The vague agreement between North Korea and the United States about the denuclearization of the Korean peninsula, instead of North Korea alone as it was initially requested by Washington, must not make us to forget the psychodrama we attended at the G7. Political leaders must now question themselves about the future of this kind of event. Created in 1975 by a French initiative, these meetings had as a purpose to allow major Western powers and Japan to exchange on economic issues and to find common positions on major trade and financial challenges. It never emerged decisive decisions and that has not permitted to avoid the rise of unbalances and the crisis they generated. But the image of these leaders for their own people was emerging stronger when they played together for a family photo. The Russia admission in 1997 gave a new signification to the event: participants were getting the consequences of the end of the Cold War and these meeting were strengthening the peace climate.
But Moscow expulsion after Crimea annexation in 2014 made the G7 to lose this global and political character, especially since new great economic powers had emerged and were still kept outside, as China and India. So it is not a chance if, when Western and Japanese leaders were confronting themselves in Canada, in the same time, another summit was gathering together in Qingdao the members of the Shanghai Cooperation Organization. Created in 2002 by Beijing, the group includes China, Russia and five Central Asia Republics to which, in 2017, India and Pakistan joined. The final statement of this meeting was urging the pacification of economic relationship and exchanges liberalization at a moment when, in Canada, the dominant issue was the instauration of customs duties and exchanges restrictions. One of the lessons to be learnt from this major diplomatic failure, among many others, is that the current list of G7 members is obsolete.
The consequences of the behavior of the U.S. president must not be exaggerated. He risks, and his country along with him, to be one of the first victims of the situation he created. Nobody will stop himself to think that a signed agreement, even if it the result of deep discussions, can be invalidated by just an impulsive act. The credibility of the United States signature is weakened from now. It is this new situation, much more than Donald Trump protectionist credo, which is worrying because it will become a permanent factor of instability. During the past, threats were coming local political crisis, like in the Middle East or from the instability in emerging countries, in Latin America during the Eighties or ten years later with the Asian crisis or even with financial markets excesses, like during the 2007-2008 crisis. This time, the leader of an essential Western country increases crisis risks through his behavior.
The show, offered and sought after, is more worrying that the philosophy which inspires its author. Globalization is irreversible. Innovations have permitted the reduction of goods transport costs and the new technologies have made possible a universal access to data. Both enterprises and consumers are definitely not going to renounce to them and it won’t be taxes on some products which will reverse trends. In the worst case, they can isolate the United States, weaken American companies and increase the cost of living in the country and weight on purchasing power and on growth. It is not possible, in a couple of days to redefine the supply chain of an industry. It is absurd to provoke retaliatory measures which could affect the few exporting activities of the country when it has such a huge trade deficit. You don’t try to humiliate your creditors. Here is the most amazing paradox. American foreign debt is the result of years of budget and trade deficits. It reached a very large level. It is financed by States which, them, have accumulated surplus. Both parts have interest to reach an agreement. But what is, everyday, more preoccupying, is that the president of the United States does not seem to have assessed the extent of the weakness of his country which relies on foreign savers to finance its deficits.
Europe must not leave itself being impressed. This new situation must be, on the contrary, a factor in favor of the Union strengthening at a time when it appears to be divided and more and more challenged from inside it. The best answer to Donald Trump is the development of the role of the euro. To get free from the financial and now legal domination of the dollar, it is urgent to act in favor of an increase of its role in international transactions, instead of being obsessed by the rules about its internal function and the management of public finances rules which are widely obsoletes. China has understood the point for a long time and has adopted, near ten years ago, a strategy consisting in the internationalization of its currency, the Yuan, which slowly but with determination, has, as an objective, to make the country less dependent of the dollar. The many hotbeds of critics inside the euro-zone must be firmly put in face of their responsibilities: how, in the future, the mark, the new franc or the lira will weight in face of the dollar?
The G7 failure must not give the illusion to someone, especially in our country, that we are coming in a “de-globalization phase”. It is exactly the opposite which will occur and the international competition will become more and more intense and sometimes violent. It is indispensable to achieve, in France, a deep pedagogical work because our leaders as the large majority of our people seem to have difficulties to understand the motives of that trend. They are continuously putting on the new world situation the cause of our internal difficulties, our foreign trade deficit and the unemployment level. The case of Germany which has had much better results than us is frequently quoted but there is also Italy which has a considerable foreign trade surplus. The cause is not coming from the abstract concept of competitiveness but from economic agent behaviors, relationship between enterprises and consumers attitudes. These ones have still not understood that it is their choices as consumers which are dictating the level of their employment. Arnaud Montebourg, some years ago, did launch the concept of “economic patriotism” to cope with these weaknesses. It was clumsy because the word evocates the idea of a sacrifice. But, as economy is concerned, the care provided to buy or to choose suppliers results, on the future, in a tangible advantage and not in a sacrifice. It is what German and Italian economic agents have understood and they take profit of the jobs and the revenues generated by their decisions.
The shows offered in Canada and in Singapore must not divert us from the essential. The best answer to American excesses, as factors of international economic tensions, lies in the strengthening of Europe. Instead of sacrificing the project to the populist temptation or to a withdrawn attitude, European leaders must put themselves at work to make their people to love Europe. The paradox, it is that they have just discovered they have a new ally to achieve it: Donald Trump.