World / Politics | 2017 NEW YEAR SPECIAL

Big changes likely in '17

Increased global tensions have the potential to make 2017 unprecedented year of transformation

by Ian Bremmer

Special To The Japan Times

A year of surprises has come to a close, but its unresolved questions will generate many more quakes in 2017. Where are the fault lines, what about President-elect Donald Trump, and what does all this mean for Japan?

The year 2016 will always be remembered as the year that voters in the U.K. and the U.S. shocked the world with demands to build new walls. In Britain, a majority voted to withdraw their country from the EU and to reclaim control of their country’s borders following a surge of migrants from other EU countries in recent years. In the U.S., Hillary Clinton won the most votes, but Donald Trump won the election through the quirks of the U.S. electoral system. Much of Trump’s support came from voters who agree that, as Trump repeatedly warned, if we don’t retake control of our borders, “we won’t have a country.”

Turn the page to 2017 and the West faces critically important national elections in France and Germany that will be run on many of the same themes — migration, borders, threats to jobs and security and the intense drive of anxious voters to beat back challenges they believe are created by globalization and regain control of their lives.

There are also important challenges in many other countries. Oil prices jumped on recent news that OPEC and non-OPEC members agreed to a modest cut in crude oil output that are to gradually take effect in early 2017.

A recent price rise has some in the countries hoping for much more. But this move isn’t nearly enough to boost prices toward the $100-plus barrel prices we saw as recently as 2014, because within a matter of months, new sources, particularly in North America, will come online to take advantage of prices above $60. Exporters such as Saudi Arabia and Russia will continue to cope with longer-term fallout. Venezuela, a producer much closer to the edge of political upheaval, can expect violence in the streets this year.

There will also be important elections in Iran, Kenya and South Korea. ISIS militants, in disarray in Iraq and Syria, will try to fan out across the Middle East, North and East Africa, Southeast Asia, the Caucasus region of Russia, the heart of Europe and even into the U.S. to carry out attacks. Protests will likely continue in important emerging markets such as Brazil and South Africa.

Brexit negotiations will begin. There will be an important leadership transition in China as five of seven members of the country’s highest political body are due to be replaced.

But the year’s biggest story is expected to come from Washington, where a new president promises to lead the world’s sole superpower in an entirely new direction. Many believe that Trump could inflict lasting damage on many of the country’s most important international partnerships.

In Europe, Trump’s relatively friendly approach to Russian President Vladimir Putin will force NATO members to consider alternative security arrangements. The new president’s open embrace of anti-EU populists across the continent will anger a number of governments. Trump’s extreme unpopularity with EU voters will make it much more difficult for European leaders to cooperate publicly with Washington, even on projects of common interest.

In the Middle East, the Saudis fear that Trump’s relationship with Putin and his willingness to see Syrian President Bashar Assad remain in power may further isolate their country. In Mexico, Trump’s aggressive and insulting rhetoric could further undermine domestic support for the current government and could return the left to power following presidential elections in 2018.

Then there is Trump’s angry rhetoric on trade. He claims that the North American Free Trade Agreement has gutted U.S. manufacturing and that he will shred the yet-to-be-ratified Trans-Pacific Partnership (TPP), the largest trade deal ever negotiated by the U.S. Trump probably won’t follow through on threats to impose high tariffs on goods from Mexico (or China), but his administration will probably launch cases against dumping and intellectual property theft more often and more aggressively — as much for political as commercial reasons.

But it is U.S. relations with China that threaten to create the most friction in 2017. There are still pragmatists in both governments. Some of Trump’s appointments, including Terry Branstad as U.S. ambassador in Beijing, signal an intention to maintain good communications to limit risk of conflict.

But if Trump wanted to insult and anger Chinese officials as quickly and forcefully as possible, he could not have chosen a better weapon than his recent comments on Taiwan. For decades, U.S. presidents have tried to freeze the status quo in cross-strait relations with a policy of ambiguity. The U.S. allows others to believe it would defend Taiwan against invasion, but that it will not support any move toward independence by Taiwan.

Trump said in an interview in early December that he doesn’t “know why we have to be bound by” previous understandings on Taiwan’s status. China’s response was predictably angry, and some form of measured retaliation is likely.

These two countries aren’t going to war over comments like this, but there is a risk that a consistently bellicose approach by Trump could create an antagonism that prevents cooperation between the two countries in resolving their disputes and from working together on crucial challenges of common concern such as climate change and North Korea.

Japan’s relationship with Trump

If there is any U.S. partnership likely to remain on solid ground, it is the relationship with Japan. That might seem surprising, given Trump’s promise to abandon the TPP, a deal so important to Prime Minister Shinzo Abe. Yet, many of Trump’s other stated goals fit well with Abe’s plans. Common concern over the implications of China’s rise gives them plenty to talk about.

Trump’s insistence during the campaign that U.S. allies should take greater direct responsibility for their own security may not play well with cash-strapped NATO partners or the increasingly anxious Saudis, but it fits well with Abe’s goal of redefining the role of Japan’s Self-Defense Forces and investing more in their capabilities.

Further, Trump’s early positive relations with Putin allow Abe to continue to try to improve Japanese-Russian commercial and political ties — and to make further progress on the future of the Northern Territories without undermining relations with the White House.

Abe’s decision to meet with Trump quickly after the election was a shrewd choice that has already helped to build trust between the two leaders.

Yet, Japan is right to recognize that China’s rise will continue, creating risks and opportunities that are much more likely than relations with Washington to define Japan’s future.

Relative to China, Japan has crucial comparative advantages. The greatest of these is its innovative commercial culture. China’s leaders face many challenges, and one of the most daunting of these is the construction of a social safety net capable of providing care for China’s growing population of elderly citizens.

Japan, of course, has demographic problems of its own, and it has responded with state-of-the-art technology to provide older citizens with new leases on life. Building relationships with Chinese companies in this field provides a good example of the ways in which Japan can build stronger and more resilient commercial ties with its giant neighbor. Wherever possible, a focus on complementarity rather than competition will serve Japan, China, East Asia and the entire global economy.

Diversifying partnerships

More broadly, Japan’s ability to continue its strategy of diversifying its political and commercial partnerships across East and Southeast Asia will be crucial.

A commitment to deepen political, security, trade and investment ties with India, Indonesia, Malaysia and the Philippines will serve Japan well in the years to come.

As Japan enters 2017, its citizens and elected leaders are well aware of the country’s many problems. But whatever one thinks of Abe and his plans, his strong approval ratings, the super-majority his party enjoys in both houses of the Diet and the lack of any credible alternative to his leadership gives him a freedom to maneuver that is the envy of Western democracies paralyzed by populism and intense polarization.

There are certainly political limits on his most ambitious policy proposals, and most of the decisions that will determine East Asia’s future will likely be made in Beijing. However, Abe’s ability to strengthen political and commercial relations with China, the U.S., India and many other countries creates important opportunities to build a stable and prosperous region. There is also a positive role to play in the geopolitical education of Trump. By moving quickly to build the personal relationship, Abe can earn the new president’s trust.

Trump will need friends in the international arena, and Abe is better suited than most to offer that friendship. This can help Abe persuade Trump to trust the values that bind Japan and the U.S. Shared respect for democracy, rule of law and open markets unite the two countries. Lasting partnerships depend not just on warm relations between leaders, but on institutional cooperation based on common values.

Maybe Japan’s experienced prime minister can help America’s new president see the value in that principle.


Download the PDF of this New Year Special

Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm. He regularly expresses his views on political issues in public speeches, television appearances, and top publications. “G-Zero,” his term for a global power vacuum in which no country is willing and able to set the international agenda, is widely accepted by policymakers and thought leaders. He has published nine books including the national bestseller “Every Nation for Itself: Winners and Losers in a G-Zero World.”

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