The January 2026 US National Defense Strategy (NDS) departs significantly from those preceding it, including from Trump’s first term. Is it deliberately misleading? Or is actual policy, including war, being driven by other considerations?

Jomo Kwame Sundaram

Much like the latest National Security Strategy (NSS), released by Secretary of State and National Security Adviser Marco Rubio in December 2025, the NDS claims to be about putting ‘America First’.

Both documents promise ‘no more business as usual’. They claim to change decades of strategy, supposedly in the national interest. Unlike earlier US military blueprints, the NDS is filled with vague rhetoric and eschews interventions abroad.

But in Trump 2.0’s first year alone, the US bombed ten countries, threatening at least four more, all in the Americas. Despite scant mention in both documents, the US-Israel war on Iran resumed on 28 February!

Europe
The NDS claims the US is reducing its direct military role in Europe but still wants to be influential.

It pledges to remain central to NATO “even as we calibrate US force posture and activities in the European theater” to meet US priorities.

Nurina Malek

The NDS blows hot and cold on Europe’s aggressive support for Ukraine’s Zelensky, envisaging a reduced troop presence on NATO’s borders with Ukraine.

Many European allies complain the Trump administration has created a ‘security vacuum’ by leaving Europe to confront Russia with uncertain US support.

They also complain about Secretary Pete Hegseth’s insistence on “credible options to guarantee US military and commercial access to key terrain”. The NDS insists on more than access to Greenland and the Panama Canal.

Issued days after Trump claimed he had a “framework of a future deal” on Arctic security with NATO chief Mark Rutte, he insisted it ensured the US “total access” to Greenland, long a territory of NATO ally, Denmark.

However, Danish officials insisted formal negotiations had not yet begun. Trump also threatened European nations opposing his Greenland plan with tariffs.

Western Hemisphere
The NDS supports the NSS and Trump’s ‘Donroe doctrine’ focus on the Western Hemisphere, envisaging the Americas as the US backyard.

In his January Davos speech, Canadian Prime Minister Mark Carney noted that recent US actions are disrupting established international norms.

The NDS was issued three days later, after a week of tensions between the White House and its Western allies. Cooperation with the Americas, including Canada, is conditional, to “ensure that they respect and do their part to defend our shared interests”.

It warns the US will “actively and fearlessly defend America’s interests throughout the Western Hemisphere. And where they do not, we will stand ready to take focused, decisive action that concretely advances US interests.”

Trump had declared the US should retake Panama and its Canal, accusing the government of ceding control to China. Later, however, Trump was more ambiguous about ‘taking back’ both the country and the canal.

Many also doubt Trump’s intentions in kidnapping Venezuelan President Nicolás Maduro and his wife, ostensibly for trial on drug charges in the US.

Asia-Pacific
The previous NDS, issued in 2022 under then-President Joe Biden, had deemed China the US’s principal threat. Biden also embraced Trump 1.0’s Indo-Pacific alliance to encircle China.

In contrast, the new NDS describes China as an established power in the Indo-Pacific region that only needs to be discouraged from dominating the US and its allies.

The goal “is not to dominate China; nor is it to strangle or humiliate them… This does not require regime change or some other existential struggle…President Trump seeks a stable peace, fair trade, and respectful relations with China”.

The NDS even proposes “a wider range of military-to-military communications” with Chinese counterparts! The U-turn followed the administration’s retreat from its threatened tit-for-tat tariff escalation after China’s successful retaliation.

Biden’s 2022 NDS promised the US would “support Taiwan’s asymmetric self-defense”. The new NDS offers no such assurances to the self-governing island province of China, which Beijing warns it will take by force if necessary.

The NDS also calls for “a sharp shift – in approach, focus, and tone”, insisting US allies must take more responsibility for countering adversaries such as China, Russia and North Korea.

It insists, “South Korea is capable of taking primary responsibility for deterring North Korea with critical but more limited US support”.

Cutting costs of empire
Like Trump, the new NDS wants allies to pay much more for US ‘protection’.

It echoes his frequent criticisms of allies for taking advantage of previous administrations to subsidise their defence and being ungrateful for US protection.

But the terms of such subordination remain ambiguous and arbitrary, even extortionate and corrupt. Gulf monarchies may now regret their generous donations to the president, apparently to little avail so far.

Trump’s treatment of allies, the Netanyahu-led war on Iran, and continuing US-led efforts to ‘contain’ China suggest both documents offer poor guidance to knowing and understanding, let alone anticipating, US policies abroad.

Nurina Malek is an economics graduate of the University of Wisconsin-Madison, currently working on policy research at the Khazanah Research Institute.

IPS UN Bureau

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Trump 2.0 has been marked by the blatantly aggressive exercise of power to secure US interests as defined by him. While many recent trends even predate his first term, his reduced use of ‘soft power’ has exposed his bullying, extortionary use of US power.

Jomo Kwame Sundaram

The US has illegally weaponised more laws and policies, especially by unilaterally imposing sanctions and tariffs, especially on dissenting regimes.

Often, such threats are not ends in themselves but actually weapons to strengthen the US bargaining position to secure more advantageous deals.

Under World Trade Organization (WTO) rules, members are obliged to extend ‘most favoured nation’ status to all other member nations.

On April 2, 2025, President Trump announced supposedly ‘reciprocal tariffs’, ostensibly responding to others having trade surpluses with the US.

Appealing to the WTO dispute settlement mechanism is futile, as the US has blocked the appointment of Appellate Body members since the Obama presidency.

Trump 2.0 has also been trying to get rich investors and governments – mainly from Europe, Japan, and the oil-rich Gulf states – to invest in the US.

Most such investments are in financial markets, rather than the real economy. Such portfolio investments have propped up asset prices, even bubbles.

Trump’s bullying is resented but has not been very effective vis-à-vis strong adversaries. Consequently, allies have been most affected and resentful.

Deepening stagflation
Meanwhile, much of the world economy has never really recovered from the COVID-19 slowdown, while Western sanctions and tariffs have raised production costs, worsening inflation.

Recent trends have also deepened the stagnation since 2009. Many governments and the IMF have made things worse by cutting spending when most needed.

Impacts have varied, generally worse in poorer countries, where the IMF limits policy options and credit rating agencies raise borrowing costs.

US Fed chair Powell’s interest rate hikes, ostensibly to address inflation, also reversed ‘quantitative easing’, which had lowered interest rates from 2009.

Trump’s aggression has reduced economic engagement with the US, inadvertently accelerating de-dollarisation, thus undermining the dollar’s ‘exorbitant privilege’.

Central banks worldwide have responded predictably, refusing to be counter-cyclical in the face of economic slowdown, citing inflationary pressures.

Transactional?
Trump’s transactional approach has meant bilateral, one-on-one dealings, further advantaging the world’s dominant power.

Involving one-time asymmetric ‘zero-sum games’, such transactions ensure the US gains, necessarily at the expense of the ‘other’. Transactionalism also enables ‘buying influence’, or corruption.

The resulting uncertainty reduces investments, not only in the US, but everywhere, due to greater perceived risks, exacerbating the stagnation. Thus, Trump 2.0 policies have reduced investment and growth.

The whole world, including the US, has suffered much ‘collateral damage’, but the White House seems content as long as others lose more.

Unipolar sovereigntism
The transitions to unipolar sovereigntism and then to a multipolar world have been much debated.

Three decades ago, the influential US Council on Foreign Relations’ journal, Foreign Affairs, argued that the post-Cold War unipolar world was actually ‘sovereigntist’.

NATO Secretary-General Mark Rutte’s ‘Daddy’ reference to Trump suggests that the sovereigntist moment is not quite over, as the US ‘No Kings’ mobilisation suggests.

Trump’s ‘America First’ clearly opposes multilateralism, generating broader concerns. He has withdrawn the US from many, but not all, multilateral bodies.

On January 7, the US withdrew from 66 international organisations deemed “wasteful, ineffective, or harmful”, addressing issues it claimed were “contrary” to national interests.

Trump’s continued, selective use of multilateral bodies has served him well, retaining privileges, e.g., permanent membership of the UN Security Council with veto power.

The UN Security Council’s Gaza ceasefire resolution was used to create and legitimise his Board of Peace, now touted by some as an alternative to the UN!

Trump will not withdraw from the WTO as its Trade-Related Intellectual Property Rights (TRIPS) agreement is key to US tech bros’ trillions from transnational IP.

End of soft power
Some of Canadian Prime Minister Mark Carney’s January 20th remarks at Davos are telling:

“More recently, great powers have begun using economic integration as weapons, tariffs as leverage. Financial infrastructure as coercion. Supply chains as vulnerabilities to be exploited.

“You cannot live within the lie of mutual benefit through integration when integration becomes the source of your subordination… If we are not at the table, we are on the menu.”

Besides exercising overwhelming military superiority, Trump 2.0 has increasingly weaponised rules, agreements and economic relations to its advantage.

The abandonment of ‘soft power’ – accelerated by Elon Musk’s DOGE – has ripped the velvet glove off US ‘hegemony’, exposing the mailed fist beneath.

USAID and other US government-funded agencies and programmes have been crucial for soft power, fostering the illusion of domination with consent. Abandoning soft power may well increase the costs of achieving America First.

IPS UN Bureau

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While media coverage of Iran’s restrictions on passage through the Hormuz Straits focuses on fuel prices, partial closure is also disrupting crucial fertiliser and other supplies, risking catastrophe for billions worldwide.

Jomo Kwame Sundaram

Hormuz is not just a chokepoint on a shipping lane for oil and gas; it has strategic implications for fertiliser, helium, and other energy-intensive exports as well as for food and other imports to the region.

Higher energy costs affect most transportation and farming requirements, such as tilling and harvesting, as well as fertiliser supplies.

Wars, especially protracted ones, have lasting effects, including for agrifood systems. Without earlier investments, output elsewhere cannot be easily increased.

Alternative fertiliser supply sources are not readily available, especially as agro-ecological options have rarely been seriously pursued despite their proven viability.

As with renewable energy generation to reduce the need for petroleum imports, it is unclear whether the looming food crisis will accelerate the needed and feasible agro-ecological transition for enhanced food security.

Disrupted food supplies
Shipping delays and port congestion disrupt food supplies, trade and availability.

K Kuhaneetha Bai

Many states have recently tried to improve their food security, expanding strategic reserves, investing in food agriculture and alternative supply routes.

Such measures have improved resilience but cannot address a prolonged blockade of the Persian Gulf. About 70% of the food for Saudi Arabia, Iraq and the Gulf emirates passes through Hormuz.

Replacing disrupted food imports for about 100 million people would require moving almost 100 million kilograms (kg) of food into the region daily by other means.

Supplying food to the Gulf region under blockade would require an unprecedented operation, possibly through contested airspace.

In 2024, the UN World Food Programme delivered about 7 million kg of food daily to 81 million people in 71 countries.

Weather-driven food shortages and price spikes triggered political instability in 2008 and 2010-11. With food systems worldwide increasingly vulnerable to climate shocks, food insecurity threatens regimes everywhere.

Fertilisers
Farmers worldwide need stable supplies of fertilisers and fuel.

The Iran war threatens to disrupt these supplies, so crucial to agricultural production. Staple crops like wheat, rice and maize rely heavily on fertilisers.

Iran, Qatar, Saudi Arabia, the Emirates and Bahrain all ship petroleum products through Hormuz, including a fifth of the world’s liquefied natural gas (LNG).

As LNG is key to producing many fertilisers, Gulf exports have become more significant, especially after the war cut Ukraine’s exports, and China and Russia reduced theirs as well.

In 2024, the Middle East accounted for almost 30% of major fertiliser exports, including nitrogen, phosphate and potash.

The Gulf alone exported 23% of the world’s ammonia and 34% of its urea, while 30-40% of the world’s nitrogen fertiliser exports pass through Hormuz!

In mid-2025, Kpler estimated that a Hormuz closure could reduce fertiliser supplies by 33%, with sulphur-based ones falling by 44% and urea by 30%.

Reduced nitrogen-based fertiliser exports would hurt major food exporters such as Brazil, the US, Thailand, and India, all heavily reliant on fertiliser imports. However, the impact of shortages may be delayed until imported stocks run out.

As the war drags on, farmers may cut fertiliser use by planting less or switching to crops requiring less. Poorer harvests would, in turn, adversely affect later investment, planting and fertiliser use.

Who suffers most?
The economic consequences of the unprovoked US-Israeli assault on Iran and Tehran’s responses are spreading fast and catastrophically, especially for the most vulnerable.

Iran’s new leadership mistrusts Washington and will keep Hormuz closed – choking fuel, food, and fertiliser flows through it – to secure the guarantees it needs to reduce its vulnerability.

As attacks on Iran continued, Tehran stepped up targeted attacks on infrastructure in the Gulf kingdoms hosting US military facilities. US-led efforts have provided little relief to its allies.

The worldwide impact is uneven, with the poorest taking the brunt. Asia and Africa have been hard hit by heavy reliance on oil, gas, and fertiliser imports.

Rich nations’ aid cuts to increase military spending have worsened poverty and hunger for millions, many of whom are also victims of war and aggression.

Unlike the rich, many migrant workers in the Gulf who cannot leave will struggle to make ends meet and send money home to their families.

And as the world’s attention has turned to the Gulf, Israel has worsened conditions in Gaza while taking over southern Lebanon and increasing Yemen’s pain.

Concerned about retribution in November’s mid-term elections, the White House is keen on a ceasefire.

But it has not offered terms acceptable to Iran, which remains suspicious of the US commitment to its own promises, let alone the rule of law.

Hence, the Iranian leadership is unlikely to agree to a ceasefire without credible guarantees for its future security from renewed Israeli and US aggression.

The Iran war has highlighted, yet again, the collateral damage of war and the food system’s vulnerability. Meanwhile, the suffering of the more vulnerable is ignored by the greater powers, who pay little heed to their plight.

IPS UN Bureau

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In mid-1971, US President Nixon ended the dollar’s gold peg at $35 per ounce, triggering de-dollarisation. The 2025 gold and silver rush followed private speculators trying to profit from central banks hedging against perceived new risks.

Jomo Kwame Sundaram

Many believe OPEC was allowed to raise oil prices from 1972, on condition petroleum purchases would be settled in dollars. ‘Petrodollars’ were thus believed to be the ‘black gold’ underlying the dollar system’s survival after 1971.

Although still the dominant world reserve currency, the dollar’s role has gradually declined over the decades. Trump 2.0’s rhetoric and actions appear to have accelerated de-dollarisation.

Trump’s 2 April 2025 ‘Liberation Day’ tariffs announcement triggered even greater uncertainty and volatility in foreign exchange and other markets worldwide.

Greater policy unpredictability has caused governments and investors to explore new options. Authorities worldwide are considering and developing alternatives to the dollar system.

Besides higher inflation, Trump’s threats and actions, particularly his tariffs, sanctions and wars, have pushed investors to sell dollar assets and seek alternatives.

Various factors have significantly accelerated de-dollarisation. In the first half of 2025, the dollar fell by over 10%, its sharpest fall since the 1973 oil crisis.

K Kuhaneetha Bai

Geopolitical economy commentator Ben Norton highlighted an April 2025 note by the Deutsche Bank foreign exchange research head, noting:

“We are witnessing a simultaneous collapse in the price of all US assets [including stocks, foreign exchange, and bonds] … we are entering uncharted territory in the global financial system…

“The market is rapidly de-dollarising. In a typical crisis environment, the market would be hoarding dollar liquidity…The market has lost faith in US assets. They are actively selling down their US assets.

“US administration policy is encouraging a trend toward de-dollarisation to safeguard international investors from a weaponisation of dollar liquidity.”

Western confiscations
The weaponisation of central banks by the US, Europe, and their allies has caused other central banks to seek ‘safety’ by switching from dollar assets to gold.

Increased weaponisation of the dollar and Western confiscation of others’ assets under various pretexts have accelerated this trend.

Billions of dollars’ worth of Venezuelan central bank gold, held at the Bank of England, was confiscated by the UK government during the 2019 Washington-instigated Caracas coup attempt.

After the coup failed, the Bank of England refused to return the gold to Venezuela. Trust in Western governments and central banks thus continued to erode.

Similarly, the US Fed and European Central Bank confiscated over $300 billion worth of Russian dollar-, euro- and sterling-denominated assets after it invaded Ukraine.

European authorities have since pledged to transfer these Russian assets to Ukraine rather than return them to their owners.

Western confiscations of the central bank reserves of Iran, Venezuela, Afghanistan, Russia and others have alarmed authorities and publics worldwide.

Central banks’ reserve managers have increasingly viewed gold as safe despite greater volatility. Besides serving as a hedge, the precious metal also offered lucrative speculative gains.

Mitigating risk
Many monetary authorities have reversed their earlier accumulation of dollar-denominated US Treasury bills and bonds in their official reserves.

While US government debt has continued growing, inflationary pressures have mounted, albeit episodically. Gold and silver holdings are believed to help hedge against inflation and fiat currency debasement.

Gold holdings in central bank reserves increased significantly after the 2008-09 global, actually Western, financial crisis, followed by the Western turn to ‘quantitative easing’.

For the first time in three decades, central banks’ total gold holdings in their international reserves exceeded their US Treasury bond holdings in 2025.

About 36,200 tons, or a fifth of all gold holdings, is now held by central banks, rising rapidly over two years from 15% at the end of 2023!

Meanwhile, rising gold prices drew more speculative investments for profit. But such price spikes are not sustainable indefinitely.

Once gold was seen as overpriced, investors turned to other precious metals, notably silver, and other financial assets.

BRICS’ golden hedge?
After Lord Jim O’Neill identified Brazil, Russia, India and China as significant new financial powers outside the Western sphere of influence, BRICS was formed in 2009 by adding South Africa.

BRICS now has ten members and ten partners. Together, they account for 44% of world income, measured by purchasing power parity, and 56% of its people.

Russia, China, and India have been among the largest recent buyers of gold. Other major purchasers include Uzbekistan and Thailand, both BRICS partners.

Trump 2.0 has generated significant apprehension internationally. Without BRICS’ help, his weaponisation of economic policies and agreements has accelerated de-dollarisation.

Although Trump accuses the BRICS of conspiring to accelerate de-dollarisation, their precious metal purchases make sense as a hedge for their reserves.

IPS UN Bureau

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US Secretary of State Marco Rubio’s Munich speech last month seemed to seduce the European elite behind President Trump, against the ‘Rest’, especially the resource-rich Global South.

Jomo Kwame Sundaram

Billed as the world’s leading forum for international security, the conference programme made clear whose interests and security were prioritised.

In its first year, Trump 2.0 bombed ten nations, besides threatening aggression against four other Latin American nations, but none were represented at Munich!

The Munich conference shed all pretence of objectivity and diplomacy on Iran, applauding Israeli-led military intervention to overthrow the Islamic Republic.

German Chancellor Friedrich Merz emphasised the world’s return to great power competition after the post-Cold War ‘unipolar moment’, making his loyalty clear.

At Davos in January, Canadian Prime Minister Mark Carney noted that Trump 2.0’s geopolitical “rupture” had forced many to abandon earlier illusions.

Dangerous new trends have been emerging, hardly any ‘order’. Trump insists US supremacy must be even more dominant, isolating rather than confronting rivals.

K Kuhaneetha Bai

Trump’s predecessors’ ‘rules-based order’ had offered a legal and diplomatic fig leaf to subordinate other states to US supremacy.

Now, Washington repudiates the very framework it demanded others accept, instead of the ostensibly universal but sometimes inconvenient ‘rule of law’.

Instead of diplomatic and commercial negotiations, economic and military threats prevail. Without velvet gloves of soft power, the mailed fists of military force and economic weaponry are exposed.

Reuniting the West
Rubio welcomed this “new era in geopolitics”, urging better transatlantic relations while reiterating Trump 2.0’s demands for Europe to pay more, albeit more gently.

After the end of the Cold War, Samuel Huntington’s Clash of Civilizations urged defending the ‘Judaeo-Christian’ West against the ‘Rest’, including Catholic Latin America.

In Munich, Cuban-American Rubio reinvented himself as a White Christian European, warning his European audience that the West is under threat.

For Rubio, “the West had been expanding” to “settle new continents, build vast empires extending out across the globe” over the last five centuries.

His history obscured Western imperialism’s dispossession, exploitation and slaughter of indigenous peoples worldwide, especially in the Global South.

Praising the superiority of European civilisation and values, he lamented setbacks to these “great Western empires” due to “godless communist” and “anti-colonial” uprisings after the Second World War.

Rather than progress inspired by the 1776 US Declaration and War of Independence, for Rubio, national self-determination was a civilisational setback.

“We in America have no interest in being polite and orderly caretakers of the West’s managed decline”. For Rubio, no more ‘liberal’ human rights, freedom and democracy rhetoric.

He did not hesitate to invoke racist, white supremacist mythology and crusader ideology to demand stronger militaries to defend Western civilisation.

The renewed Western alliance will share their common civilisational identity, bound by “Christian faith, culture, heritage, language, ancestry”.

Ethno-chauvinistic beliefs about race, religion and culture are the new bases for solidarity and authority. ‘Defending Christians’ became the pretext for the US 2025 Christmas Day bombing of Nigeria.

Another Western century?
Rubio appealed for pan-European Western unity against multilateralism and other threats, calling for increased military spending and immigration controls.

He urged Europe to “take back control” of ‘Western’ industries and supply chains. After all, NATO allies have joined the US in seizing foreign assets at will.

Vassal-like and desperate for reassurance after a year of Trump’s blatant contempt and threats, the audience welcomed his speech with a standing ovation.

Fearing Washington might negotiate with Moscow over Ukraine without them, European leaders have intensified demands for all-out war against Russia.

Rubio is working to secure critical minerals supplies against “extortion from other powers”, including Europe, through opaque bilateral agreements secured with threats.

Trump 2.0 is making military threats for profit, including post-war ownership, mining and other rights. For many, NATO’s US-Europe divide is not over peace, but rather sharing Ukraine war costs and spoils.

While funding for European welfare states and other ‘social’ purposes continues to fall, military budgets continue to spike, as demanded by Trump.

Meanwhile, Merz has invoked military Keynesianism to justify Germany’s largest-ever military budget since the Cold War, aimed at strengthening NATO.

Ostensibly to strengthen national security, the Trump administration has cut social programmes. Instead, US military spending is being prioritised.

Meanwhile, the US Congress has shown support by approving a larger War Department budget than the Pentagon requested.

Armaments contracts have mainly benefited established companies, while the ‘tech bros’ increasingly supply newer weapons and related systems using artificial intelligence.

Following Trump, the European elites are strengthening their already powerful militaries and securing commercial deals for their own advantage, rather than defending the peaceful multilateral cooperation they once advocated.

IPS UN Bureau

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As US President Donald Trump pushes the world to war, arms spending has been rising worldwide. Wars secure more budgetary allocations, mainly benefiting the US-dominated military-industrial complex.

Jomo Kwame Sundaram

In 2024, the US accounted for over 36% of the world’s military spending of $2.7 trillion! This exceeded the total expenditure of the next nine biggest spenders – China, Russia, Germany, India, UK, Saudi Arabia, Ukraine, France, and Japan!

China’s military budget for 2025 was $250-300 billion. Most others are US allies who have pledged to increase war spending from under 2% of GDP to 5%!

The US and its allies will be even further ahead despite pushing friends and foes to spend more. Fortune magazine projects that US spending will exceed that of the next 35 highest-spending countries combined!

Despite its huge economic costs, the hike is being justified as helping to achieve ‘peace through strength’. After all, bombing ten nations in Trump 2.0’s first year did not incur any significant American military casualties.

Borrowing for war
Early this year, Dean Baker warned that President Trump was planning to increase annual military spending by $600 billion. Just under 2% of GDP, the spending increase would be massive.

K Kuhaneetha Bai

As Trump is more committed to cutting taxes than the US federal public debt, the “$600 billion increase in annual taxes would come to $6 trillion, roughly $45,000 per household” over the next decade.

The independent Committee for a Responsible Federal Budget projects federal debt for military spending will increase by $5.8 trillion over the next decade!

Trump has long promised to cut US public debt, which is already equivalent to 120% of annual output, and not to increase the deficit! But this would require massive tax increases, impossible to raise with tariffs alone.

Worse, federal government debt, which Trump promised to cut, will rise. Meanwhile, 94% of his Big Beautiful Bill (BBB) tax cuts benefit the top 60%, with only 1% trickling down to the poorest fifth.

The top fifth nominally gets 69%, but only the top 5% will actually pay less! The bottom 95% will pay more tax, with low-income households paying relatively more for tariffs!

Trump’s Department of Government Efficiency (DOGE), led by Elon Musk, was supposed to cut federal government fraud, waste, and debt, but instead cut US growth in 2025’s last quarter.

While the BBB cut $186 billion of food aid for poorer Americans, rising war spending will mainly benefit US military-industrial complex cronies.

US consumers will pay more
Increased tariff rates would have to be impossibly high. And these would need to be even higher if exemptions are granted. Imports would fall sharply with such high tariffs.

Trump claimed additional tariff revenue would cover half a trillion dollars of additional military spending. He has long claimed other countries pay for tariffs.

With deindustrialisation over the past half-century, consumers have been buying more imports, paying for most tariff revenue.

Imports would fall sharply with such high tariffs. As many imports are intermediate goods used in manufacturing, high tariffs would hurt the industries Trump is claiming to promote.

High tariffs will raise consumer prices sharply. Cost-of-living increases would be unaffordable to many, including in Trump’s political base.

Before the 20 February Supreme Court decision declaring them unconstitutional, the tariffs were only expected to raise $300 billion in the first year.

Revenue was expected to fall as consumers bought more domestically produced goods instead of imports.

As many intermediate goods for manufacturing are imported, higher tariffs would hurt the very industries Trump claims to be helping. Thus, high tariffs will sharply raise consumer prices for both imports and US-made substitutes.

Also, massively increasing military spending will divert resources, including labour, away from more productive uses.

Military industrial cronies
US military contracts mainly went to five corporate groups even before Trump 2.0. While projects are worth more, beneficiaries are fewer, reflecting lobbying efforts.

More government military spending is unlikely to increase jobs in the long run, as jobs have decreased drastically since the 1980s due to greater automation.

Military contractors pass the costs of R&D and capital expenditures onto taxpayers, freeing revenue to pay for cash dividends and stock buybacks.

In 2024, the Pentagon’s leading contractor, Lockheed Martin paid out $7 billion for stock buybacks and dividends.

Although Trump once offered to work with China and Russia to cut the trio’s military spending by half, it was difficult to take his offer seriously given his other pronouncements and actions.

US military spending will continue to rise, driven by the same interests and impulses behind the recent massive hikes.

Military expenditure needs wars to secure yet more allocations for buying more military equipment, to the beat of war drums.

The actual political and business relationships are complex and ever-changing. As Walter Scott observed in 1808:

Oh, what a tangled web we weave,
When first we practice to deceive

IPS UN Bureau

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President Donald Trump has shaken up the world economy and the rule of international law in the first year of his second term – ostensibly to make America great again, particularly by reviving US manufacturing jobs.

Jomo Kwame Sundaram

Tariffs
Trump’s 2nd April 2025 Liberation Day tariffs were ostensibly his primary means for generating manufacturing employment.

When the US Supreme Court overruled him on 20 February, he responded by imposing a 10% tariff on all imports, raised to 15% the next day!

The tariffs are a blunt means for reviving US manufacturing jobs. The policy assumes US manufacturing jobs have been mainly lost due to what the White House deems ‘unfair’ competition from cheap imports.

Undoubtedly, US and other transnational corporations have relocated production and generally sourced imports from abroad to reduce import costs.

Imposing tariffs on imported goods to raise their prices is supposed to induce manufacturers to relocate production and jobs to the US.

Higher tariffs were imposed on countries with larger goods trade surpluses with the US. This ignores the services trade balance, generally more favourable to the US.

Tariff threats are now among the Trump administration’s choice weapons or means of economic coercion, including sanctions, to advance and secure its interests.

K Kuhaneetha Bai

But only $264 billion was collected during Trump 2.0’s first year, much higher than before, but still less than 1% of US federal debt.

Tariff revenue peaked in October 2025 at $31.35 billion, well below expectations, months before the Supreme Court decision.

The Kiel Institute for the World Economy found only 4% of tariffs ‘absorbed’ by foreign exporters losing some export earnings. US importers paid the 96% balance of $264 billion in tariffs, weakening the impact of Trump’s business tax cuts.

But Trump’s tariffs have not reduced the US trade deficit, not even for manufactures; this rose to $1 trillion in 2025, as $3.15 trillion in imports exceeded $2.15 trillion in exports.

Although mortgage and loan interest rates have not fallen, inflation continues. The additional tariff revenue would not even have covered the extra military budget Trump has promised.

Congress could have reclaimed its tariff authority, though the current Trump-dominated House of Representatives has not tried.

But with the November midterm elections looming, Forbes reported that the president’s disapproval rating rose to 55% in mid-February, as fewer are confident his administration prioritises curbing inflation.

Financialisation
The US federal debt, around $39 trillion, now requires over $1 trillion in annual debt servicing from the $7 trillion annual budget.

Growing by $1.5-2.0 trillion annually, this unrepayable debt is being ‘rolled over’ for ever-shorter maturities. Hedge funds now hold 27% of US Treasuries, while foreigners, who held half in 2015, now have only 30%.

Treasury bond repurchase – or repo – agreements provide about $4 trillion in financing daily for derivatives speculation. Another financial crash can wipe out many more trillions of often dubious ‘value’.

While the US economy, productive employment, and research funding diminish, various bubbles of unrepayable debt are growing rapidly. Worse, so-called stablecoins and cryptocurrencies have infiltrated financial markets.

Meanwhile, some US mortgage delinquency rates have reached levels worse than in 2007-08. By the end of 2025, financial news agencies were publishing ominous reports of financial vulnerabilities.

Hundreds of billions of promised investments, coerced from other nations using tariff and other threats, will be invested in US financial asset markets but little of this will create manufacturing jobs.

Manufacturing comeback
Trump has promised to make the US a manufacturing superpower once again, leading the world in technology, computing power and military weaponry. But China leads in many – if not most – areas of recent technological advancement.

Dean Baker found the US labour market weakening over Trump 2.0’s first year. Overall, and manufacturing jobs growth both declined from Biden’s last year.

US manufacturing jobs have long been threatened by transnational corporate globalisation and labour-saving technical change, especially automation.

US policy in recent decades has left the private sector responsible for ensuring US industrial technology leadership and progress. Meanwhile, problems, such as poor infrastructure, remain unaddressed.

Trump’s tariffs may also inadvertently reduce US jobs. Many industrial processes require imported parts, with the tariffs proving disruptive.

Trump’s policies have not created enough manufacturing jobs. The president fired his Labor Department’s statistics head in mid-2025 for not reporting enough job growth.

Nonetheless, it reported only 584,000 net new jobs for all of 2025, compared to 1.6 million in 2024, for the US labour force of 165 million!

The Wall Street Journal noted, “The manufacturing boom President Trump promised … is going in reverse”.

The Trump administration could still use the Supreme Court’s ruling to change its strategy to make America great again by drawing better lessons from US economic history and adopting a more pragmatic approach. But so far, it seems unlikely to do so.

IPS UN Bureau

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Despite lacking both evidence and theory, many economists claim trade liberalisation accelerates development. But only a few economies have gained many jobs from external market access.

Jomo Kwame Sundaram

Multilateral trade liberalisation
In conventional trade theory, gains from trade liberalisation are mainly one-time increases in output and exports due to static comparative advantage.

Post-World War Two (WWII) US foreign policy transformed multilateral relations and transnational institutions, including international economic governance.

With the growing power of transnational corporations, many multilateral institutions, including the United Nations system, have been reconfigured or marginalised.

The General Agreement on Tariffs and Trade (GATT) was a ‘second-best’ compromise after the US Congress vetoed the creation of the International Trade Organisation, despite widespread international enthusiasm for the 1948 Havana Charter.

Almost half a century later, the World Trade Organisation (WTO) was established in 1995, following the 1994 Marrakesh Declaration concluding the Uruguay Round of GATT negotiations.

Trade mahaguru Jagdish Bhagwati argued that multilateral trade has been undermined by plurilateral and bilateral arrangements favouring dominant partners.

With the era of trade liberalisation essentially over since the 2008-09 global financial crisis (GFC), free trade advocacy has received a new lease of life from mythmaking about the ‘pre-Trump’ era.

Uneven, mixed effects
Mainstream trade theory does not entertain the possibility of ‘unequal exchange’, however defined.

Nor does it even incorporate Bhagwati’s notion of ‘immiserising growth’ when productivity gains reduce prices for consumers, rather than increase producers’ earnings.

The three decades of trade liberalisation from the 1980s saw slower, but more volatile growth than the post-WWII quarter-century termed the ‘Golden Age’. More recently, stagnationist tendencies have dominated since the GFC.

With trade liberalisation, many developing countries have experienced greater food insecurity and deindustrialisation, as the manufacturing shares of their national income shrank.

Much import-substituting industrialisation after WWII or independence has since collapsed. Besides resource processing, very few new industries have emerged in Africa.

‘Aid for Trade’ for poorer developing countries implicitly acknowledges trade liberalisation’s adverse effects by mitigating some of them. Why then should they abandon protectionism if they need to be compensated for doing so?

Wealthy nations have also insisted that developing countries end manufacturing tariffs. But as Dani Rodrik has quipped, why rich nations “need to be bribed by poor countries to do what is good for them is an enduring mystery”.

African nations and Caribbean and Pacific small island developing states enjoyed preferential access to European markets, which full multilateral trade liberalisation would eliminate.

Such preferences for Sub-Saharan Africa have pitted African against Asian least developed countries, undermining the collective negotiating strengths of both.

Many countries had expected the current Doha Round to eliminate rich nations’ producer subsidies, tariffs, and non-tariff barriers, but that has not happened.

Cutting farm support in the North could make food agriculture in developing countries more viable, but would also raise food import prices in the interim.

World Bank ‘structural adjustment’ programmes and IMF fiscal discipline requirements have undermined rural infrastructure and productivity, setting back smallholder agriculture in most developing countries.

Setbacks, not gains
Trade liberalisation also reduces tariff revenue. Such losses have hurt developing nations, especially the poorest, for whom tariffs often accounted for up to half of all tax revenue.

Such revenue cuts severely undermined the fiscal means of developing nations, crucial for government spending and investment, including for development and welfare.

Most governments are unable to replace lost tariff revenue with new or higher taxes. Meanwhile, more borrowing to offset lost tariff revenue has worsened indebtedness.

Trade liberalisation advocates are typically vague about how it is supposed to raise exports, incomes, and tax revenue, besides compensating for lost tariff revenue.

Instead, tax burdens typically become more regressive as overall tax revenue declines. Real consumption is supposed to rise as import prices fall with lower tariffs, but could also decline due to increasing consumption taxes.

Less policy space
Trade liberalisation has also reduced available development policy tools, especially those relating to trade, investment, and industrialisation.

The constraints imposed by trade liberalisation and investment agreements have generally limited the scope for and potential of development policy initiatives.

The actual role and impact of trade policy for growth and employment remain moot. But there are no analytical reasons or robust empirical evidence that trade liberalisation per se ensures sustainable development.

World Bank and most other studies acknowledged modest, if not negative, net gains for most developing countries from any realistically achievable outcome.

It is often ignored that realistic expectations of gains from trade liberalisation rely crucially on a strong positive export supply response.

However, such a response is unlikely when internationally competitive, productive and export capacities do not already exist, as in most developing countries, especially the poorest.

Hence, most of the Global South has not been able to overcome the worst consequences of trade liberalisation to achieve sustainable development.

In any case, the WTO Doha Round talks were ended by rich nations in 2015.

With the increasingly blatant self-interested contravention of WTO rules by the US, European and other wealthy nations, developing countries may best enhance their development prospects by reverting to GATT rules.

This would allow them to opt in, as appropriate, rather than resign themselves to the uniform ‘one size fits all’ WTO rules and regulations, regardless of context, circumstances, capacities and capabilities.

IPS UN Bureau

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After condemning pragmatic responses to the 1997-98 Asian financial crises, the West pursued similar policies in response to the 2008 global financial crisis without acknowledging its own mistakes.

Jomo Kwame Sundaram

US exports could barely compete internationally, particularly with Germany and Japan. During his first term, Trump initially pursued a strong dollar policy, which undermined exports and encouraged imports.

The September 1985 ‘Plaza Accord’ among the G7 grouping of the world’s largest economies, held at New York’s Plaza Hotel, agreed that the Japanese yen and the Deutsche mark must both appreciate sharply against the US dollar.

The ‘strong yen’ period, or endaka in Japanese, ensued for a decade until mid-1995. This made Japanese imports less competitive, enabling the Reagan era boom.

By accelerating reunification with the East and the new euro currency, German Chancellor Helmut Kohl prevented the mark strengthening as much as the yen.

Thus, Germany avoided the Japanese catastrophe after its decades-long post-war miracle ended abruptly with the disastrous 1989 Big Bang financial reforms.

Liberalising capital flows
As the IMF urged national authorities to abandon capital controls, East Asians borrowed dollars, expecting to repay later on better terms.

Meanwhile, the dollar only stopped weakening after the US allowed Japan to reverse yen appreciation in mid-1995.

Under Managing Director Michel Camdessus, the IMF began pushing capital account liberalisation. This contradicted the intent of the Fund’s sixth Article of Agreement, affirming national authorities’ right to manage their capital accounts.

Despite considerable evidence to the contrary, Camdessus’ IMF preached the ostensible virtues of capital account liberalisation.

East Asian emerging financial markets were initially delighted by the significant capital inflows before mid-1997. After the strong yen decade, the US dollar appreciated from mid-1995.

When financial inflows reversed after mid-1997, some East Asian monetary authorities were unable to cope and turned to the IMF for emergency funding .

Many paths to crises
The Asian financial crisis is typically dated from 2 July 1997, when the Thai baht was ‘floated’ and its value quickly fell without central bank support. The ensuing panic quickly spread like contagion across national boundaries via financial markets.

Financial investors – in Bangkok, Singapore, Hong Kong, Tokyo, London and New York – hastily withdrew their funds, often mindlessly following perceived ‘market leaders’ without knowing why, like animal herds in panic.

Funds fled economies in the region, like frightened audiences in a dark theatre hearing a fire alarm. Capital even fled the Philippines, which had received little finance, because it was in Southeast Asia, the ‘wrong neighbourhood’.

After earlier celebrating Malaysia, Indonesia, and Thailand as ‘East Asian miracle’ economies, confidence in Southeast Asian investments fell suddenly.

Central banks in the region were sceptical of IMF prescriptions but believed they had little choice but to comply.

Press photographs showed Camdessus standing sternly, with arms folded like a displeased schoolmaster, over the Indonesian President bowing deeply to sign the IMF agreement.

This humiliating image probably expedited Soeharto’s shock resignation soon after, in mid-1998, over three decades after he seized power in a brutal military putsch in September 1965.

Following an earlier financial crisis, a 1989 Malaysian law had prohibited some risky banking and financial practices, but the authorities sought to attract foreign investments into its stock market.

Thailand had become vulnerable by allowing borrowers direct access to foreign banks through the Bangkok International Banking Facility and its provincial counterpart.

Debtors could thus bypass central bank regulation and supervision. The Thai currency float prompted massive funds outflows from the country.

As market confidence waned, funds fled Malaysia’s bourse, triggering a massive collapse in the currency’s value against the dollar, which had steadily weakened against the yen between 1985 and 1995.

Following massive capital outflows, Malaysia finally introduced capital controls on outflows from September 1998, fourteen months after the crisis began!

The controls enabled Malaysia to stabilise its currency and the economy temporarily, but also ended the earlier decade of accelerated industrialisation and growth.

Learning from experience
Rather than acknowledge and address the worsening problem due to earlier capital account liberalisation, the Fund made things worse with its prescriptions.

It insisted on keeping capital accounts open and raising interest rates to reverse outflows. This slowed economic growth as borrowing – and hence, both spending and investing – became more costly.

As investment and spending are necessary for economic growth, IMF prescriptions exacerbated the problems instead of providing a solution.

The East Asian financial crisis was undoubtedly avoidable. Experience has shown that financial markets and capital flows do not function as mainstream theories claim.

Thus, financial dogma and its influence on economic theory and policy obscured more realistic understanding of how markets actually operate and the ability to develop more pragmatic and appropriate policy alternatives.

History never fully repeats itself. But better policymaking for financial crisis avoidance and recovery will only emerge from more informed, historically grounded analysis.

IPS UN Bureau

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While US President Donald Trump has blamed the BRICS and foreign investors for de-dollarisation, his rhetoric, actions and policy measures are mainly responsible for the trend’s recent acceleration.

Jomo Kwame Sundaram

Despite some temporary reversals, the dollar’s post-World War II role as world reserve currency has gradually declined over the decades, especially since the 1970s. Ben Norton has argued that several Trump measures have accelerated this trend.

Trump claims his supposedly ‘reciprocal tariffs’ will reduce the US trade or current account deficit with the rest of the world. But if countries cannot export to the US, they cannot earn dollars to meet their trade and investment needs.

Many believe Trump’s tariffs and other threats are enhancing US leverage vis-à-vis others, but their reactions, including defensive countermeasures, are accelerating de-dollarisation.

Trump’s measures, such as his insistence on bilateral negotiations, have alarmed most nations, including long-time allies. As nations, including allies, rethink their economic relations with and vulnerability to the US, de-dollarisation inadvertently accelerates.

Trump vs the Fed
The US Federal Reserve Bank’s overnight lending or funds rate has been higher since 2022, responding to higher consumer price inflation following the pandemic and the Russian invasion of Ukraine.

As the Fed raised interest rates, yields on US government debt rose. But Trump now wants the Fed to cut interest rates to reduce the high debt servicing costs of both the government and private corporations.

In 2024, the US federal government paid about 3% of GDP in debt interest alone. Although such debt exceeds 120% of GDP, debt service costs are deemed manageable as long as interest rates remain low.

Trump’s pressures on the Fed to cut interest rates have inadvertently undermined investor confidence and prompted ‘flights [from dollar assets] to safety’.

Trump’s recent campaign against his earlier Fed chair appointee, Jerome Powell, has inadvertently raised investor concerns about his espoused monetary policy priorities.

Inflation fears persist
Investors now worry that Trump is pressuring the Fed to cut interest rates. They believe this will stoke inflation and cause the dollar to fall against other major currencies. As Trump is seen forcing down interest rates, he risks being blamed for persistent inflation.

If the Fed buys US Treasuries to reduce yields, for a new round of ‘quantitative easing’ (QE), dollar asset investments will realise lower, if not negative, real yields.

Although inflation hawks’ worst fears of higher inflation have not materialised so far, few believe tariffs will not raise inflation.

Expecting Trump 2.0 to impose more tariffs, many US companies stockpiled imports before April 2. As tariffs took effect and stocks declined, prices rose.

Many investors have sold their dollar assets as monetary authorities worldwide seek alternatives to the greenback. Such sell-offs lower the dollar’s value, further spurring de-dollarisation.

Trump now wants to lower US Treasury bond yields as foreign governments and investors seek alternatives to holding dollar assets.

Many are considering switching to non-dollar assets despite stagnation tendencies elsewhere in the Global North, especially in Europe and Japan. If investors stop buying dollar assets or sell them to purchase non-dollar assets, de-dollarisation will gain momentum.

Foreign demand falling
Washington is understandably worried that foreign investors will dump Treasury securities. In 2015, a third was held by foreigners, but this has since fallen to under a quarter.

The ‘Mar-A-Lago Accord’ proposal, which requires foreign governments to hold US Treasury ‘century bonds’ for 100 years despite assured losses, will compound resentment.

Lowering Treasury bond yields is both risky and difficult due to the highly financialised US economy. Past bond market turmoil has triggered stock market selloffs, lowering Treasury yields, share prices and tax revenue.

Government and corporate borrowing costs rise together. As trillions of dollars’ worth of corporate bonds mature over the next two years, high interest rates will raise corporations’ borrowing costs. Many want to refinance at lower interest rates.

These efforts to bring down interest rates are apparent to all. But lower interest rates and negative ‘actual yields’ for Treasury securities will ensure high inflation persists.

De-dollarisation accelerating?
Trump’s actions, especially threats of tariffs and sanctions, have elicited diverse reactions, often undermining dollar hegemony and accelerating de-dollarisation.

Many recent developments have undermined public confidence in the US government and the rule of law, accelerating de-dollarisation.

As investors sold US assets in mid-2025, the dollar saw its biggest fall since the 1973 oil price hike. It fell by over 10% against other major currencies, triggering temporary falls in the prices of many financial assets, including equities and bonds.

Since then, there has been increased capital market uncertainty and volatility, as in the US bond market, although a strong rally followed the ensuing stock market crash.

In many recent episodes of financial volatility, dollar liquidity was considered the safe option. But in 2025, confidence in dollar assets fell, prompting selloffs and de-dollarisation.

Thus far, Trump has been adept at managing short-term volatility, but his style implies no one knows when the music will stop.

IPS UN Bureau

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Opinions have been divided over the annual UN climate conferences. While some see COP30 in Belém, Brazil, as confirming their irrelevance, others see it as a turning point in the struggle for climate justice.

Jomo Kwame Sundaram

As the world accelerates toward catastrophic warming, ecological systems are collapsing, and millions across the Global South face increasingly life-threatening situations.

Rising sea levels, extreme heat, droughts and flooding are undermining food security, displacing communities, and exacerbating inequality and living conditions.

The economic costs of climate disasters are accelerating. Social and human costs continue to rise, with lives, livelihoods and ecosystems destroyed.

Fiscal austerity and indebtedness are making things worse. Instead, governments increase military spending and subsidise fossil fuels, accelerating planetary warming.

Business interest in ‘green transitions’ focuses on new profit-making opportunities. As renewable energy grows, energy supplies increase as fossil fuels are slowly replaced.

COP of Truth?
In his opening speech to the thirtieth Conference of Parties (COP30) in Belém, host President Luiz Inácio Lula da Silva promised it would be the ‘COP of Truth’.

K Kuhaneetha Bai

Although not officially present, the US continued to frustrate the climate talks by urging petrostates to resist efforts to reduce reliance on fossil fuels.

The COP30 Climate Change Performance Index exposed governments’ weak commitments to combating planetary warming over the past 21 years.

Its report analysed the policies of 63 countries responsible for 90% of the world’s greenhouse gas (GHG) emissions.

The top three spots were kept empty to emphasise that no country has shown sufficient ambition to do so.

For 2025, Saudi Arabia took last place, with the US, Russia and Iran not far behind. Trump’s latest policies have set the US further back.

Meanwhile, the White House threatened sanctions and tariffs against governments that support a global tax on GHG emissions by international shipping.

Just transition?
COP30 in Belém continued to fail to achieve what is urgently needed: binding GHG emission cuts, phasing out fossil fuels, meaningfully compensating for past losses and damages, or better financing for climate adaptation.

COP30 adopted the Belém Mechanism for Just Global Transition – a new UNFCCC arrangement to overcome the fragmentation and inadequacy of such efforts worldwide.

However, the mechanism lacks both finances and plans to protect those harmed by decarbonisation initiatives. Nor are there resources for ‘green industrialisation’.

Climate justice is still misrepresented as threatening livelihoods rather than as key to survival. The climate justice movement must convince the public that it is key to social progress.

Climate finance setback
Lula appealed again for increased climate financing for the Global South following the dismal record since the 2009 Copenhagen COP.

Brazil also launched the Tropical Forests Forever Fund (TFFF) to incentivise countries conserving their forests. Although it failed to raise its target of $25 billion, 53 countries endorsed the TFFF, with pledges in Belém totalling $6.6 billion.

Belém also offered new suggestions for climate finance, in its ‘Baku to Belém (B2B) Roadmap to 1.3T’ (USD1.3 trillion), and the report of the COP30 Circle of Finance Ministers (CoFM).

The CoFM involved 35 finance ministers representing three-fifths of the world’s population and its GHG emissions.

The COP30 promise to “at least triple” finance for developing countries’ climate adaptation by 2035 was again blocked by the Global North. LDC requests for grant financing were also ignored yet again.

Promoting voluntarism
Brazilian COP30 chair Corrêa do Lago proposed various compromises to encourage those disappointed by UN processes to take climate action.

His proposed ‘voluntary roadmap’ to transition from fossil fuels will be discussed at the Colombia/Netherlands-led ‘coalition of the willing’ conference in April 2026.

The chair’s other voluntary roadmap for forest conservation followed the COP30 agreement’s failure to condemn deforestation with stronger language.

The adoption of the 59 compromise indicators for the Global Goal on Adaptation was delayed by poorer African countries’ inability to afford immediate implementation. The compromise was a two-year delay, referred to as the ‘Belém-Addis vision’.

Belém as turning point
For the first time, the US was officially absent from the Belém COP. With over 56,000 delegates registered, attendance was second only to Dubai, with more than 1,600 business lobbyists present.

COPs make slow progress by painstakingly extending the consensus for climate action. Belém may shift the COPs’ focus from negotiations to initiatives, a precedent which can be abused or advanced.

Belém’s Mutirão Decision (Action Agenda) focuses on delivery, drawing from the ‘whole of society’. Its 30 measurable Key Objectives were based on the 2023 Global Stocktake.

While Belém’s outcomes fell short of most expectations, many acknowledge Brazil did its best under trying circumstances. Nonetheless, climate justice is being denied by the continuing procrastination of powerful vested interests.

Although not quite the ‘COP of Truth’, inclusion and implementation that Lula promised, Belém reversed the backward slide of recent COPs, which the Global South must build upon before it is too late.

IPS UN Bureau

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The new US National Security Strategy (NSS) repositions the superpower’s role in the world. Hence, foreign policy will be mainly driven by considerations of ‘making America great again’ (MAGA).

Jomo Kwame Sundaram

Quietly released on December 4, it is certainly not an easily forgettable update of long-established positions, cloaked in obscure bureaucratic and diplomatic parlance.

Mainly drafted under the leadership of ‘neo-con’ Secretary of State and National Security Adviser Marco Rubio, it is already seen as the most significant document of Trump 2.0.

It asserts, “The days of the United States propping up the entire world order like Atlas are over.” Instead, foreign policy should now prioritise advancing US interests.

New priorities
The NSS implies the US will no longer be the world’s policeman. Instead, it will exercise power selectively, prioritising transactional rather than strategic considerations.

It emphasises economic strength as key to national security, rebuilding industrial capacity, securing supply chains and ensuring the US never relies on others for critical materials.

K Kuhaneetha Bai

The NSS is ostensibly based on MAGA considerations involving immigration control, hemispheric dominance, and cultural ethno-chauvinism.

Mainstream commentators complain it lacks the supposedly enlightened values underlying foreign policy in the US-dominated world order after the Second World War.

They complain the new NSS is narrow in focus, redefining interests, and sharing power. Its stance and tone are said to be more 19th-century than 21st-century.

Besides pragmatic imperatives, mixed messages may be due to unsatisfactory compromises among rival factions in Trump’s administration.

MAGA foreign policy
Long-term observers see the NSS as unprecedented and blatantly ideological.

White supremacist ideology influences not only national cultural politics but also foreign policy. The NSS unapologetically promotes Judaeo-Christian chauvinism despite the constitutional separation of church from state.

MAGA’s ‘America First’ priority is evident throughout. Border security is crucial as immigration is deemed the primary national security concern.

For Samuel Huntington, immigration threatens the US by making it less WASP (White Anglo-Saxon Protestant).

The NSS blames social and economic breakdown on immigration. Inflows into the Western Hemisphere, not just the US, must be urgently stopped by all available means.

Ironically, the US has long been a nation of immigrants, with relatively more immigrants than any European country. Its non-white numbers are almost equal to whites.

Trump’s neocolonial interpretation of the 1823 Monroe Doctrine emphasises the Americas as the new foreign policy priority.

Foreign rivals must not be allowed to acquire strategic assets, ports, mines, or infrastructure in Latin America and the Caribbean, mainly to keep China out.

Trump’s NSS prioritises the Western Hemisphere, with Asia second. Africa receives three paragraphs, primarily for its minerals.

Europe is downgraded to third, due to its ostensible immigration-induced civilizational decline. Surprisingly, the NSS urges halting North Atlantic Treaty Organisation (NATO) expansion.

China near peer!
The NSS policy on China is widely viewed as unexpectedly restrained. China remains a priority, but is no longer its primary antagonist; it is now a peer competitor.

Now, the US must rebalance its economic relationship with China based on mutually beneficial reciprocity, fairness, and the resurgence of US manufacturing.

The US will continue to work with allies to limit China’s growth and technological progress. However, China is allowed to develop green technologies due to US disinterest.

Meanwhile, US hawks have ensured a military ‘overmatch’ for Taiwan. The NSS emphasises Taiwan’s centrality to Indo-Pacific security and world chip production.

The NSS warns China would gain access to the Second Island Chain if it captured Taiwan, reshaping regional power and threatening vital US trade routes.

With allied support, the US military will seek to contain China within the First Island Chain. However, Taiwan fears US support will wane after TSMC chip production moves to the US.

The NSS expects the ‘Quad’ of the US, Australia, Japan and India to enhance Indo-Pacific security. For Washington, only India can balance China in Asia, and is hence crucial to contain China in the long term.

Regional reordering
The NSS also downgrades the Middle East (ME). Conditions that once made the region important have changed.

The ME’s importance stemmed from its petroleum and Western guilt over Israel. Now, the US has become a significant oil and gas exporter.

Critically, the US strike on Iran in mid-2025 is believed to have set back Tehran’s nuclear programme.

The ME seems unlikely to continue to drive US strategic planning as it has over the last half-century. For the US, the region is now expected to be a major investor.

As US foreign policy is redefined, the world worries. The ME has been downgraded as Latin America has become the new frontline region.

Much has happened in less than a year of Trump 2.0, with little clear or consistent pattern of continuity or change from his first term. But policies have also been quickly reversed or revised.

While the NSS is undoubtedly important and indicative, it would be presumptuous to think it will actually determine policy over the next three years, or even in the very near future.

IPS UN Bureau

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Although inequality among countries still accounts for a far greater share of income inequality worldwide than national-level inequalities, discussions of inequality continue to focus on the latter.

Jomo Kwame Sundaram

South Africa (SA) and Brazil, the previous G20 host, have long had the world’s highest national-level inequalities. However, their current governments have led progressive initiatives for the Global South.

Although due to take over the G20 presidency next year, US President Trump refused to participate in this year’s summit, inter alia, because of alleged SA oppression of its White minority.

Inequality growing faster
The G20 report utilises various measures to show the widening gap between the rich and the poor.

National-level inequality is widespread: 83% of countries, with 90% of the world’s population, have high Gini coefficients of income inequality above 40%.

While income inequality worldwide is very high, with a Gini coefficient of 61%, it has declined slightly since 2000, primarily due to China’s economic growth.

K Kuhaneetha Bai

Meanwhile, wealth concentration has continued. Wealth inequality is even greater than income inequality, with the richest 10% owning 74% of the world’s assets.

The average wealth of the richest 1% grew by $1.3 million from 2000, accounting for 41% of new wealth by 2024! Private wealth has risen sharply since 2000, while public assets have declined.

Besides income and wealth, the report reviews other inequalities, including health, education, employment, housing, environmental vulnerability, and even political voice.

Such inequalities, involving class, gender, ethnicity, and geography, often ‘intersect’. The promise of equal opportunity is rarely meaningful, as most enjoy limited social mobility options.

The report thus serves as the most comprehensive and accessible review of various dimensions of economic inequality available.

Harmful effects
The G20 report condemns ‘extreme inequality’ for its adverse economic, political, and social consequences.

Inadequate income typically means hunger, poor nutrition and healthcare. Economies underperform, unable to realise their actual potential.

Inequality, including power imbalances, influences resource allocation. Such disparities enhance the incomes of the rich, often at the expense of working people.

Natural resources typically enrich owners while undermining environmental sustainability and social well-being.

The report argues that economic inequality inevitably involves political disparities, as the rich are better able to buy influence.

New rules and policies favour the rich and powerful, increasing inequalities and undermining national and worldwide economic performance.

High inequality, due to rules favouring the wealthy, also undermines public trust in institutions. The declining influence of the middle class threatens both economic and political stability, especially in the West.

Drivers of inequality
The report argues that public policy can address inequalities by influencing how market incomes are initially distributed and how taxes and transfers redistribute them.

Market income distribution is determined by asset distribution (mediated by finance, skills, and social networks) and among labour, capital, and rents. Returns to shareholders are prioritised over other claims.

Increased inequality in recent decades is attributed to weakened equalising policies, or ‘equilibrating forces’, and stronger ‘disequilibrating forces’, including wealth inheritance.

New economic policies over recent decades have favoured the wealthy by weakening labour via market deregulation and restricting trade unions.

Tax systems have become less progressive with the shift from direct to indirect taxes, lowering taxes paid by large corporations and the wealthy. Fiscal austerity has exacerbated the situation, especially for the vulnerable.

Financial deregulation has also generated more instability, triggering crises, with ‘resolution’ usually favouring the influential.

Privatisation of public services has also favoured the well-connected, at the expense of the public, consumers, and labour.

International governance
International economic and legal institutions have also shaped inequality.

More international trade and capital mobility have lowered wages, increased income disparities and job insecurity, and weakened workers’ bargaining power.

Liberalising financial flows has favoured wealthy creditors over debtors, worsening financial volatility and sovereign debt crises.

International inequalities have adverse cross-border effects, especially for the environment and public health. Overconsumption and higher greenhouse gas emissions by the rich significantly worsen planetary heating.

International health inequalities have been worsened by stronger transnational intellectual property rights and increased profits at the expense of poorer countries.

International tax agreements have enabled the wealthy, including transnational corporations, to pay less than those less fortunate. Meanwhile, Oxfam reported that the top one per cent in the Global North drained the South at a rate of $30 million per hour.

Inaction despite consensus?
The report claims a new analytical consensus that inequality is detrimental to economic progress, and reducing inequality is better for the economy.

Inequality is attributed to policy choices reflecting moral choices and economic trade-offs. It argues that combating inequality is both desirable and feasible.

Recent research from the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) has criticised growing national inequalities.

However, there is no evidence of serious efforts by the G20, IMF, and OECD to reduce inequalities, especially inter-country, particularly between North and South.

IPS UN Bureau

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US President Trump’s economic strategy for his second term aims to get the rest of the world, especially its wealthy allies with greater means, to pay more to help strengthen the US economy.

Jomo Kwame Sundaram

De-dollarisation distraction
Harvard economist Kenneth Rogoff recently observed, “We are absolutely at the biggest inflection point in the global currency system since the Nixon shock to end the last vestige of the gold standard.”

After the Bretton Woods Conference in 1944, the gold price was set at $35 per ounce. In August 1971, US President Richard Nixon ended this gold-dollar parity.

De-dollarisation has gradually continued since, with occasional brief spurts and reversals. For example, capital flows abroad rose following the 2008-09 global financial crisis.

Growing weaponisation of economic relations has probably accelerated de-dollarisation. Rogoff observed, “this was happening for a decade before Trump. Trump is an accelerant.”

Governments, central banks and BRICS countries have been de-dollarising. Even US dollar hegemony advocates no longer deny alternatives to the dollar’s role as global reserve currency.

Meanwhile, private foreign investors, including foreign asset managers, investment banks and pension funds, do not want to be left behind.

Investment fund managers are increasingly ‘de-risking’ by cutting exposure to dollar-denominated assets.

Mar-a-Lago plan
Economist Stephen Miran has proposed a new Trump initiative to require other governments to pay the US for services purportedly rendered.

First appointed chair of Trump’s Council of Economic Advisers, Miran has since been appointed to the US Federal Reserve Board.

A few days after Trump announced his Liberation Day tariffs on April 2, Miran articulated five expectations. These expect other nations to pay the US for ‘public goods’ services it ostensibly provides the world.

Allies will be expected to pay the US more for the ‘security umbrella’ it provides to NATO and other allies. The US also expects those buying Treasury bonds to pay more for the ‘privilege’

In November 2024, Miran’s A User’s Guide to Restructuring the Global Trading System proposed the Mar-A-Lago accord, named for Trump’s exclusive Florida island resort and residence.

He also referred to the Plaza Accord, which the Reagan administration imposed on its G5 allies in September 1985. Then, the US forced Japan and Germany to appreciate their currencies against the dollar.

The yen’s appreciation fuelled a massive Japanese asset price bubble that burst with devastating consequences in 1989, ending its post-war boom.

Trump now seeks the appreciation of other major currencies. Already, he has succeeded in getting his European allies to agree.

However, it seems unlikely that Trump will get China and other BRICS economies to do so, as they are aware of how the Plaza Accord affected Japan.

Century bonds
Other national monetary authorities buying US Treasury bonds to stabilise their own currencies have long caused dollar appreciation.

They are now expected to help depreciate the dollar. Miran has proposed that the US issue century, i.e., 100-year bonds, at very low interest rates, well below the current rates for US Treasury securities.

Miran wants foreign central bank reserve currency managers to sell off their dollar-denominated assets. They should “term out” their “remaining reserve holdings” and refinance short-term debt with long-term borrowings.

Miran is explicit: “The US Treasury can effectively buy duration back from the market and replace that borrowing with century bonds sold to the foreign official sector.”

His plan thus intends to force foreign holders of US government debt (‘Treasuries’) to extend the duration of their loans.

Very low interest rates for century bonds will ensure that foreign bondholders effectively pay the US more for the ‘privilege’ of borrowing dollars.

For Miran, the appreciation of other currencies against the dollar will also strengthen the American economy. US manufacturing will strengthen as its exports become more competitive.

Thus, his Mar-A-Lago accord plan expects other nations to pay more to strengthen the world’s largest and richest economy.

Miran’s Mar-A-Lago plan is not yet official US policy. However, this can change with Miran’s likely appointment as the next Fed chair, replacing Trump 1.0 appointee Jerome Powell.

BRICS de-dollarisation?
However, Miran’s declared plan to strengthen the US economy by depreciating the dollar against other major currencies has also accelerated de-dollarisation.

In recent years, the BRICS have been accused of conspiring to accelerate de-dollarisation worldwide, but this is certainly not a shared ambition.

Lacking significant trade surpluses, Brazil and South Africa have long advocated de-dollarisation. But Russia’s complaints have more to do with recent NATO weaponisation of financial instruments against it.

There is no comparable enthusiasm among other BRICS member states, which have much healthier trade surpluses and more dollar assets.

Its recent membership expansion will make an official BRICS de-dollarisation stance even more unlikely.

Nevertheless, Trump’s leadership relies on the American public believing the rest of the world is conspiring against them.

IPS UN Bureau

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Opposition to data centres (DCs) has been rapidly spreading internationally due to their fast-growing resource demands. DCs have been proliferating quickly, driven by the popularity of artificial intelligence (AI).

Jomo Kwame Sundaram

In October 2024, McKinsey projected that global energy demand by DCs would rise between 19% and 22% annually through 2030, reaching an annual demand between 171 and 219 gigawatts.

This greatly exceeds the “current demand of 60 GW”. “To avoid a [supply] deficit, at least twice the [DC] capacity built since 2000 would have to be built in less than a quarter of the time”!

As tech companies are not paying for the additional energy generation capacity, consumers and host governments are, whether they benefit from AI or not.

As DCs increasingly faced growing pushback in the North, developers have turned to developing countries, outsourcing problems to poorer nations with limited resources.

Understanding these energy- and water-guzzling facilities is necessary to better protect economies, societies, communities, and their environments.

Energy needs
With growing corporate and consumer demand for AI, DC growth will continue, and even occasionally accelerate.

K Kuhaneetha Bai

As demand for AI and DCs increases, supporting computers will require significantly more electricity. This will generate heat, needing the use of water and energy for cooling. Much energy used by DCs, from 38% to 50%, is for cooling.

Electricity generation, whether from fossil fuels or nuclear fission, requires more cooling than renewable energy sources such as photovoltaic solar panels or wind turbines.

A small-scale DC with 500 to 2,000 servers consumes one to five megawatts (MW). For tech giants, a ‘hyperscale’ DC, hosting tens of thousands of servers, consumes 20 to over 100MW, like a small city!

Data centres not cool
As the popular focus is on DCs’ enormous energy requirements, their massive water needs to cool equipment tend to be ignored, understated and overlooked.

Locating new DCs in developing countries will further heat local microclimates and the planetary atmosphere. Worse still, heat is more environmentally threatening in the tropics, where ambient temperatures are higher.

Establishing more DCs will inevitably crowd out existing and other possible uses of freshwater supplies, besides reducing local groundwater aquifers.

Unsurprisingly, DC investors rarely warn host governments about the amount of locally supplied energy and water required.

DCs require much freshwater to cool servers and routers. In 2023, Google alone used almost 23 billion litres to cool DCs. In cooling systems using evaporation, cold water is used to absorb severe heat, releasing steam into the atmosphere.

Closed-loop cooling systems absorb heat using piped-in water, while air-cooled chillers cool down hot water. Cooled water recirculated for cooling requires less water but more energy to chill hot water.

Investors expect subsidies
Like other prospective investors, DCs have relocated to areas where host governments have been more generous and less demanding.

Led by US President Trump’s powerful ‘tech bros’, many foreign investors have profited from subsidised energy, cheap land and water, and other special incentives.

Prospective host governments compete to offer tax and other incentives, such as subsidised energy and water, to attract foreign direct investment in DCs.

The US pressured Malaysia and Thailand to stop Chinese firms from using them as an “export-control backdoor” for its AI chips. Washington alleges that DCs outside China buy chips to train its AI for military purposes. So far, only Malaysia has complied.

This limits Chinese firms’ access to such chips. Washington claims that Chinese substitutes for US-made chips are inferior and seeks to protect US technology from China.

High-tech DC jobs?
Data centres are emerging everywhere, but not many jobs will be created. Advocates claim DCs will provide high-tech jobs.

DCs are largely self-operating, requiring minimal human intervention, except for maintenance, which they determine independently. Thus, job creation is minimised.

Construction and installation work will be temporary, with most managerial functions being performed remotely from headquarters. A Georgetown University report estimates only 27% of DC jobs are ‘technical’.

While the DC discourse mainly focuses on foreign investments, there is little discussion on growing national desires for data sovereignty.

Acceding to so many foreign requests will inevitably block national capacity ambitions to develop end-to-end DC capabilities and not just host them.

Thus far, there is limited interest in the ‘afterlife’ of DCs, such as what happens after they have outlived their purpose, or the disposal of waste materials.

Higher energy and water costs, subsidies, tax incentives and other problems caused by DCs are hardly offset by their modest employment and other benefits.

IPS UN Bureau

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Global South cooperation arrangements must evolve to better respond to pressing contemporary and imminent challenges, rather than risk being irrelevant straitjackets stuck in the past.

Jomo Kwame Sundaram

The creation of Malaysia had led to problems with the Philippines and Indonesia, while Singapore had seceded from the new confederation in August 1965.

ASEAN was not a Cold War creation in the same sense as the Southeast Asia Treaty Organisation (SEATO), one of several regional security arrangements established by the Americans in the early 1950s, the only significant one remaining being NATO.

ASEAN’s most significant initiative was to declare Southeast Asia a Zone of Peace, Freedom and Neutrality (ZOPFAN) in 1973, two years before the end of the Indochina wars.

Regional economic cooperation
The region has since seen four major economic initiatives, with the first being the ASEAN Free Trade Area (AFTA).

AFTA was established at the height of the trade liberalisation zeal in the early 1990s. Beyond the initial ‘one-time’ trade liberalisation effects, there has been little actual economic transformation since then.

Trade liberalisation mahaguru Jagdish Bhagwati’s last (2008) book, Termites in the Trading System, saw preferential plurilateral and bilateral FTAs as ‘termites’ undermining the WTO promise of multilateral trade liberalisation.

While seemingly mutually beneficial, such FTAs are akin to termites that surreptitiously erode the foundations of the multilateral trading system by encouraging discrimination, thereby undermining the principle of non-discrimination.

Naive enthusiasm for all FTAs has thus actually undermined multilateralism, also triggering pushback since the late 20th century.

Following the 2008-09 global financial crisis, the G20’s developed economies all raised protectionist barriers, confirming their dubious commitment to free trade.

Meanwhile, US trade policies since the Obama presidency, and especially this year, have made a mockery of the WTO’s commitment to the multilateralism of the 1994 Marrakech Declaration.

Asymmetric financialization
The 1997-98 Asian financial crisis should have served as a wake-up call about the dangers of financialization, but the West dismissed it as simply due to Asian hubris.

Under Managing Director Michel Camdessus, IMF promotion of capital account liberalisation even contravened the Fund’s own Articles of Agreement.

When Japanese Finance Minister Miyazawa and Vice Minister Sakakibara proposed an East Asian financial rescue plan, which was soon killed by then US Treasury Deputy Secretary Larry Summers.

Eventually, the Chiang Mai Initiative was developed by ASEAN+3, including Japan, South Korea, and China as the additional three. Ensuring bilateral swap facilities for financial emergencies have since been multi-lateralised.

ASEAN+3 later led the Regional Comprehensive Economic Partnership (RCEP), still conceived mainly in terms of regional trade liberalisation.

Non-alignment for our times
Developing relevant institutions and arrangements in our times requires us to pragmatically consider history, rather than abstract, ahistorical principles.

2025 marks several significant anniversaries, most notably the end of World War II in 1945 and the 1955 Bandung Asia-Africa solidarity conference, which anticipated the formation of the non-aligned movement.

The world seems to have lost its commitment to creating the conditions for enduring peace. Despite much rhetoric, the post-World War II commitment to freedom and neutrality in the Global North has largely gone.

The world was deemed unipolar after the end of the Cold War. However, for most, it has been multipolar, with the majority of the Global South remaining non-aligned.

As for peace-making, the US’s NATO allies have increasingly marginalised the United Nations and multilateralism with it. Already, the number of military interventions since the end of the Cold War exceeds those of that era.

While ASEAN cannot realistically lead international peace-making, it can be a much stronger voice for multilateralism, peace, freedom, neutrality, development, and international cooperation.

East Asian potential
The world economy is now stagnating due to Western policies. Hence, ASEAN+3 has become more relevant.

Just before President Trump made his April 2nd Liberation Day unilateral tariffs announcement, the governments of Japan, China, and South Korea met in late March without ASEAN to coordinate responses despite their long history of tensions.

ASEAN risks becoming increasingly irrelevant, due to the limited progress since the Chiang Mai Agreement a quarter of a century ago. Worse, ASEAN’s regional leadership has rarely gone beyond trade liberalisation, now sadly irrelevant in ‘post-normal’ times.

Rather than risk growing irrelevance, regional cooperation needs to rise to contemporary challenges. Working closely with partners accounting for two-fifths of the world economy, ASEAN countries only stand to gain from broader regional cooperation.

President Trump’s ‘shock and awe’ tariffs and Mar-a-Lago ambitions clearly signal that ‘business as usual’ is over, and Washington intends to remake the world. Will East Asia rise to this challenge of our times?

IPS UN Bureau

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The World Bank’s 1981 Berg Report provided the blueprint for structural adjustment, including economic liberalisation in Africa. Urging trade liberalisation, it promised growth from its supposed comparative advantage in agriculture.

Jomo Kwame Sundaram

Removing ‘distortions’ caused by marketing boards and other state interventions and institutions was supposed to unleash export-led growth for Sub-Saharan African (SSA) producers.

However, despite the supposed comparative advantage and trade preferences, African agricultural exports have not grown significantly due to protection by wealthy nations.

By the turn of the century, Africa’s share of worldwide non-oil exports had declined to less than half of what it was in the early 1980s.

African agricultural output and export capacities have been undermined by decades of low investment, economic stagnation and neglect.

Significant public spending cuts accelerated the deterioration of existing infrastructure (roads, water supply, etc.), undermining potential ‘supply responses’.

K Kuhaneetha Bai

Even the primary commodity price collapse from 2014 did not prevent Africa’s share of world exports from increasing.

Promises, promises
The 1994 Marrakech declaration, concluding the Uruguay Round of multilateral trade negotiations, created the World Trade Organisation (WTO) in 1995.

The new Doha Development Round of trade negotiations began in 2001, following the dramatic walkout by African trade ministers at the WTO Seattle ministerial conference in 1999.

The Public Health Exception to the WTO’s onerous new intellectual property rules alleviated this concern but was ignored during the deadly COVID-19 pandemic.

Developing countries were projected to gain US$16 billion in the most likely scenario, according to a 2005 World Bank study led by Kym Anderson, which estimated the likely effects of a Doha Round trade agreement.

However, various studies estimating the welfare effects of multilateral agricultural trade liberalisation – including Anderson et al. – suggest significant net losses, not gains, for SSA.

Gains from agricultural trade liberalisation would largely accrue to existing major agricultural exporters – mainly from the Cairns Group – not SSA.

Nevertheless, the World Bank and others continued to insist that trade liberalisation would benefit all developing countries, including SSA, although most studies indicated otherwise.

WTO trade rules have reduced the policy space for developing countries – especially in industrial, trade, or investment policy – although some claim that room for industrial policy remains.

African governments were told that a Doha Round deal would reduce agricultural subsidies, import tariffs and non-tariff barriers by rich nations, especially in Europe.

But the neglect of both physical and economic infrastructure over two decades of structural adjustment programmes left little effective capacity to respond to new export opportunities.

Worse still, trade liberalisation of manufactured goods also undermined nascent African industrialisation.

African market access to rich, mainly European, markets was secured through negotiated preferential agreements, rather than trade liberalisation. Hence, further multilateral trade liberalisation would erode these modest gains.

Additionally, most African governments – particularly those of poorer economies with limited government capacities – were unable to replace lost tariff revenues with new taxes.

African losses foretold
What was Africa expected to gain from a Doha Round deal?

Thandika Mkandawire warned the WTO trade regime would make Africa worse off, especially without preferential treatment from the European Union under the Lomé Convention.

Anderson et al. claimed SSA would gain substantially as “farm employment, the real value of agricultural output and exports, the real returns to farm land and unskilled labor, and real net farm incomes would all rise substantially in capital scarce SSA countries with a move to free merchandise trade”.

To be sure, the modest gains from trade liberalisation would be ‘one-time’ improvements projected by the models used.

Anderson et al. claimed that SSA, excluding South Africa, would gain US$3.5 billion, compared to roughly US$550 billion worldwide.

These projected gains of less than one per cent of its 2007 output were nonetheless much more than the tenth of one per cent for all developing countries!

World Bank structural adjustment programmes undermined the limited competitiveness of African smallholder agriculture. However, their projections ignored the reasons why African food agriculture declined after the 1970s.

Meanwhile, the agricultural exports of wealthy nations have benefited from higher production subsidies, which more than offset lower export subsidies. However, reducing agricultural subsidies would likely lead to higher prices of imported food.

Uneven effects
Uneven and partial trade liberalisation and subsidy reduction will have mixed implications. These effects vary with national conditions, including food imports and share of consumer spending.

Earlier estimates for all developing countries obscured the likely impacts of trade liberalisation on Africa. The one-time welfare improvement for SSA, excluding most of Southern Africa, would be three-fifths of one per cent by 2015!

With deindustrialisation accelerated by structural adjustment, Sandra Polaski estimated that SSA, excluding South Africa, would lose US$122 billion from Doha Round trade liberalisation.

Although former World Bank economists agreed the lost decades were due to Bank structural adjustment programmes, these were reimposed a decade ago.

SSA, excluding South Africa, would lose US$106 billion to agricultural trade liberalisation. Poor infrastructure, export capacities and competitiveness in both SSA industry and agriculture were responsible.

Most of the poorest and least developed SSA countries were likely to be worse off in all ‘realistic’ Doha Round outcome scenarios.

With more realistic model assumptions – e.g., allowing for unemployment – Lance Taylor and Rudiger von Arnim found SSA would not gain, on balance, from trade liberalisation.

Mainstream international trade theory cannot justify trade liberalisation for SSA. Worse, ‘new trade theories’ and evolutionary studies of technological development suggest trade liberalisation would permanently slow growth.

Export growth?
As economic growth typically precedes export expansion, trade can foster a virtuous circle but cannot trigger it.

Specifically, a weak investment-export nexus hinders export expansion and diversification, as rapid resource reallocation is unlikely without high investment and sustained growth.

Citing the World Bank, Mkandawire noted Africa’s export collapse in the 1980s and 1990s meant “a staggering annual income loss of US$68 billion – or 21 per cent of regional GDP”!

For Dani Rodrik, Africa’s ‘marginalisation’ was not due to its trade performance, although poor by international standards. Gerald Helleiner has emphasised, “Africa’s failures have been developmental, not export failure per se”.

With its geography and income, Africa probably trades as much as can be expected. Indeed, “Africa overtrades compared with other developing regions in the sense that its trade is higher than would be expected from the various determinants of bilateral trade”!

Vulnerable Africa
The Doha Round of WTO negotiations effectively ended over a decade ago as the backlash in wealthy nations – against globalisation and its consequences – gained momentum.

Meanwhile, trade liberalisation – as part of structural adjustment programmes – deepened SSA deindustrialisation and food insecurity.

With Africa unevenly integrated by economic globalisation, most of the continent exports little to the USA, making it less of a target of Trump’s tariffs.

Nevertheless, trade liberalisation has made developing economies more vulnerable to and unprotected from the recent weaponisation of tariffs and other economic measures.

Last month’s expiration of the African Growth and Opportunity Act (AGOA) prompted some African leaders to scramble for an extension.

US AGOA imports in 2023 totalled US$10 billion, accounting for high shares of some countries’ exports. Tariff imposition will exacerbate problems due to AGOA’s demise.

Meanwhile, there have been great expectations for the African Continental Free Trade Area (AfCFTA). Still, regional trade integration may not be very beneficial, as SSA exports are more competitive than complementary.

K. Kuhaneetha Bai studied at the University of Malaya and does policy research at Khazanah Research Institute.

IPS UN Bureau

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US President Trump’s snide barbs against his appointee, US Federal Reserve Bank Chairman Jerome Powell, have revived support for central bank independence – long abused by powerful finance interests against growth and equity.

Jomo Kwame Sundaram

Independent of whom?
Central banks were established to determine monetary policy to shape financial conditions to achieve national economic objectives.

In recent decades, the new conventional policy wisdom has been that independent central banks should set monetary policy. Thus, they have been influenced by powerful financial interests, typically foreign, in smaller, open developing countries.

In the last half-century, many governments have changed laws under the influence of international finance to legislate central bank independence from governments of the day, especially the executive and legislative branches.

Meanwhile, most central banks have come to equate financial stability with price stability as ‘inflation targeting’ became the leading policy fetish.

When inflation rises, central banks raise interest rates, which reduces economic activity. However, some central banks of open economies, especially those pegging to major international currencies, target the exchange rate.

Thus, reducing inflation by conventional means worsens contractionary pressures. Many governments now face the threat of ‘stagflation’, i.e., recession with inflation. Central banks recognise this trade-off regarding how much growth has to decline for inflation to fall.

With interest rate management as their primary policy tool, central banks may raise interest rates in anticipation of inflation, despite its adverse consequences for growth, income and employment.

Such contractionary effects have reduced wages and jobs worldwide. Only a few, mainly large developed economies, have had other priorities, such as growth or employment.

Ironically, the end of the Bretton Woods fixed exchange rates regime and the counter-revolution against Keynesian economics from the late 1970s ensured the irrelevance of Milton Friedman’s monetarist emphasis on central banks’ money supply targeting.

Worsening inequity
Central banks worldwide respond to and anticipate inflation by raising interest rates to curb inflation.

‘Inflation targeting’ causes significant collateral damage, typically reducing growth, income and employment. Poor households’ incomes are likelier to fall, especially with labour-displacing technological change, such as mechanisation, automation, and artificial intelligence (AI) applications.

As unemployment increases, poor workers are more likely to lose jobs, especially hurting poorer families. Banks have typically profited handsomely from such situations, although most people are worse off.

With lending rates rising, banks get even more interest as borrowing rates lag, not increasing as much. Max Lawson cites an IMF study finding that the adverse effects of higher interest rates are “not counterbalanced by the positive effects of lower interest rates.”

The US Fed strongly influences central banks worldwide. Higher Fed interest rates from 2023, in response to minor inflationary pressures, have hurt developing countries, especially the poorest.

As most Global South companies and governments have incurred dollar-denominated debt, countries’ central banks raised interest rates to deter capital outflows.

Quantitative easing
‘Quantitative easing’ (QE) refers to central bank interventions buying financial assets. Such interventions were sought as it is difficult for central banks to cut interest rates below zero to revive economies. QE seemed to fit the bill.

Commercial banks typically get more for their deposits with the central bank when it raises interest rates. Thus, they receive considerable additional windfall interest payments from the central bank risk-free.

QE programmes seek to raise asset prices. Central banks buy assets such as government debt, inducing private investors to acquire riskier assets. US government debt is still the most important financial asset in the international monetary system.

Thus, QE tries to induce growth, presuming earlier contractionary policies will continue to curb or ‘moderate’ inflation. This has even been justified as prudent, as inflation rates were below target despite interest rates near zero.

Major Western central banks adopted QE following the 2008-09 global financial crisis. Many governments spent even more in response to the COVID-19 pandemic from 2020.

Such efforts sought to counter the downward spiral of falling financial asset prices. The US Fed’s QE intervention involved ‘portfolio rebalancing’. It bought over $600 billion in US Treasury bonds and almost $300 billion in mortgage-backed securities.

Wealth is concentrated in relatively few hands in most societies. Jordi Bosch showed the top ten per cent holding 11 times more wealth than the bottom half in the euro zone, while the bottom fifth had more debt than assets.

QE interventions increase financial asset prices, enriching owners, especially the rich, who have more assets. As prices rise, their worth generally increases. Hence, such central bank interventions further enrich the already wealthy.

As the world struggles to cope with challenges posed by the current conjuncture, we must not jump out of the frying pan back into the fire kindled by central bank independence.

IPS UN Bureau

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Greenhouse gas (GHG) emissions have risen over the last two centuries, with current and accumulated emissions per capita from rich nations greatly exceeding those of the Global South.

Tropical vulnerability
The last six millennia have seen much higher ‘carrying capacities’, soil fertility, population densities, and urbanisation in the tropics than in the temperate zone.

Jomo Kwame Sundaram

Different environments, geographies, ecologies and means affect vulnerability to planetary heating. Climate change’s effects vary considerably, especially between tropical and temperate regions.

Extreme weather events – cyclones, hurricanes, or typhoons – are generally much more severe in the tropics, which are also much more vulnerable to planetary heating.

Although they have emitted relatively less GHGs per capita, tropical developing countries must now adapt much more to planetary heating and its consequences.

Many rural livelihoods have become increasingly unviable, forcing ‘climate refugees’ to move away. Increasing numbers in the countryside have little choice but to leave.

Worse, economic and technological changes of recent decades have limited job creation in many developing countries, causing employment to fall further behind labour force growth.

Unequal development has also worsened climate injustice. Adaptation efforts are far more urgent in the tropics as planetary heating has damaged these regions much more.

Technological solutions?
While science may offer solutions, innovation has become increasingly commercialised for profit. Previously, developing countries could negotiate technology transfer agreements, but this option is becoming less available.

Strengthened intellectual property rights (IPRs) limit technology transfer, innovation, and development. The World Trade Organization (WTO) greatly increased the scope of IPRs in 1995 with its new Trade-Related Intellectual Property Rights (TRIPS) provisions.

Thus, access to technology depends increasingly on ability to pay and getting government permission, slowing climate action in the Global South. Financial constraints doubly handicap the worst off.

Despite rapidly mounting deaths due to the unprecedented COVID-19 pandemic, European governments refused to honour the West’s public health exception (PHE) concession in 2001 to restart WTO ministerial talks after the 1999 Seattle debacle.

Instead of implementing the TRIPS PHE as the pandemic quickly spread, Europeans dragged out negotiations until a poor compromise was reached years after the pandemic had been officially declared and millions had died worldwide.

With the second Trump administration withdrawing again from the World Health Organization (WHO) and cutting research funding, tropical threats will continue to dominate the WHO list of neglected diseases.

Climate finance inadequate
Citing the 2008 global financial crisis (GFC), rich nations claimed they could only afford to contribute a hundred billion dollars annually to climate finance for developing countries in line with the sustainable development principle of ‘common but differentiated responsibility’.

This hundred-billion-dollar promise was made before the 2009 Copenhagen Conference of the Parties (COP) to secure support for a significant new climate agreement after the US Senate rejected the Kyoto Protocol before the end of the 20th century.

Rich nations promised to raise their concessional climate finance contributions from 2020 after recovery from the recession following the GFC. However, official development assistance has declined while military spending pledges have risen sharply.

The rich OECD nations now claim that the hundred-billion-dollar climate finance promise has been met with some new ‘creative accounting’, including Italian government funding support for a commercial gelateria chain abroad!

In recent climate finance talks, Western governments increasingly insist that only mitigation funding should qualify as climate finance, claiming adaptation efforts do not slow planetary heating.

Meanwhile, reparations funds for ‘losses and damages’ remain embarrassingly low. Worse, in recent years, much of the West has abandoned specific promises to slow planetary heating.

Despite being among the greatest GHG emitters per capita, the USA has made the least progress. The two Trump administrations’ aggressive reversals of modest earlier US commitments have further reduced the negligible progress so far.

In late 2021, the Glasgow climate COP pledged to end coal burning for energy. But less than half a year later, the West abandoned this promise to block energy imports from Russia after it invaded Ukraine.

Concessional to commercial finance
Responding to developing countries’ demands for more financial resources on concessional terms to achieve the Sustainable Development Goals (SDGs) and address the climate crisis, World Bank president Jim Kim promoted the ‘from billions to trillions’ financing slogan.

The catchphrase was used to urge developing countries to take much more commercial loans as access to concessional finance declined and borrowing terms tightened.

With lower interest rates in the West due to unconventional monetary policies following the 2008 GFC, many developing nations increased borrowing until interest rates were sharply raised from early 2022.

Funds leaving developing countries in great haste precipitated widespread debt distress, especially in many poorer developing countries. Thus, purported market financial solutions compounded rather than mitigated the climate crisis.

Meanwhile, growing geopolitical hostilities, leading to what some consider a new Cold War, are accelerating planetary heating and further threatening tropical ecologies, rural livelihoods, and well-being.

IPS UN Bureau

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The Global South had little voice, let alone influence, in shaping the economically ‘neoliberal’ and politically ‘neoconservative’ globalisation leading to contemporary geopolitical economic conflicts. Pacifist non-aligned cooperation for sustainable development offers the best way forward.

Jomo Kwame Sundaram

The Association of South-East Asian Nations (ASEAN) was established in 1967 by anti-communist governments of the region. In 1973, its leaders agreed the area should be a Zone of Peace, Freedom, and Neutrality (ZOPFAN).

The world was deemed unipolar American discourse after the first Cold War. Meanwhile, most of the Global South remained non-aligned in what the Rest see as a multipolar world.

Despite critical dissent, the West seems to have lost interest in preserving peace. Unsurprisingly, the US and its NATO allies increasingly ignore the United Nations. Foreign military interventions since the first Cold War already exceed the many of that longer era.

During World War II, military production generated growth and employment in Germany, Japan and the US. But surely, development today is best achieved peacefully and cooperatively.

Pacifist non-alignment should cut unnecessary military spending. Although big powers compete for hegemony by weaponising international relations, they will still try to ‘buy’ support from the non-aligned.

Realistically, most small developing nations cannot lead international peace-making. But they can and should be a stronger moral force urging justice, peace, freedom, neutrality, development, and international cooperation.

Return of the Global South
The Group of 77 (G77) developing countries’ caucus and the UN Conference on Trade and Development (UNCTAD) were both established in 1964. Headquartered in Geneva, UNCTAD is part of the UN Secretariat but has been steadily marginalised.

The G77 has a formal presence throughout the UN multilateral system. It now has over 130 members, including China, but its impact outside New York in recent decades has been limited.

Sustainability challenges and planetary heating are generally worse in the tropics, where most people in developing countries are. Meanwhile, hunger worldwide has worsened since 2014, while World Bank-reported income poverty has risen since the COVID-19 pandemic.

An inclusive and equitable multilateralism can better address the world’s challenges, especially peace and sustainable development – so crucial for progress in our dark times.

Global South needs better voice
While working for Goldman Sachs, Lord Jim O’Neill referred to Brazil, Russia, India, and China as the BRIC countries.

With South Africa joining, ostensibly representing Africa, they soon began meeting regularly. As members of the G20 group of the world’s twenty largest economies, the BRICS initially lobbied on financial issues.

They have since incorporated other large economies of the South, but also incurred the wrath of President Trump. While some nations have sought to join the enlarged BRICS plus (BRICS+), a few have hesitated after being invited.

BRICS has no record of strong and consistent advocacy of the interests of smaller developing economies. Most financially weak small nations doubt that BRICS+ will serve them well.

Higher US interest rates have triggered massive capital inflows, especially from the poorest countries, depriving them of finance at a time of greater need.

Meanwhile, aid levels have fallen tremendously, especially with Trump 2.0. Official development assistance (ODA) to the Global South is now below 0.3% of GDP, less than half the 0.7% commitment made in 1969.

Lowering tax rates has further squeezed the West’s already limited budgetary resources as stagnation deepens. Trump’s tariffs, US expenditure cuts, and greater Western military spending deepen worldwide economic contraction.

Non-alignment for our times
The Global South must urgently promote a new non-alignment for multilateral peace, development, and international cooperation to address Third World challenges better.

Even IMF number two, Gita Gopinath, agrees that developing countries should opt for non-alignment to benefit from not taking sides in the new Cold War.

With the exception of Brazil’s Lula, leadership by statesmen with international standing beyond their national stature largely passed with Nelson Mandela.

A few dynamic new leaders have emerged, but have not taken on the responsibilities of Global South leadership. Such leadership is in short supply despite the urgent need.

It is much easier to revive, reform, and reinvigorate NAM than to start from scratch. Although it has been less influential in recent decades, it can be revitalised.

Also, foreign policies are typically less subject to other typical national domestic policy considerations. Hence, they do not vary as much with the governments of the day.

Also, most developing country governments must appear to protect national interests to secure political support and legitimacy for survival.

Hence, conservative, even reactionary governments may take otherwise surprising anti-hegemonic positions in multilateral fora, especially with growing widespread resentment of bullying for extortion.

IPS UN Bureau

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The accumulation of still growing greenhouse gas emissions (GHG) in an increasingly unequal world is accelerating planetary heating. It is also worsening disparities, especially between the rich and others, both nationally and internationally.

Unequal emissions
In our grossly unequal world, international disparities account for two-thirds of overall income inequalities. National income aggregates and averages can mislead by obscuring significant disparities within countries.

Jomo Kwame Sundaram

The World Inequality Report argues that GHG emission disparities are mainly due to inequalities within countries. Meanwhile, GHG emissions continue to grow as their accumulation accelerates planetary heating.

Emissions disparities within nations now account for almost two-thirds of worldwide emissions inequality, nearly doubling from slightly over a third in 1990.

The bottom halves of rich country populations are already at – or close to – the 2030 per capita carbon dioxide equivalent emission targets set by their governments. Yet North America’s wealthiest 10% or decile are the world’s biggest GHG emitters.

Their average emissions are 73 times those of the bottom half of the South and Southeast Asian populations! The East Asian rich also emit high GHGs, but much less than in North America.

The bottom halves of their populations emit nearly ten tons per capita yearly in North America, around five tons in Europe, and about three tons in East Asia.

The much smaller carbon footprints of most of the Global South contrast with the GHG emissions of the top deciles in their own countries and those of the wealthiest 10% in poorer regions.

The top deciles in South and Southeast Asia emit more than double the GHG emissions of Europe’s lower half. Even sub-Saharan Africa’s top decile emits more than Europe’s lower half on average.

Inequality drives emissions
Jayati Ghosh, Shouvik Chakraborty and Debamanyu Das argue that inequality has been driving increases in GHG emissions. While the bottom halves in the US and Europe reduced per capita emissions by 15-20% between 1990 and 2019, the top 1% increased theirs.

The world’s top decile alone accounts for almost half of GHG emissions. As the wealthy become even richer, their adverse environmental impacts increase.

Despite misleading rhetoric, most carbon taxation is not progressive, typically burdening middle- and low-income groups much more than those most responsible, the rich.

Policies to cut GHG emissions must curb excessive consumption by the rich as well as ‘extractivist’ production worldwide to meet their demands.

Profits trump public interest
Meanwhile, transnational corporations and Western governments have refused to honour the public health exception (PHE) to the World Trade Organization (WTO) intellectual property (IP) rights agreement, TRIPS.

The PHE compromise was agreed to in 2001 to resume WTO trade negotiations at its Doha inter-ministerial meeting after the aborted Seattle conference in 1999.

But then, rich nation governments blocked developing countries’ requests for a PHE waiver to urgently produce enough affordable tests, treatments, equipment and vaccines for the duration of the COVID-19 pandemic.

Hence, it is unlikely significant IP concessions will be forthcoming to boost developing countries’ efforts to mitigate and adapt to effectively address planetary heating.

The sources of global warming are local, while planetary heating is worldwide, albeit uneven. Effective coping policies and measures are costly and generally more burdensome to the poor and middle classes.

Alternative arrangements can enable greater equity and sustainability. However, mobilising more concerted and effective resistance to planetary heating has proved very difficult.

Climate injustice
Historical accumulation of GHG emissions is the leading cause of planetary warming. Developed countries were responsible for almost four-fifths of cumulative GHG emissions from 1850 to 2011.

Meanwhile, their adverse impacts on developing countries in the tropics are worse. The Global South is also less able to cope due to limited policy space and means.

‘Net-zero’ commitments by countries do not acknowledge the huge climate burden imposed by past GHG accumulation, thus undermining prospects for a just transition.

In international negotiations, wealthy economies have evaded historical responsibility for ‘climate debt’ by focusing on contemporary emissions and ignoring their accumulation over the last two centuries.

Ignoring this historical climate debt also serves to legitimise ignoring compensation for those most adversely impacted in low- and lower-middle-income countries, who have already suffered extensive damage and losses.

This pretence is not only unfair, but also counterproductive. It has undermined the international solidarity and cooperation needed to cope with planetary heating.

Breaching threshold
Current rich nations’ projected emissions will use up three-fifths of the remaining global warming threshold for the world’s ‘carbon budget’ until 2050, so as not to exceed the 1.5°C addition to pre-industrial levels!

However, the most optimistic recent Intergovernmental Panel on Climate Change (IPCC) scenario expected the 1.5°C threshold to be crossed by 2040!

But even before US President Trump re-accelerated planetary heating after his re-election, then UN Special Envoy and now Canadian Prime Minister Mark Carney warned this threshold would be breached by the end of this decade!

IPS UN Bureau

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US President Trump has successfully used tariff threats to achieve economic, political and even personal goals. These threats, reminiscent of colonialism, have secured submission and concessions.

Jomo Kwame Sundaram

After hearing the 2024 US elections, Indonesian President Prabowo Subianto respectfully stood up in his Jakarta office to call to congratulate the winner.

Trump bragged about his tariff offer to Indonesia in mid-July 2025, flattering its president profusely. After hesitating initially, former General Prabowo had agreed to join BRICS, despite Trump’s clear disapproval.

“I spoke to their really great president, very popular, very strong, smart. And we made the deal. We will pay no tariffs…they are giving us access to Indonesia … the other part is they are going to pay 19% and we are going to pay nothing.”

An Indian commentator noted, “Those words say it all. This deal is clearly one-sided, and it should bother the whole world.” Americans, not Indonesians, will pay tariffs on imports from Indonesia.

The US is Indonesia’s second-largest export market, importing apparel, palm oil, footwear, and cosmetics. Initially, Trump had threatened a 32% tariff on such imports.

This has been reduced to 19%, still almost four times more than last year! In 2024, Indonesian exports to the US were taxed at 5% on average. The Indonesian president has not complained but instead seemed relieved.

Nadia Malyanah Azman

Indonesia will lose not only exports, but also growth and jobs. As Trump loves to brag, he added insult to injury as he could not resist reiterating: “They will pay 19%, and we will pay nothing.”

Guaranteed sales
Indonesia will also buy $15 billion of US oil and gas, $4.5 billion of farm produce, and 50 Boeing jets. But the 2019 Lion Air plane tragedy, which the US plane manufacturer quickly blamed on Indonesian pilots, is still alive in the national memory.

Boeing’s reputation worldwide has not recovered from the investigation into the Nairobi air crash involving the same plane model, which led to its grounding.

Indonesia is among the US’s top 25 trade partners. The deal secures American access to the Indonesian market, allowing US goods to be sold tariff-free.

Last year, Indonesia shipped $28 billion worth of goods to the US. Higher tariffs are now expected to cut Indonesian exports by a quarter, GDP growth by 0.3%, and many jobs!

Other Southeast Asian lessons?
The Philippines’ Marcos II government is the most pro-US in Southeast (SE) Asia, hosting 11 American military bases.

Yet it was the only one without a US tariff offer before Secretary of State Rubio’s SE Asian visit earlier this month. The Philippines has since been offered a new US trade deal with the same 19% tariff rate despite its loyalty to Washington.

Loyal long-term support for the US, 11 military bases and serving as an additional ‘unsinkable aircraft carrier’ just south of Taiwan did not secure a better trade deal for the other archipelagic nation in SE Asia.

Trump wants trade deals even more favourable to the US than existing ones. With deadlines passing, the US is expected to announce more trade deals.

The tariff threats have been more effective for Trump, thanks to decades of trade liberalisation forced on the Global South, undermining earlier import-substituting industrialisation and food security measures.

Washington has already revised earlier demands, sometimes not just once, but typically to the chagrin of US trade partners. Vietnam’s Communist Party leader was initially thought to have negotiated a better deal than other SE Asian governments.

Lessons for others?
Will the US offer to Indonesia become a template for others? Or even for countries of comparable significance in the world economy? Nobody knows Trump’s strategy, let alone how it may still change.

Perhaps it begins with the threat of high tariffs, shock and awe. Then, a less painful deal is offered, dressed up as a concession.

This may be worse than the status quo ante, but it still seems preferable to the original threat. Nations will also be required to buy US goods that may not be needed or offer the best value for money.

Thus, US offers to SE Asia are being studied worldwide for lessons on better negotiating with Washington. Meanwhile, the US refuses to negotiate collectively except with the European Union.

All over the world, policymakers will continue to debate Trump’s tariff war strategy after Monday’s agreement in Scotland, which included a 15% baseline tariff on most EU exports to the US.

The US-EU deal makes clear the West, including Europe, has never really been committed to a rules-based international order, including multilateral trade liberalisation.

As American buyers pay the tariffs, imported goods become more expensive. US trading partners will lose exports, related growth and jobs. This will mean less expansion, employment and exports worldwide, accelerating stagnation.

Meanwhile, most SE Asian governments believe they have little choice but to continue negotiating with the US, which is driving them to others willing to engage them on more favourable, if not fairer, terms.

IPS UN Bureau

 

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Trump’s billionaire cronies want more monopoly profits, not competition. With more policies crafted for them, wealth concentration is set to become greater than ever.

Jomo Kwame Sundaram

Some demand market competition and oppose monopolies and oligopolies. For others, property rights are crucial, typically strengthening monopoly rights.

Many avowed neoliberals deemphasise competition and hesitate to insist on antitrust action or opposition to abuses of market power.

Property rights confer monopoly or exclusive ownership rights to an asset, typically denying access to others except for payment. Many such rights are recent.

While UK Prime Minister from 1979, Margaret Thatcher triggered a worldwide neoliberal economic counter-revolution, especially in the Anglosphere.

With generally more limited public ownership, the US economy has long been more ‘private’, offering little scope for privatisation.

Tech Big Bro
PayPal and Palantir founder Peter Thiel is the most influential of the so-called ‘tech bros’ supporting re-elected US President Donald Trump.

Thiel was the two-term president’s biggest funder for his unexpectedly successful 2016 campaign. As former boss, funder and mentor, he is now Vice President JD Vance’s godfather.

In 2014, Thiel’s ‘Competition is for Losers’ established him as the lead apologist for lucrative rentier monopolies, especially those invoking intellectual property rights (IPRs).

Thiel noted ‘perfect competition’ is “both the ideal and the default state in Economics 101”. In textbooks, firms in competitive markets are presumed to be similar, selling the same goods.

Hence, they have no ‘market power’ and must sell at market-determined prices. When demand rises, firms invest to increase supply, reducing prices and profits.

In mainstream economics, there can be no economic rent under perfect competition. But prices can be raised more easily in cornered markets.

Buyers will then have no other source to buy from. Without competition, monopolies can maximise profits by controlling market supplies and prices.

Hence, profit maximisation involves capturing more rents in monopolistic conditions. To become richer, firms eschew competition in favour of monopoly.

Government role contradictory
Tech ‘Big Brother’ Thiel notes, “To an economist, every monopoly looks the same, whether it deviously eliminates rivals, secures a license from the state or innovates its way to the top.”

The state’s role is contradictory as government “works hard to create monopolies (by granting patents to new inventions)” while enforcing antitrust law to undermine them.

Thiel claims to be uninterested in “illegal bullies or government favorites”, but surely knows governments create and sustain the monopolies he so cherishes.

He notes that “Americans mythologize competition and credit it with saving us from socialist bread lines”. But for him, “capitalism and competition are opposites”.

“Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away.”

The advocate of monopoly claims monopolists are “incentivized to bend the truth” and to “lie to protect themselves … [from] … being audited, scrutinized and attacked”.

Thiel unabashedly acknowledges that rentiers have every incentive to protect, disguise and “conceal their monopoly” and incomes.

Instead, the billionaire rentier wants monopoly powers and profits to grow faster without being taxed or having to share.

Monopoly best for capitalism?
Thiel acknowledges that monopolists accumulate rents in a static world.

But he insists they “invent new and better things … Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better.”

He insists a monopoly is “so good at what it does that no other firm can offer a close substitute”. For him, “the history of progress is a history of better monopoly businesses replacing incumbents”.

The tech billionaire insists decades of monopoly profits provide a powerful incentive to innovate. Thus, monopolies continue to drive progress.

He denounces mainstream neoliberal economists as “obsessed with competition as an ideal state? It is a relic of history … Their theories describe … perfect competition because that is what’s easy to model.”

“In the real world outside economic theory, every business is successful exactly to the extent that it does something others cannot … Monopoly is the condition of every successful business.”

Monopolies thrive under Trump
Unsurprisingly, many supposed neoliberals today stress property rights while ignoring liberal economics’ claim to promote competition.

Competition is dismissed as 19th-century economic liberalism. Meanwhile, contemporary monopoly capitalism accelerates wealth and income concentration.

But Thiel exaggerates monopolies’ contribution to human progress, capitalist dynamism and innovation, while understating their considerable harms.

With the tech bros increasingly supporting the president, Trump 2.0 promises to further enrich rentiers, especially those of their ilk.

His selective Liberation Day tariffs and other policies, especially his new ‘big beautiful bill’, will significantly increase, not reduce, US government debt while deepening American fiscal inequities.

As US tariffs, wars and other distractions preoccupy the world, unwitting MAGA loyalists remain loyal to Trump and his billionaire rentiers’ ‘counter-revolution’.

IPS UN Bureau

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President Trump’s tariffs have exposed neoliberal trade ideology and undermined corporate lobbying in the name of free trade. But his rhetoric has also exposed the fallacies of his own economic strategy.

Ideological shift?
To be sure, there has never really been an era of truly free trade in centuries. International trade has typically been partially and unevenly free and, more often than not, regulated.

Jomo Kwame Sundaram

Trump’s tariffs claim to revive manufacturing jobs, which the US has lost to cheaper imports. But employment lost to automation will be almost impossible to regain. Worse, his tariffs will regressively tax US consumers.

Free trade does not help selective investment and technology promotion. Biden sought to promote new industries, often at high cost, with his Inflation Reduction Act, CHIPS and Science Act, and other industrial policy measures.

However, these have been undermined by Trump’s insistence on repudiating earlier administrations’ initiatives and cutting non-military government spending even when they serve his ostensible strategic ends.

With tariffs, his main policy weapon in his bullying transactional approach to exclusively bilateral bargaining, Trump’s reindustrialisation ambitions may only partially succeed.

His refusal to bargain collectively enhances the US advantage in such asymmetric negotiations. Others anxious to curry favour have already conceded excessive concessions, even exceeding Washington’s expectations!

The fates of the worst-off thus only worsen, generating widespread resentment and antagonism. But few tangible gains are likely from the weakest, except for mineral concessions.

Bretton Woods over
In the 1960s, French President Charles de Gaulle complained the 1944 Bretton Woods agreement (BWA) had given the US an ‘exorbitant privilege’. The price of an ounce of gold was set at $35.

This peg allowed the US to borrow cheaply from those who needed US dollars. Selling US Treasury bonds to the world thus closed both its current account (trade) and fiscal deficits.

Pressure on the greenback rose over the 1960s, especially with sharply rising Vietnam War spending. France then led others to demand gold instead of holding dollars.

In August 1971, President Nixon unilaterally repudiated the US’s BW obligation to redeem gold at the promised dollar price. But this did not end the US’s exorbitant privilege.

The US allowed the Saudi-led OPEC to raise the oil price if payments were in dollars. The petroleum price hike also set back its emerging European and Japanese industrial rivals.

Since 1971, US dollar acceptance has relied on the belief that it will continue as the international reserve currency. Thus, exorbitant privilege has become a matter of faith.

Ironically, while Eurodollars had undermined the BWA, petrodollars saved the dollar’s reserve currency status and exorbitant privilege, with oil becoming the ‘new gold’.

Neoliberal trade myths
Half a century of neoliberal trade rhetoric has claimed ‘trade liberalisation’ benefits all, e.g., free trade lifts all boats, its leading myth.

Although this has not even been true of the Global North, it has not deterred economic policy pundits from advocating free trade agreements with the US as the solution to Trump’s tariffs!

But even trade mahaguru Jagdish Bhagwati insists that only an equitable multilateral trade agreement can lift all boats. He denounced bilateral, regional, and other plurilateral agreements as termites detracting from it.

The most popular computable general equilibrium (CGE)-based trade simulations assume unchanging full employment, trade, and fiscal balances.

Such estimates of free trade gains are misleading, as their methodologies typically ignore trade liberalisation’s significant problematic effects, such as output and job losses and trade and fiscal imbalances.

Unsurprisingly, cost-benefit studies by the World Bank and others projected net losses for most of the Global South from the 2001 Doha Round of World Trade Organization (WTO) negotiations.

False narratives
Trump’s ‘shock and awe’ Liberation Day announcement brought much of the world to heel in one fell swoop. As the president bragged, scores of governments rushed to “kiss his arse”.

However, Trump’s priorities, especially his proposed tax cuts, the changing world political economy, and the diverse nature of US interests, will erode public support for his agenda.

Trump’s policy narrative is unashamedly incoherent and self-contradictory. The Financial Times noted, “The US president wants both to protect domestic manufacturing and hold the dollar as the reserve currency.”

Self-servingly dismissive of received conventional wisdom, his jingoistic rhetoric and self-congratulatory style successfully target his faithful with cherry-picked evidence and half-truths.

Even if Trump’s tariffs fail on his own terms, he can still claim to have tried to make America great again. He will continue to blame opposition within and without to secure his jingoist MAGA base.

IPS UN Bureau

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Wars, economic shocks, planetary heating and aid cuts have worsened food crises in recent years, with almost 300 million people now threatened by starvation.

Jomo Kwame Sundaram

Clearly, inadequate food due to population growth cannot explain persistent hunger. Yet, the number of hungry people has been rising for more than a decade. So, why are so many hungry if there is more than enough food for all?

The multi-stakeholder 2025 Global Report on Food Crises (GRFC) notes 2024 was the sixth consecutive year of high and growing acute food insecurity, with 295.3 million people starving!

In 2023, 733 million people experienced chronic hunger. Over a fifth (22.6%) of the 53 countries/territories assessed in this year’s GRFC were especially vulnerable.

Food output in 2024 continued to rise. In 2022, the world produced 11 billion metric tonnes of food, including 9.6 billion tonnes of cereal crops, such as maize, rice and wheat.

Most hungry people are poor. The poverty line is supposed to reflect the poor’s ability to afford basic needs, mainly food. But the discrepancy between poverty and hunger trends implies inconsistent data and definitions.

Nadia Malyanah Azman

Over 700 million worldwide survive on less than $2.15 daily without enough food. Presumably, the 3.4 billion with less than $5.50 daily can barely afford enough nutrition.

New World Bank data estimates 838 million, 10.5% of the world’s population, were in extreme poverty in 2022, 125 million more than previously estimated. It expects one in ten (9.9%) to be in extreme poverty in 2025, with about 750 million hungry.

The extreme poverty line is now $3/day instead of $2.15/day. The poor comprised almost half (48%) the world’s population in 2022. With bleak medium-term growth prospects and inequality still growing, their prospects look especially dismal.

While dietary or caloric energy is essential for human activity, adequate dietary diversity is crucial for human nutrition. Hence, the poor typically cannot afford to eat enough, let alone healthily.

Women and girls are generally more likely to go hungry than men, with hunger rates in women-headed households usually higher. UN-recognized ‘indigenous peoples’ are under 5% of the world’s population but account for 15% of the extreme poor, suffering more hunger than others.

Why food crises?
The multi-stakeholder 2025 Global Report on Food Crises (GRFC) notes 2024 was the sixth consecutive year of high and growing acute food insecurity, with 295.3 million people starving!

Worsening conflicts, economic crises, deep funding cuts and less humanitarian assistance all threaten food security. As planetary heating worsens, those experiencing acute food insecurity will likely increase again this year.

Food insecurity has worsened in 19 countries/territories, mainly due to internal conflicts, as in Myanmar, Nigeria, and the Democratic Republic of the Congo.

Even before the aid cuts, half the countries/territories featured in GRFC 2025 faced food crises. Despite La Niña rains, droughts in Ethiopia, Kenya, Somalia, Afghanistan and Pakistan are expected to worsen.

USAID and other recent aid cuts have defunded food programmes for over 14 million children in Sudan, Yemen and Haiti alone. G7 countries are expected to cut aid by 28% in 2026 from 2024. Meanwhile, the GRFC 2025 reported humanitarian food assistance “declined by 30 percent in 2023, and again in 2024”!

In 2024, 65.9 million in Asia were food insecure, the worst in the Middle East and North Africa (MENA). Food crises threatened 33.5 million, or 44% of those in the eight MENA territories assessed in GRFC 2025.

Starvation as weapon
The number of starving people more than doubled in 2024! Over 95% of this increase was in the Gaza Strip or Sudan. Wars destroy and disrupt food production and distribution. A famine was declared in Sudan in December 2024, with more than 24 million starving due to the civil war.

Sudan has the largest land area for farming in Africa. Two-thirds of Sudan’s population relies on agriculture, but the ongoing conflict has caused the destruction and abandonment of much farmland and infrastructure.

Despite the Sudanese military’s devastating factional war, the country remains the world’s largest exporter of oily seeds (groundnuts, safflower, sesame, soybean, and sunflower), reflecting its agronomic potential.

Many more are starving in Haiti, Mali, and South Sudan. The UN’s Integrated Food Security Phase Classification (IPC) deems such starvation, death, destitution and severe acute malnutrition “catastrophic”.

Food deprivation has become the primary Israeli weapon against the people of Gaza. Gaza’s 2.1 million Palestinians have been at “critical risk” of famine due to the Israeli blockade on food and humanitarian aid since October 2023!

Despite official Israeli denial of mass starvation, growing international outrage, including from some of its staunchest allies, has forced the Netanyahu government to gloss over its actions. In May, it set up the Gaza Humanitarian Foundation to “calibrate” calorie rations to continue starvation but not to death.

IPS UN Bureau

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With two-fifths of the world economy, East Asia can inspire others by creatively responding to the US President’s tariff challenge by promoting fair, dynamic and peaceful regional cooperation.

No winners in economic war
Trump’s Liberation Day tariff announcement on April 2nd poses a common challenge that everyone needs to take seriously. Dismissing it as crazy or stupid for rejecting conventional policy wisdom is useless.

Jomo Kwame Sundaram

His first shot was arguably fired when Canada arrested Huawei’s founder’s daughter at the behest of the first Trump administration. Others suggest different starting points.

Obama announced the US ‘pivot to Asia’ to contain China. The Nobel Peace Laureate also undermined the multilateral World Trade Organization (WTO)’s ability to settle disputes by blocking arbitration panel appointments.

Trump’s approach is termed transactional. It presumes ‘zero-sum games’ and ignores cooperative ‘win-win’ solutions. Its implications mean we live in perilous times.

His penchant for ‘shock and awe’ is well-known. As if demanding instant gratification, Trump seems uninterested in the medium-term, let alone the long-term.

He insists on bilateral one-on-one transactions – weakening ‘the other’ by refusing collective bargaining. He rejects plurilateral and other collective arrangements but embraces cooperation to share costs. China is different but exceptionally so.

ASEAN
The Association of South East Asian Nations (ASEAN) did not include all in the region when it was formed in 1967.

Malaysia had recently had conflicts with all other founding members. Indonesia and the Philippines both opposed the new British-sponsored Malaysian confederation established in 1963, and in 1965, Singapore seceded from it.

Like the European Union, ASEAN helped resolve recent conflicts. But ASEAN soon got its act together, even before the Vietnam, Cambodian and Laotian wars ended in 1975.

In 1973, ASEAN leaders agreed that Southeast Asia should become a zone of peace, freedom, and neutrality (ZOPFAN). But its progress has been mixed.

The Philippines removed all US military bases before the end of the 20th century, but now has eleven, with four new ones in the north, facing Taiwan.

ZOPFAN is especially relevant now as several Global North powers have a military presence in the South China Sea. Worse, several Asian leaders have made generous concessions to ‘circumvent’ personal legal ‘problems’ with US authorities.

The recent ASEAN summit will be followed by a second one later in 2025. Two ASEAN precedents, established in response to earlier predicaments, remain relevant.

Bandung
The 1955 Bandung conference of Asian and African leaders of newly emerging nations, which led to the birth of the Non-Aligned Movement, remains relevant.

Europe recently celebrated the 80th anniversary of the defeat of Nazi Germany. Now rejecting peaceful coexistence with its erstwhile liberator, Europe insists on fighting Russia to the last Ukrainian.

Military interventions after the first Cold War now exceed the number during it! Despite its rhetoric, the Global North seems uninterested in freedom and neutrality.

Western pundits deemed the world unipolar after the 1980s. However, many now see it as multipolar, with most in the Global South preferring not to be aligned with any particular world power.

Major Western powers have increasingly marginalised the UN, undermining its capacity for peacemaking. Few in the West, especially in NATO, remain seriously committed to the UN Charter despite giving much lip service.

But realistically, ASEAN cannot really lead international peacemaking. It can only be a pro-active, pro-UN voice of reason for peace, freedom, neutrality, development and international cooperation.

East Asia
Meanwhile, the world economy is stagnating, mainly due to Western policies since 2008. ASEAN+3 (including Japan, South Korea, and China) is especially relevant now with its Regional Comprehensive Economic Partnership (RCEP).

The earlier ASEAN+3 Chiang Mai Agreement responded to the 1997-98 Asian financial crises. After years of Northeast Asian encouragement, ASEAN nations agreed to move from bilateral to multilateral swap arrangements.

Meanwhile, the ASEAN Free Trade Area (AFTA) has progressed little since its creation over three decades ago.

More recently, the governments of Japan, China, and South Korea met without ASEAN in late March to prepare for Trump’s tariffs.

Sadly, key ASEAN leaders can hardly envision regional economic cooperation beyond yet another free trade agreement.

Trump has declared he wants to remake and rule the world to make America great again. His tariffs and Mar-a-Lago proposals should be seen as long overdue wake-up calls that ‘business as usual’ is over.

Will East Asia rise to the challenge and go beyond defensive actions to offer an alternative for the region’s economies and people, if not beyond?

The UN-led multilateral system still largely serves the US, but not enough for Trump. Thus, the US still invokes multilateral language self-servingly, e.g., it claims its unilateral tariffs are ‘reciprocal’.

Hence, despite his blatant contempt for them, Trump is unlikely to withdraw from all multilateral organisations and arrangements, especially those which serve him well.

IPS UN Bureau

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With President Trump’s efforts to end the Ukraine war, Europeans are now mainly responsible for prolonging it. Despite lame protestations of peace, Europe seems committed to fighting ‘to the last Ukrainian’.

Unsustainable peace
As Europe celebrated the end of the Nazi-initiated Second World War earlier in May, it does not seem to know how to sustain peace after war.

Jomo Kwame Sundaram

After attending the Versailles palace negotiations following WW1, the young John Maynard Keynes’ The Economic Consequences of the Peace warned the agreement’s terms undermined a sustainable peace, almost anticipating Nazism’s later rise.

Towards the end of World War II (WW2), FDR’s Treasury Secretary, Henry Morgenthau, insisted Germany should not be allowed to re-industrialise after the War.

After starting and losing two world wars, German military aggression seemed unavoidable. For Morgenthau, reindustrialisation would inevitably lead Germany to war again.

For FDR, only postwar recovery for all would ‘win the peace’, not subjugating and destroying the loser.

His WW2 generals, famously Eisenhower, Marshall and MacArthur, imposed ‘pacifist’ constitutions and reforms for postwar growth on Germany and Japan.

Imperial oversight?
Despite his brilliant contemporaneous insights into the unsustainability of the peace secured at Versailles, Keynes ignored its outcome for China.

At Versailles, the Shandong peninsula, previously ruled by the Germans, was not returned to China, but given to Japan instead!

The resulting May 4th (1919) movement culminated in the Chinese revolution. Keynes was as blind to this as to WW2’s three million lives lost to the Bengal famine.

Although invisible in movies, tens of thousands from China were involved in WW1, mainly digging trenches for European troops in a war primarily remembered for trench warfare.

German possessions in southern Africa were not returned to Africans, but instead held ‘in trust’ by European powers, including the white South African regime.

While there have not been more ‘world wars’ since the end of the Cold War, there have been many more wars in the supposedly unipolar/multipolar world.

NATO v the UN
At the UN General Assembly, 141 countries condemned the Russian invasion of Ukraine in 2022. But many also oppose North Atlantic Treaty Organization (NATO) expansion via Ukraine to threaten Russia.

This is reminiscent of broad international support for President John F Kennedy in 1962 when he insisted Soviet missiles be withdrawn from Cuba, just off Florida.

NATO was established for the Cold War and should have been dissolved at its end. Its raison d’être, the rival Warsaw Pact, was gone. Worse, NATO expansion continues while it conducts unlawful wars not sanctioned by the UN Security Council.

German Chancellor Angela Merkel and French President François Hollande have both confessed that the 2014 Minsk deal with the Russians was intended to buy time to arm Ukraine for war later, not to secure peace.

Similarly, British Prime Minister Boris Johnson successfully blocked negotiations between Ukraine and Russia in the last half-year of his tenure. A peace deal would have ended hostilities and saved hundreds of thousands of lives, mainly Ukrainian.

Europe has continued to insist on war despite worsening odds. And when NATO allies blew up the gas pipeline from Russia to Germany, no protests followed.

NATO should have been dissolved at the end of the Cold War, once its raison d’être, the rival Warsaw Pact, was gone.

Despite Europe’s pretensions of leading worldwide efforts against global warming, it quickly reversed earlier commitments, even abandoning its 2021 Glasgow commitment to reject coal less than half a year later.

Unsurprisingly, the Global South remains sceptical of the EU’s carbon border adjustment mechanism (CBAM), perhaps only the latest form of European trade protectionism.

The EU has already worsened world economic conditions by raising interest rates, imposing illegal sanctions, insisting on fiscal austerity and cutting social spending in favour of military expenditure.

European leaders now proudly announce military Keynesian policies, expecting growth from more war spending. Thus, the turn to war has meant less growth and more inequality.

A non-aligned South?
FDR envisaged a peaceful new multilateral order offering progress for all. But such hopes have been squelched by political pressures for informal empire abetted by a resurgent military-industrial complex.

A different world is needed based on much stronger commitments to peace, freedom and non-alignment. It may be time for the West, the Global North and others to learn from the South-East.

In 1955, Indonesia hosted the Afro-Asian summit in Bandung, which boldly spoke for the post-colonial South and made the case for non-alignment as the Cold War began.

Over half a century ago, in 1973, the Association for South East Asian Nations (ASEAN), set up in 1967, committed to creating a zone of peace, freedom and neutrality (ZOPFAN).

Creating the enabling conditions for ongoing cooperation, development, and progress can help sustain the bases for a peaceful and progressive new world order.

IPS UN Bureau

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US President Donald Trump has deliberately sown discord worldwide in attempting to remake the world to serve supposed American interests better. He will not cede influence, let alone power and control, to other nations, let alone people.

Jomo Kwame Sundaram

For Miran, Trump is reshaping the US-led unipolar world more equitably by getting others to bear more of the costs of ‘global public goods’ that the US ostensibly provides.

As geopolitical economist Ben Norton has noted, the US spends trillions on its global empire, with around 800 military bases abroad! While influential US corporate interests have benefited most, others have also gained.

The US contributed to the Global North’s reconstruction boom after World War II (WW2). After pre-empting growing Soviet influence from the last year of WW2, the US enhanced its hegemony by strengthening allies during the first Cold War.

However, Miran complains it is too “costly” to maintain the post-Cold War unipolar order without others bearing their “fair share” of the US costs of providing a “global security umbrella” and international dollar liquidity.

1985 Plaza Accord
In the 1980s, many complained about how Japan and Germany, which had lost WW2, had benefited from imposed military spending constraints and US occupation to gain industrial leadership worldwide.

At its second meeting at New York’s Plaza Hotel, the US-led Group of Five (G5), of the largest Western economies, agreed that the yen and Deutschemark should greatly appreciate against the US dollar.

This would ensure US recovery from its slowdown following dollar strengthening due to the Fed’s high-interest rate policy to quell inflation after the second oil price hike.

As the yen appreciated, Japan’s 1989 ‘Big Bang’ financial reforms sealed its fate. Its asset price bubble burst, also ending the post-war Japanese miracle boom.

Miran acknowledges US dollar “overvaluation has weighed heavily on the American manufacturing sector while benefiting financialised sectors of the economy in manners that benefit wealthy Americans”.

From Plaza to Mar-a-Lago
Unlike Plaza, Miran’s proposed Mar-a-Lago Accord, named for Trump’s private Florida retreat, will be imposed on all, especially allies in the Global North.

The Global North must improve the US trade balance by deterring imports and increasing exports by letting the dollar depreciate. Allies have been threatened with tariffs and unilateral withdrawal of the US security umbrella.

Miran’s proposal also envisions foreign governments holding 100-year US Treasury bonds. This should transfer long-term losses due to inflation to bondholders abroad.

He also wants a US sovereign wealth fund financed by revaluing US gold reserves to market prices. Meanwhile, his proposed cryptocurrency stabilisation fund already threatens to disrupt international finance.

His plan claims to reduce US trade deficits and bring back good jobs. Miran expects it will significantly shrink the US current account and fiscal deficits without requiring more tax revenue or spending cuts.

Weaker dollar not enough
Jenny Gordon has challenged Miran’s argument. She reasons that his plan is unrealisable without significantly shifting US resources from non-tradables to tradables.

Manufacturing investments needed to substitute imports and increase exports have to be financed. But the US has been a net borrower for almost half a century!

Its current account deficit reflects these savings-investment imbalances. The US would have to cut its capital account surplus by borrowing much less from others to reduce its current account deficit.

Making manufacturing more competitive requires a weaker dollar and new investment. The US must encourage Americans to save more, consume less, divert investment from elsewhere, and cut its fiscal deficit.

Otherwise, foreign borrowings financing manufacturing investments will strengthen the US dollar. Worse, a weaker greenback is needed to boost US competitiveness.

Miran may prevail
Even if US manufacturing recovers, well-paid jobs in depressed areas remain unlikely. Besides ageing, changing technology, consumption, and incomes have adversely affected prospects for reviving US manufacturing.

Government spending cuts have hurt state-sponsored research, which enabled the US to lead technological innovation worldwide until early this century.

Miran’s proposed forced conversion of US Treasury bonds held in official reserves to ‘century bonds’ will reduce confidence in the dollar and its liquidity value.

Besides lowering US borrowing costs, it would undermine the deep secondary market for US T-bills and dollar-denominated trade and financial flows—all key to dollar privilege.

The dollar’s status as a reserve currency has enabled the US to maintain massive fiscal deficits without high interest rates or the threat of currency collapse. But it has also constrained US economic options, favouring finance and other modern services.

Trump does not want to lose the dollar’s status as a reserve currency. His threat to the BRICS suggests likely harsh retaliation against efforts to reduce reliance on the US dollar.

The dollar’s status in international finance also enables the US to threaten others credibly. However, Trump’s treatment of allies reminds us that compliance does not ensure stability.

Miran presumes that trade and investment partner countries will do as he wants. While few may agree to his proposal, which will not work, not many may stand up to Trump. Worse, some are already giving lip service to the proposal.

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Donald Trump’s top economic advisor claims the President has weaponised tariffs to ‘persuade’ other nations to pay the US to maintain its supposedly mutually beneficial global empire.

Jomo Kwame Sundaram

The Institute is funded by financiers such as media czar Rupert Murdoch, who controls Fox News, The Wall Street Journal, and other conservative media.

Miran made his case just after Trump’s electoral victory in A User’s Guide to Restructuring the Global Trading System. Miran attempts to rationalise Trump’s economic policies, which are widely seen as at odds with conventional wisdom and reason.

Enhancing US dominance
Miran defends Trump’s tariffs as part of an ambitious economic strategy to strengthen US interests internationally with a “generational change in the international trade and financial systems”.

“Our military and financial dominance cannot be taken for granted, and the Trump administration is determined to preserve them”. Miran claims the US provides two major ‘global public goods’, both “costly to us to provide”.

First, Miran claims US military spending provides the world a ‘security umbrella’ that others should also pay for. Second, the US issues the dollar and Treasury bonds, the main reserve assets for the liquidity of the international monetary and financial system.

Miran seems blissfully unaware of longstanding complaints of US ‘exorbitant privilege’. The dollar’s reserve currency status has provided seigniorage income to the US while Treasury bond sales have long financed US debt at very low cost.

Miran’s case for Trump
The White House has threatened others with high tariffs unless they make concessions, at their own expense, benefiting the US. Miran’s defence of tariffs is indirect, as part of an ostensible grand strategy.

“The President has been clear that the United States is committed to remaining the reserve [currency] provider”, Miran added. He claims US dollar hegemony is “great” and denies “dollar dominance is a problem”.

While this “has some side effects, which can be problematic”, Miran “would like to … ameliorate the side effects, so that dollar dominance can continue for decades, in perpetuity”.

For Miran, these side effects are supposedly largely adverse while ignoring the benefits to the US. Chronic US trade deficits have been possible and financed by mounting US debt, enabling the dollar to serve as a global reserve currency.

Hence, US trade deficits have been sustained since the 1960s, rather than “unsustainable”, as he alleges. US manufacturing has been “decimated” by its consumers and transnational corporations, not by an extensive foreign conspiracy.

Miran’s Guide acknowledged the ‘Triffin dilemma’. In 1960, Robert Triffin warned that the dollar’s status as global reserve currency posed problems and risks for US monetary policy.

He invokes Triffin to argue that the US must import more than it exports to provide liquidity to the world, which needs dollars for international trade and to hold as reserves.

Miran adopts the Trumpian narrative of only blaming others. However, the US expected to benefit from continuing trade surpluses at Bretton Woods. In 1944, it opposed alternative payments arrangements to deter excessive trade surpluses.

US trade deficits have grown since the 1960s with post-World War II reconstruction of the Global North and uneven ‘late industrialisation’ in the Global South.

The empire must pay
The Trump administration wants to eat its cake and still have it. It intends to strengthen US empire while minimising adverse side effects and costs.

Miran wants foreign nations to “pay their fair share” in five ways. First, “countries should accept tariffs on their exports to the US without retaliation”. Tariffs provide revenue, which has financed its global public goods provision. Second, they should buy “more US-made goods”.

Third, they should “boost defense spending and procurement from the US”. Fourth, they should “invest in and install factories in America”. Fifth, they should “simply … help us finance global public goods”, i.e., foreign aid should go to or via the US.

Miran then emphasises that Trump “will no longer stand for other nations free-riding”, and calls for “improved burden-sharing at the global level”.

“If other nations want to benefit from the US geopolitical and financial umbrella, then they need to … pay their fair share”, i.e., the world must “bear the costs” of maintaining US empire.

Trump dilemmas 2.0
Trump wants to use tariffs to force countries with trade surpluses with the US to buy more from the US. Ending these deficits would undermine dollar hegemony, which, paradoxically, Trump obsessively wants to preserve.

Miran wants other countries to convert their US Treasury bills into 100-year bonds at very low interest rates, effectively subsidising the US over the long term. He also wants nations running trade surpluses with the US to buy more long-term US Treasury securities.

Trump has threatened 100% tariffs on BRICS members and all countries promoting de-dollarisation or undermining dollar hegemony in the international monetary system.

During his first term, Trump wanted to do the near-impossible by boosting exports while preserving a strong dollar!

Miran acknowledges that the “root of the economic imbalances lies in persistent dollar overvaluation that prevents international trade balancing”. But he also insists that dollar “overvaluation is driven by inelastic demand for reserve assets”.

Trump now hopes to kill both US trade and fiscal deficit birds by cutting imports and raising revenue with higher tariffs. He also wants the world to continue using dollars despite the US budget and trade deficits and policy uncertainties.

Meanwhile, official US debt, financed by selling Treasury bonds, continues to grow. Trump has to deliver his promised tax cuts soon before his earlier measures run out. Trump is falling foul of his bluster and may have to revert to the status quo ante while denying it.

Despite Miran’s best efforts, he cannot provide a coherent rationale for Trump’s rhetoric. But dismissing Trump as ‘mad’ or ‘stupid’ obscures the impossible dilemma due to and obscured by post-war US dominance.

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US President Donald Trump has again seized global attention by arbitrarily imposing sweeping tariffs on the rest of the world. He reminds us America is still boss, claiming to ‘make America great again’ (MAGA) by ensuring ‘America first’ at everyone else’s expense.

Jomo Kwame Sundaram

Since then, the world has been scrambling to understand better the president’s intentions to protect their interests. This has also triggered much talk about managing adjustment and enhancing resilience.

Shocked by his unilateral abandonment of the revised free trade agreement renegotiated during Trump 1.0, its North American neighbours were the first to engage publicly.

More recently, China’s ironically reciprocal response gave Trump another excuse for more punitively escalating his ‘reciprocal tariffs’. With little left to lose even before Trump’s latest tariffs against China, it said No to the Orange Emperor, switching the impact from manufacturing to agriculture.

Only major economies dare to retaliate. However, due to its geopolitics, including Trump’s demands for more ‘equitable’ NATO cost-sharing, an appropriately strong European response seems unlikely.

Many prioritise the Western alliance, while a few prefer other options. Sensing the ‘silence of the lambs’, the president has gloated over the steady stream of foreign leaders coming to ‘kiss my arse’.

Trump’s tariff fetish
The tariff announcement was not set in stone. It remains to be seen how much Trump’s support base, especially from the US corporate elite, will succeed in revising his measures.

He is unlikely to respond positively to opposition from abroad or even within the US. The tariffs will be tied up in legal and legislative procedures for some time, even after they go into effect.

The dissent of some Senate Republicans suggests the US Congress may reject the tariffs as a significant infringement on their Constitutional prerogatives.

Announced as executive orders, they are subject to judicial scrutiny. Of course, the White House will have to reconsider which battles to fight and which to concede without appearing to do so.

A face-saving compromise between the Republican-controlled Congress and the White House is increasingly likely. Attention can thus be diverted abroad to preferred targets such as China and Iran.

Some other countries, especially the BRICS, may also be hit to ‘save face’. The president can then claim he tried his best to MAGA but was foiled by foreign-connected opponents.

While Trump critics are making much of his subsequent revisions, concessions, amendments and postponements, the greater significance of his announcement lies elsewhere.

Divided we fall
Trump 2.0 will dictate the terms of US engagement with the world. He has already reminded everyone he is The Great Disruptor. Dismissing cooperation as for losers, his team’s purpose is to put others down.

Trump has subverted the World Trade Organization and all US-negotiated trade agreements except when it best serves its interests. He has given notice of selectively invoking multilateralism and the rule of law to serve his preferred interests best.

Although all European countries will be affected by Trump’s tariffs, each will be hit differently. Hence, developing a strong, unified European position will be difficult. This will deter other regional and plurilateral groupings from collective action.

In one stroke, Trump reminded the world that America remains number one and that he means business. Critics overlook his purpose and strategy by dismissing his methods and tactics as transactional, stupid or irrational.

Method to the madness?
Trump’s Council of Economic Advisors chairman, Stephen Miran, has offered an economic rationale for Trumponomics 2.0. He argues the world must pay for the ‘global public goods’ the US ostensibly provides, especially US military spending.

He also insists the US is doing the world a favour by allowing the US dollar to serve as the world’s reserve currency. He ignores how it earns seigniorage and the ‘exorbitant privilege’ of being able to issue debt to the rest of the world without having to repay.

His so-called Mar-a-Lago Accord purports to offer more financial stability through US dollar currency pegs and related digital currency arrangements, requiring payment flows to the US Treasury and Federal Reserve.

Trump has promised even more regressive tax reforms for the super-rich who generously funded his re-election campaign. As before, this will be obscured by some tax relief for the ‘middle class’.

The shift from potentially progressive direct taxation to more indirect taxation has already begun, with the proposed tariffs impacting purchases of merchandise imports.

Industrial policy redux?
Tariffs cannot simply restart long-abandoned production overnight. Earlier manufacturing jobs were lost to imports and the automation of production processes.

Reviving abandoned productive capacities and capabilities will mainly create poor jobs. ‘Fortress USA will attract some investments, mainly for the limited US market, but it cannot transform itself into the world’s manufacturing powerhouse it once was.

Recent reshoring efforts have proved embarrassingly unsuccessful. This has been evident with the difficulties of the forced relocation of the world’s leading (Taiwanese) semiconductor manufacturer to the US.

Trump’s turn to industrial policy is more backward-looking than progressive. It seeks to save uncompetitive old capacities rather than advance potentially competitive new investments, technology, productive capacities, and capabilities.

Also, investment and technology promotion need supportive policies, especially in human resources, research, and development, which are increasingly undermined by Musk-led government spending cuts.

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The World Bank set its US ‘dollar-a-day’ poverty line using its 1990 data. Despite many doubts and criticisms, its poverty numbers fell until the COVID-19 pandemic began in 2020.

Jomo Kwame Sundaram

Poverty has long been seen in terms of inequality, as people generally feel poorer compared to others. Meanwhile, explanations of poverty differ considerably, with many calling for better policy measures.

For decades, the Bank refused to address inequality, focusing instead on poverty. Efforts to improve poverty measurement have long been driven by the belief that policy cannot be improved without better estimating it.

Measuring or estimating cash incomes has inevitably been prioritised. But the focus on money incomes poses problems. Money measures of poverty can be helpful but also deceptive. For instance, many children from urban households with incomes above the poverty line remain undernourished.

However, incomes above any arbitrarily set poverty line do not necessarily ensure well-being. This has generated interest in poverty indicators other than money incomes.

Such criticisms reflect a money fetish and the widespread practice of measuring welfare, well-being and poverty in cash terms. Recognising the value of other poverty indicators is now uncontroversial.

Dimensions of poverty
Yet many still want a single composite multidimensional poverty index despite its well-known problems. A dashboard of several key dimensions of poverty, rather than a single composite index, offers much more relevant information to improve policymaking.

Aware of such problems and limitations, OECD and UN Member States have not approved of composite indices. Neither adopted the pioneering work on composite indices by the most influential statistician of both bodies.

Composite indices, such as the human development index, have only been adopted and used by UN funds and programmes, which do not require Member State approval or review.

Meanwhile, lower infant and maternal mortality have accounted for over 80% of improved life expectancy in many developing countries. Low-cost reforms for safer pregnancies and births have significantly extended average life spans at low cost.

Food security
The UN Food and Agriculture Organization (FAO) has long defined food-secure households as those with enough income to afford enough carbohydrates or dietary energy (typically measured in calories or joules) for a sedentary lifestyle.

Despite this low bar and its methodological problems and limitations, undernourished or ‘food-insecure’ households have increased worldwide since 2014, growing for years while the World Bank’s estimate of poor households continued to decline!

According to the Bank, the number of poor worldwide only increased for the first time since the 1990s during the pandemic, both absolutely and relatively. This discrepancy between multilateral poverty and undernourishment trends has triggered debates over the significance of different well-being and deprivation measures.

Various controversies and doubts about Bank poverty numbers have prompted many to regard undernourishment as a better indicator of deprivation and lack of well-being than the poverty measure.

Although income inequality trends are moot and the subject of much dispute and controversy, disparities worldwide have risen again in recent years.

Meanwhile, dollar billionaires have proliferated worldwide as inequality has worsened. As income and wealth inequalities worsen, some convergences have also occurred, causing both trends to be mixed and uneven.

With rural impoverishment spreading worldwide, urbanisation has grown while reducing rural food production for household subsistence consumption. Rural households typically produced food for own consumption by breeding animals, harvesting fruits and vegetables, or even gathering food available nearby.

However, urban areas offer far fewer subsistence production and consumption opportunities. Cash incomes and spending increasingly determine food consumption, including personal nourishment.

Nutrition matters
As man does not live by bread (‘carbs’, i.e., dietary energy from carbohydrates) alone, a more holistic approach requires a more comprehensive approach to human nutrition.

Comparisons of the physical development of children of food producers and cash croppers suggest that household money incomes have not always determined the nutritional status of many.

Food producers’ children are generally better off than those of cash croppers. Why? Probably, food producers are far more likely to provide adequate nourishment to their families regardless of cash incomes.

Thus, children of food producers meet many of their food needs without buying them on the market. Hence, the common presumption that higher cash incomes ensure well-being, including nutrition, is doubtful.

Malnutrition challenges our understanding of well-being and its complex determinants. Many now suffer malnutrition, not only due to both macro and micro-nutrient deprivation but also due to the growing significance of diet-related non-communicable diseases.

As with obesity and overweight, diabetes incidence has risen with new consumer preferences. Incomes, the media, and other influences increasingly shape lifestyles with significant consequences for nutrition and health, many of which are perverse.

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NATO geopolitical strategy has now joined the ‘coalition’ of Western geoeconomic forces accelerating planetary heating, now led again by re-elected US President Donald Trump.

Jomo Kwame Sundaram

Burning biomass and fossil fuels greatly expanded mechanical energy generation. The age of industry in the last two centuries has thus involved more hydrocarbon combustion to increase output.

Uneven development has also transformed population geography. Tropical soils were far more productive, enabling higher population-carrying capacities. Hence, during the Anthropocene over the last six millennia, human settlement was denser around the tropics.

Greater water availability enabled more botanical growth, supporting more fauna that was less subject to seasonal vicissitudes. If not undermined by aridification and desertification, much denser human settlements and populations became more viable in and near the tropics.

Meanwhile, industrialisation has been uneven. It was initially mainly located in the temperate West until after decolonisation following the Second World War (WW2).

However, post-WW2 industrialisation in the Global South was largely denounced as protectionist and inefficient until the East Asian miracles were better understood.

Sustainable development goals
The 1972 Stockholm Environment Summit helped catalyse public awareness of ecological and related vulnerabilities. The 1992 Rio Earth Summit promoted a more comprehensive approach centred on sustainable development.

The Millennium Development Goals (MDGs) were drafted in 2001 by a small group appointed by the UN Secretary-General. In sharp contrast, the formulation and greater legitimacy of the 17 Sustainable Development Goals (SDGs) required time-consuming widespread consultations.

Undoubtedly, many SDGs contain apparent contradictions, omissions, and unnecessary inclusions. While participatory processes tend to be messy and slow, genuine cooperation is impossible without inclusive consultation.

After decades, developing countries successfully secured recognition for the need to compensate for losses and damages, i.e., provide climate reparations, yet most prosperous countries have given nothing so far.

While mitigation is undoubtedly crucial for slowing planetary heating, resources for adaptation are urgently needed by all developing countries. Those located in the tropics have been more adversely affected.

Sustainable development should sustain ecology and human progress. Planetary heating should be curbed fairly to ensure those living precariously are not worse off.

Planetary heating
Thus, the neoliberal – and neocolonial – counter-revolution against development economics from the 1980s, with its insistence on trade liberalisation, deprived much of recently independent Africa and others of industry and food security.

The worst consequences of planetary heating are in the tropics, where populations are generally denser but poorer. European settler colonialism in temperate regions exacerbated this, blocking later immigration from the tropics.

Economic growth, higher productivity and living standards have been closely associated with more greenhouse gas (GHG) emissions in the last two centuries. Historical GHG accumulation now exacerbates planetary heating.

The New York Times has identified significant benefits of planetary heating for the US and, by extension, the Global North. Thus, the commitment of the temperate West to urgently address planetary heating remains suspect.

It claimed the melting Arctic ice cap would eventually allow inter-ocean shipping, even during winter, without using the Panama Canal, thus cutting marine transport costs. Planetary warming would also extend temperate zone summers, increasing plant and animal growth.

Sad tropics
Former central banker Mark Carney, then UN Special Envoy on Climate Action and Finance, has warned that average planetary temperatures will exceed the 1.5oC (degrees Celsius) threshold over pre-industrial levels in less than a decade.

This threshold was mainly demanded by tropical developing countries but opposed by the Global North, especially temperate European countries, who wanted it higher at 2oC. Planetary heating exacerbates poverty, with most of the world’s poor living in the tropics.

Adaptation to planetary warming is thus very urgent for developing nations. But most concessionary climate finance is earmarked for mitigation, ignoring urgent adaptation needs. Meanwhile, extreme weather events have become more common.

At least ten provinces in Vietnam now have seawater seeping into rice fields, reducing production. As rice is the main staple in Asia, higher prices will reduce its affordability, undermining the region’s food security.

War worsens planetary heating
The North Atlantic Treaty Organization (NATO) response to the Ukraine invasion has blocked Russian exports of oil and gas, strengthening the US monopoly of European fossil fuel imports.

With higher oil and gas prices, Europe has provided various energy price subsidies to ensure public support for the NATO war against Russia. The UK host secured a commitment to abandon coal at the Glasgow 26th UN climate Conference of Parties at the end of 2021.

As Mrs Thatcher had crushed the militant British coal mineworkers’ trade union in the 1980s, abandoning was easier for UK Conservatives. But the vow was soon abandoned, and coal mining in Europe revived to block cheap Russian oil and gas imports.

Thus, NATO’s energy strategy has exposed European climate hypocrisy, with the West abandoning its coal pledge for geopolitical and geoeconomic advantage. Such considerations have also undermined carbon markets’ ability to mitigate planetary heating.

Last year, the European Parliament voted to give Ukraine 0.25% of their national incomes while official OECD development assistance to the entire Global South has fallen to 0.3%! Burn, tropics, burn!

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Donald Trump’s Make America Great Again (MAGA) appeal captured US mass discontent against globalisation. In recent decades, variations of America First have reflected growing ethnonationalism in the world’s presumptive hegemon.

Jomo Kwame Sundaram

With deindustrialisation in the North blamed on globalisation, their governments gradually abandoned trade liberalisation, especially after the 2008 global financial crisis.

Free trade mahaguru Jagdish Bhagwati has long complained of the weak commitment to multilateral trade liberalisation. Most recent supposed free trade agreements (FTAs) have been plurilateral or bilateral, undermining multilateralism while promoting non-trade measures.

The new geoeconomics and geopolitics have undermined the rules and norms supporting multilateralism. This has undermined confidence in the rules of the game, encouraging individualistic opportunism and subverting collective action.

Policymaking has become more problematic as it can no longer count on agreed-shared rules and norms, undermining sustained international cooperation. Biased and often inappropriate economic policies and institutions have only made things worse.

Successive Washington administrations’ unilateral changes in policies, rules and conventions have also undermined confidence in US-dominated international economic arrangements, including the Bretton Woods institutions.

Deliberate contraction
Although recent inflation has been mainly due to supply-side disruptions, Western central banks have imposed contractionary demand-side macroeconomic policies by raising interest rates and pursuing fiscal austerity.

US Federal Reserve interest rate hikes from early 2022 have been unnecessary and inappropriate. Squeezing consumption and investment demand with higher interest rates cannot and does not address supply-side disruptions and contractions.

After earlier ‘quantitative easing’ encouraged much more commercial borrowing, higher Western central bank interest rates were contractionary and regressive. Hence, much of world economic stagnation now is due to Western policies.

Developing countries have long known that international economic institutions and arrangements are biased against them. Believing they have no opportunity for wide-ranging reform, most authorities are resigned to only using available macroeconomic policy space.

Nevertheless, national authorities have become more willing to undertake previously unacceptable measures. For example, several conservative central banks deployed ‘monetary financing’ of government spending to cope with the pandemic, lending directly to government treasuries without market intermediation.

More recently, central banks in Japan, China, and some Southeast Asian countries refused to raise interest rates in concert with the West. Instead, they sought and found new policy space, helping to mitigate contractionary international economic pressures.

Nonetheless, many economists piously urged central banks worldwide to raise interest rates until mid-2024. Meanwhile, policy pressures for fiscal austerity continue, worsening conditions for billions.

Neoliberal?
To secure support for neoliberal reforms from the late 20th century, the Global North promised developing countries greater market access and export opportunities.

However, trade liberalisation has slowly reversed since the World Trade Organization (WTO) creation in 1995. Policy reversals have become more blatant since the 2008 global financial crisis with geopolitically driven sanctions and weaponisation of trade.

But ‘neoliberal’ globalisation was a misnomer, as there was little liberal about it beyond selective trade liberalisation. Instead, FTAs have mainly strengthened and extended property and contract rights, i.e., selectively interpreting and enforcing international law.

Trade liberalisation undermined earlier selective protectionism, which promoted food security and industrialisation in developing countries. Tariffs have also been crucial revenue sources, especially for the poorest countries.

Intellectual property
Strengthening the rule of law has rarely fostered liberal markets. Even 19th-century economic liberals recognise the inevitable wealth concentration due to selective and partial neoliberalism.

Property rights invariably strengthen monopoly privileges under various pretexts. Global North governments now believe control of technology is key to world dominance. The WTO’s trade-related intellectual property rights (TRIPS) have greatly strengthened IP enforcement.

With IP more lucrative, corporations have less incentive to share or transfer technology. With TRIPS enforced from 1995, technology transfer to developing countries has declined, further undermining development prospects.

The 2001 public health exception to TRIPS could not overcome IP obstacles to ensure affordable COVID-19 tests, protective equipment, vaccines and therapies during the COVID-19 pandemic, even triggering criticisms of ‘vaccine apartheid’.

Weaponising economics
The West has increasingly deployed economic sanctions, which are illegal without UN Security Council mandates. Meanwhile, access to trade, investment, finance and technology has become increasingly weaponised.

Foreign direct investment was supposed to sustain growth in developing countries. Intensifying Obama-initiated efforts to undermine China, then-President Trump and Japanese Prime Minister Abe Shinzo urged ‘reshoring’, i.e., investing in investors’ own countries instead.

Initial attempts to invest in their own economies instead of China largely failed. However, later efforts to undermine China have been more successful, notably ‘friend-shoring’, which urges companies to invest in politically allied or friendly countries instead.

With more economic stagnation, geopolitical strategic considerations and weaponisation of economic policies, cooperation and institutions, fewer resources are available for growth, equity and sustainability. Thus, the new geopolitics has jeopardised prospects for sustainable development.

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Many in the West, of the political right and left, now deny imperialism. For Josef Schumpeter, empires were pre-capitalist atavisms that would not survive the spread of capitalism. But even the conservative Economist notes President Trump’s revival of this US legacy.

Jomo Kwame Sundaram

A century and a half ago, Dadabhai Naoroji, from India, became a Liberal Party Member of the UK Parliament. In his drainage theory, colonialism and imperial power enabled surplus extraction.

As the Anglo-Boer war drew to a close in 1902, another English liberal, John Hobson, published his study of economic imperialism, drawing heavily on the South African experience.

Later, Vladimir Ilyich Lenin cited Hobson, his comrade Nikolai Bukharin and Rudolf Hilferding’s Finance Capital for his famous 1916 imperialism booklet urging comrades not to take sides in the European inter-imperialist First World War (WW1).

Three pre-capitalist empires – Russian, Austro-Hungarian and Ottoman – ended at the start of the 20th century. Their collapse spawned new Western nationalisms, which contributed to both world wars.

Germany lost its empire at Versailles after WW1, while Italian forays into Africa were successfully rebuffed. Western powers did little to check Japanese militaristic expansion from the late 19th century until the outbreak of World War Two (WW2) in Europe.

Imperialism and capitalism
Economists Utsa and Prabhat Patnaik argue that the primary accumulation of economic surplus – not involving the exploitation of free wage labour – was necessary for capitalism’s emergence.

Drawing on economic history, they clarify that primary accumulation has been crucial for capitalism’s ascendance. Thus, imperialism was a condition for capitalism’s emergence and rapid early development. Ensuring continued imperial dominance has sustained capitalist accumulation since.

The 1910s and 1920s debates between the Second and Third Internationals of Social Democrats and allied movements in Europe and beyond involved contrasting positions on WW1 and imperialism.

For most of humanity in emerging nations, now termed developing countries, imperialism and capital accumulation did not ‘generalise’ the exploitation of free wage labour, spreading capitalist relations of production, as in ‘developed’ Western economies.

Due to capitalism’s uneven development worldwide, the Third International maintained the struggle against imperialism was foremost for the Global South or Third World of ‘emerging nations’, not the class struggle against capitalism, as in developed capitalist economies.

After decades of uneven international economic integration, including globalisation, the struggle against imperialism continues to be foremost a century later. Imperialism has reshaped colonial and now national economies but has also united the Global South, even if only in opposition to it.

Blinkers at Versailles
After observing the peace negotiations after WWI, John Maynard Keynes presciently criticised the terms of the Treaty of Versailles, warning of likely consequences. In The Economic Consequences of the Peace, he warned that its treatment of the defeated Germany would have dangerous consequences.

But Keynes failed to consider some of the Treaty’s other consequences. Newly Republican China had contributed the most troops to the Allied forces in WW1, as India did in WW2.

Germany was forced to surrender the Shantung peninsula, which it had dominated since before WW1. But instead of China’s significant contributions to the war effort being appreciated at Versailles with the peninsula’s return, Shantung was given to imperial Japan!

Unsurprisingly, the Versailles Treaty’s terms triggered the May Fourth movement against imperialism in China, culminating in the communist-led revolution that eventually took over most of China in October 1949.

Even today, popular culture, especially Western narratives, largely ignores the role and effects of war on these ‘coloured peoples’. By contrast, understating the Soviet contributions to and sacrifices in WW2 was probably primarily politically motivated.

Another counter-revolution
Franklin Delano Roosevelt was elected US president in 1932. He announced the New Deal in early 1933, years before Keynes published his General Theory in 1936.

Many policies have been introduced and implemented well before they were theorised. Unsurprisingly, it is often joked that economic theory rationalises actual economic conditions and policies already implemented.

Keynesian economic thinking inspired much economic policymaking before, during, and after WW2. Both Allied and Axis powers adopted various state-led policies. Keynesian economics remained influential worldwide until the 1960s and arguably to this day.

The counter-revolution against Keynesian economics from the late 1970s saw a parallel opposition movement against development economics, which had legitimised more pragmatic and unconventional policy thinking. From the 1980s, neoliberal economics spread with a vengeance and much encouragement from Washington, DC.

This Washington Consensus – the shared ‘neoliberal’ views of the US capital’s economic establishment, including its Treasury, the World Bank, and the International Monetary Fund – has since been replaced by brazenly ethno-nationalist ‘geoeconomic’ and ‘geopolitical’ responses to unipolar globalisation.

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Ending US dollar dominance alone will not end monetary imperialism. Only much better multilateral arrangements to clear international payments can meet the Global South’s aspirations for sustainable development.

Ndongo Samba Sylla

Valéry Giscard d’Estaing, his Minister of Finance and Economic Affairs between 1962 and 1966, coined the phrase ‘exorbitant privilege’ to complain of US dollar dominance.

With the dollar’s status as the global reserve currency, the US can buy foreign goods, services, and assets on credit. It also enables the US to spend much more on foreign military bases and wars.

The privilege allows such extravagance with limited adverse effects on its balance of payments and the US dollar’s exchange rate. French economist Jacques Rueff noted the US could thus maintain external deficits “without tears”.

De Gaulle demanded the US Federal Reserve Bank convert France’s surplus ‘Eurodollars’ into monetary gold. The French challenge called the US bluff, forcing it to end dollar-gold convertibility at the heart of the 1944 Bretton Woods arrangement in 1971.

To gain some economic advantage in a system otherwise dominated by the dollar, post-war France imposed a monetary arrangement on most of its former African colonies, giving it a neocolonial privilege similar to the US’s worldwide.

Jomo Kwame Sundaram

Replacing the French franc with the euro in 1999 did not end this monetary imperialism. Now, 14 Sub-Saharan African countries with over 200 million people still use the CFA franc.

Created in 1945, this currency arrangement helped rebuild and use its colonies to accelerate post-war reconstruction of the French economy. It remains under the legal custodianship of the French Treasury.

France benefiting from its currency relations with its former colonies imply that the US’s rivals can also benefit from monetary hegemony if they succeed in displacing dollar dominance without subverting monetary imperialism.

De-dollarization
The term de-dollarization currently refers to the development of alternative bilateral and plurilateral payments initiatives reducing the role of the dollar and dollar-based financial arrangements in settling international economic obligations and managing foreign exchange transactions.

This has been growing. In 2022, international trade worldwide was estimated at $46 trillion, with over half invoiced in currencies other than the US dollar. More countries are trading with one another and settling in currencies other than the greenback.

Although this trend has eroded the dollar’s share of total official foreign currency reserves, this is not about to dethrone the dollar’s status as the global reserve currency.

Indeed, international trade is only the tip of the iceberg of international financial transactions, which are still mainly denominated in US dollars.

The current challenge to dollar hegemony has much to do with the unilateral financial sanctions by the US and its mainly European allies on several nations, including Russia, Iran and Venezuela.

These countries have been expelled from the SWIFT messaging system and/or have seen their assets abroad, especially dollar, euro, or gold reserves, unilaterally confiscated on various pretexts.

Facing such sanctions, more countries want to develop alternative payment systems, reduce their dollar and euro reserves, and find more secure ways to store their external surpluses.

A recent report by the Russian government for the BRICS criticised the West’s weaponisation of international payments arrangements. It called for an international monetary and financial system consistent with the principles of security, independence, inclusion, and sustainability.

Resource-rich countries with significant foreign exchange surpluses are understandably concerned with this threat. But the report did not address the problems and needs of deficit countries constituting much of the Global South.

International clearing union
A fundamental problem of the existing international monetary and financial system is that a national currency – the US dollar – functions as a reserve asset for the rest of the world.

This obliges most nations, especially in the Global South, to accumulate US dollars to meet their external obligations. Struggling to secure enough US dollars, such countries are especially vulnerable to external debt crises.

Their problems will not be addressed if US dollar dominance is no longer unrivalled, and its privilege has to be shared with other international reserve currencies.

A fair international monetary and financial system supportive of sustainable development should eliminate the obligation to accumulate foreign exchange reserves, e.g., if every country can pay for imports with its currency, which is technically possible.

With an International Clearing Union, Ernst Friedrich Schumacher noted “every national currency is made into a world currency, whereby the creation of a new world currency becomes unnecessary”.

Such arrangements would address the Global South’s financial, debt, and climate crises. However, there have not been renewed efforts since 1944 to secure the multilateral consensus necessary for such a transformation.

IPS UN Bureau

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