Yesterday I attended a breakfast hosted by the Chicago Council on Global Affairs. Ivo Daalder, who runs the Council and is former U.S. Ambassador to NATO, held forth on the world’s most pressing issues. In short, we are in a fine mess with unpredictable consequences. Here are his most important points:
1. U.S. Reset of the 1945 Consensus — In the coming months, watch for more evidence of a U.S. retreat from its world leadership role. Under the Trump administration, the U.S. will reset expectations on Pax Americana and its position as a beneficent trade partner. Any trade deal must be looked at through the prism of U.S. interests. During a time of high tension on the Korean peninsula, Vice President Pence, on his way out of South Korea, tweeted that the country’s current trade surplus with the U.S. was unsustainable.
2. China Fills the Void — The Chinese are an existential competitor to the U.S. in shaping the global order. China has decided that it will be the dominant player in Asia, both economically and militarily. Watch for problems in the South China Sea and shortly thereafter with Taiwan. The Chinese are also forging strong relationships in Africa and South America, investing in infrastructure. The U.S. and China need to align against chaos; the Paris Agreement on climate change was a good example of working together to solve issues.
3. The Possible End of the EU — France’s impending election could see Marine Le Pen winning over Jean-Luc Mélanchon, resulting in the withdrawal of France from the European Union. Daalder’s best-case scenario is a win by Emmanuel Macron, the most centrist of the top contenders. He also noted a possible victory in Italy by the Five Star Movement party, headed by Beppe Grillo, who has pledged to leave the EU.
4. North Korea Bomb — Kim Jong-un is using nuclear threat as a means of countering the traditional U.S. leverage on the peninsula. The North Koreans currently can threaten countries in the region; their new missile could reach California. The Americans are using the Chinese to put pressure on North Korea, but to little avail.
5. Russia as Aggressor — Daalder is deeply worried about Russia’s military maneuvers in the Baltics with 120,000 troops and tanks. He believes that the Russians are hardening their control of Eastern Ukraine, where citizens now use Russian currency. The Russians are pressing in the Balkans through the creation of an Orthodox alliance, starting in traditional ally nation Serbia, moving into Bosnia and Macedonia.
6. Middle East Instability — Yemen and Libya have no effective government. American warplanes are significantly and regularly involved in both failed states, and in Syria, the use of Tomahawk missiles indicates how difficult it will be for the U.S. to resist becoming involved in the conflict. We are making territorial progress in the fight against ISIS, but the ideological struggle continues.
7. Demographic Time Bomb — Both the West and the East are aging, but the South is young and on fire. Africa will double its population by 2050; one half of Africans will be under 18. The question remains: Will the economies of those nations provide enough jobs for youth coming into working age?
8. Mexico and Canada Optimism — The NAFTA deal will be revised along the lines of the TPP treaty that did not pass in Congress. There is still enough room for compromise. The big threat is the possible election next year of a very left-wing candidate in Mexico, Andrés Manuel López Obrador.
9. Iran Nuclear Treaty — The deal that was done during Barack Obama’s presidency will hold because the signatories, except for the U.S., still want it to remain in place.
10. Latin America Going the Right Way — Chile, Peru, Argentina and Colombia are all moving in a positive direction, with functioning democracies and better economic news.
This global turmoil will force multinational companies to reconsider their spending patterns and make it more difficult for them to take a global approach to product marketing. In many areas of the world there is resurgent nationalism, leading companies such as GE* to consider local sourcing of product. The move toward a “glocal” approach is increasing in countries where local upstarts and unicorns are challenging long-established global brands.
Those of us in communications will play a critical role in advising companies on how to be strong partners to local communities while maintaining the competitive edge of a global supply chain. Underlining local roots, connecting through social purpose, and contributing to solutions of community problems are ways that multinational brands can strengthen their local relevance and help inure themselves against challenging political forces.
Richard Edelman is president and CEO.
*Edelman client