approach of America in the world. His analysis is comprehensive on all collaterals from this isolationist, unilateral turn that America’s government is keen to implement. With America First policy, Americanization as such might be seeing its last days. Professor Bremmer has said America First marks the end of Pax Americana, which secured stability, with the international system of regimes and rules on trade, finance, democracy, all led by America. As Bremmer has said before, America refuses to be the policeman of the world and that is a big problem. Who is willing or capable to fill the void?
With the end of the Pax Americana, we have come to witness the human representation of a populist surge in member countries of the European Union, such as Le Pen in France. On elections in France, Ian Bremmer is clear: a Macron’s win does not erase the uncertainty and instability lurking in Europe. With uncertainty in the air, there is still one more element to add to this picture: angry constituents will demand changes, those structural changes that have not been able to be implemented.
Standing and facing the audience, Ian Bremmer delivered reasoning and provocative thinking. Professor Bremmer is a robust thinker. He warned against the threats to emerging countries and the changes in the supply chain. With reduced willingness to move factories abroad, the impact on unstable countries would be devastating when artificial intelligence takes over.
Professor Bremmer talks extensively about the geopolitical recession, featuring uncertainty, instability and the rise of bottom-up discontent over economic stagnation. Latin American countries are no strangers to populist voices, caudillos, and ideologies. However, what is new for us is to see the political phenomenon striking rich countries. First Brexit, then America’s elections and the emergence right-wing populism in the run-up to elections in the EU. On that, Ian Bremmer points to structural inequality as the main driver for discontent. And he has more warnings to do: indeed, we will be seeing this populist trend, this anti-establishment sentiment beyond the elections in France. Beware, they will not subside for at least 5 or 10 years more to come. If at this point the question is why would that be so, Professor Bremmer explains this is because the reforms needed on safety nets are not being effectively implemented. Because the creation of job opportunities for vast areas of the populations who feel left behind in the wake of globalization are not being implemented as rapidly as they should be.
Who is to blame then? That is when opportunistic populist leaders see a chance to get to power. Blaming the immigrants who have taken the local population’s jobs is the usual rhetoric by right-wing populists. Add to the economic stagnation in jobs, the lack of integration of many migrants and citizens into the countries which took them in, and you have a powerful electoral tool to rally sympathies to close borders, a point argued by Ian Bremmer before this talk.
Country Risk Chile estimates that probably the inability of politicians, institutional constraints in politics have impeded the necessary corrections and have blocked the reformist initiative, but also constraints imposed by global forces. Here, Eurasia Group President had another warning. There is more instability to see in global trends: efficiency brought by artificial intelligence for which countries are not totally prepared.
The hidden secret. The obscure secret.
According to Ian Bremmer, such geopolitical recession was inevitable. It was in the making during the Clinton, Bush and Obama’s administrations. Professor Bremmer discloses that even if Clinton had been elected, such process had been slower but would have been still unfolding.
His talk bears significance to Chile.
After his appraisal of the current state of global affairs, and the emergence of the bottom-up surge, in the wake of structural inequality, there was time to answer the audience questions. One question on Chile captured attendees attention: is Chile still the lead student in the region and how is Chile doing so far? Eurasia Group President cautions us that Chile is a “reasonably stable country". In his own words: “In Chile, there's an independent Judiciary, an independent media and educated middle classes; in Chile, there's rule of law and what is Chile's experiencing is the effects of increased transparency”.
On that, he acknowledges that the cases we have experienced on tax-fraud are just a tiny fragment of the corruption level seen in Brazil in comparison. Chile is still the lead student in the neighborhood and he points to our obsession with making a political case of the tiniest public thing. Country Risk Chile believes that this is probably because a lead student feels the pressure to keep the edge, as with all competitive students, a mean streak is bound to surface when one cannot reach a target, this case being increased growth.
However, Chile has still space to maneuver and find new commercial partners and envisage new deals, according to Eurasia Group President.
On what is the best advice for candidates in Chile, Ian Bremmer observed: “listen to your population, but at the same time, don't neglect growth”.
In that line, Country Risk Chile believes that the challenge perhaps is to find formulae which can produce a new set of incentives to commit all stakeholders. The state can pursue long-term objectives of sustainable growth, with the help of the entrepreneurial elite and not against entrepreneurs. High-skilled, innovative jobs are the creation of the private sector in modern, highly sustainable markets; targeting value-added products could be a cross-partisan political goal, with the incorporation of a more active role of entrepreneurs towards an innovative job market, via doctorate experts, through clusters or synergies between academic bodies and productive sectors.
The significance of incorporating political risk in decision-making:
At the talk, Scotiabank Chile’s CEO - Francisco Sardón - pointed at the record-low growth experienced by Chile in the last 4 years, and highlighted economic slowdown as a great concern for the local market, a slowdown not seen since 1980, which is making the productive and financial sectors worried. In Sardón’s words, there was a big concern when some politicians seem to be calling for a greater role of the state. Against this business concern, it is reasonable to take recourse to Ian Bremmer’s strategic tools for better understanding. This is where the element of political risks (and opportunities) comes in as an important tool on decision-making offered to the market, which finds limitations to predict what a particular political outcome will be and what the effects will be. Especially because in words of Professor Bremmer “politicians change their minds, that’s what they do”. Ian Bremmer has developed in the last 20 years his Yearly Global Risks to promote the importance of political readings for the market.
Professor Bremmer's analysis of global trends, with the emergence of the bottom-up surge, is perfect to understand what these last 4 years have meant for Chile. It is in the view of Country Risk Chile that - at the light of Ian Bremmer’s talk - Chile took the difficult road – independently of the level of technical expertise displayed, whether the reforms under way have been efficiently implemented or not – Chile took on the challenge to deal with the bottom-up discontent to secure stability and governance.
Professor Bremmer uses social media extensively to bring his views to the population at large with only one commitment: doses of humor in political debate; therefore, on Facebook, he posted: “Ian Bremmer is in Chile. My apologies to Chileans, you haven't done anything wrong.... Not yet... To my knowledge”.
On an electoral year, we could follow his advice. And not do anything wrong.
Based on his cautionary expert advice and especially in an electoral year, let us all find ways to contribute so Chile can still be the lead student in the region, with less animosity and more creativity to increase growth, while at the same time, we could improve our ability to listen to our own Chilean buddies along the road, just as Professor Bremmer has hinted at us at Casa Piedra, Santiago, May 3, 2017”
Soledad Soza, May 5, 2017
