Davos, Trump And «G Zero»

Written by Dmitri Drobnitsky; Originally appeared at VZ, translated by AlexD exclusively for SouthFront

Every year, in the Swiss Alps, the elite of the world meets. Two speakers at the Davos forum undoubtedly will bask in glory, although this glory for the global elite is akin to the Trojan Cassandra.

This week, from January 17 to 20 Davos, Switzerland, will host the next world economic forum.

It is difficult to say if it the organisers chose that date to coincide with the meeting closing exactly on the inauguration of the new American president Donald Trump, but it appears quite symbolic.

Davos, the most blatant impersonation of globalisation. Every year in the Swiss Alps, under heavy protection, gather the elite of the world and serving their expertocracy to discuss business of the globe and work out strategies and tactics to control it.

Resolutions are not taken at the forum, instructions are not given, no memoranda are signed, secret or public. The world does not freeze in suspense of news from Davos – after all it is not a plenum sunk into oblivion of the Central Committee of the CPSU, not a meeting of the board of directors of the Federal Reserve, nor a session of the Security Council of the UN.

Only policy makers, heads of corporations and analysts come to the forum to solve more serious issues than the Federal Reserve of the US or the UN. They do not decide at the forum itself, in Davos only the results are summarised, a review is carried out on ideas and a prognosis is given on the future.

Already at the previous congress the most influential people of the world were sounding disturbing notes. But practically to all participants of the forum it appeared that with the “rise of populism” it would be relatively easy to cope. Those in power were much more interested in the prospects of the fourth technological revolution and trans-oceanic trade and investment agreements.

I do not know about the fourth technological revolution, but the appearance of the trans-Atlantic and trans-Pacific free trade zones is clearly not meant to be.

There are no doubts that the most talked about topic at Davos will be the explosive growth of anti-globalism in America and Europe. Last year Brexit occurred, Donald Trump won the elections, David Cameron and Matteo Renzi stepped down, the incredibly fast rise of Marine LePen’s ratings, Angela Merkel’s shaking seat…

Of course the representatives of the global elite, suddenly finding themselves in a situtation of retreat and defend, will pay special attention of Russia’s “wrong” behaviour and her role in all that “mess” that reigns in the world in January 2017.

Almost certainly China will not be seriously criticised at the forum. For the first time in the history of Davos, the current president of the PRC Xi Jinping will participate.

Will Beijing lend a shoulder to globalisation or would prefer to look for profits in a new post-global world order – this is, perhaps, one of the main questions of the next two-three years. So the Chinese leader will be persuaded and cajoled in Switzerland in all possible manners.

At the forum the head of Sberbank, German Gref, will also be carefully listened to and in the corridors they will try to find out from him the long-term plans of the “Russian hackers”.

With reverence they will greet another keynote speech from Fareed Zakaria, reward with applause the president of the “young Ukrainian democracy” Vitaly Klitchko, with sympathy will be looking at Albert Gore and Rich Lesser…

However, two speakers of the Davos forum undoubtedly will bask in glory, although this glory for the global elite is akin to the Trojan Cassandra.

They are Ian Bremmer and Nouriel Roubini.

On the eve of Davos 2011, when all leading Western think tanks and media were trumpeting about the turning point in the struggle against the economic recession, Bremmer and Roubini made a frightening prediction about the collapse of the Euro-Atlantic union and the transition of the world order to the phase of a great reboot which they called “G Zero”.

In English this term sounds like G-Zero (or G-0), as an analogy with the “Group of Seven” (G-7) and “Group of Twenty” (G-20).

On January 4, 2011 at the Eurasia Group think tank site the article “Top Risks 2011: G-0 tops the list” was published. The article was prepared by the head of the centre Ian Bremmer and his colleague David Gordon and was a literary presentation of the prognostic report from the specialist of the Eurasia Group.

No one paid attention to this publication until the concept of the “Group of Zero” was supported by Nouriel Roubini, widely known in the West by his precise economic prognoses. Specifically, he practically predicted to the hour the development of the 2007-2008 crisis, for which he was given the moniker Doctor Doom.

At the plenary meeting of the world economic forum of January 26, 2011 he was unexpectedly very sceptical about the prospects for the G-20 and the ability of the elite to control the economic processes of the world. At the tribune at Davos, Roubini declared: We move towards G-Zero, where there won’t be any global control of economic policy.”

During the break, experts and media representatives, having already googled “Group of Zero”, threw themselves on Ian Bremmer for comments and explanations. In the press his prophetic statement appeared: “I hear a lot about growth in Davos. But few speak about the impending conflict.”

Then Bremmer and Roubini decided to write a joint article, immediately were offered to have it published in the March edition of Foreign Affairs by a staff member of the Council on Foreign Relations.

The article created a great response, but no one believed the prognosis of the authors. If the global establishment accepted the criticism of the “Twenty”, then the argument that in five-seven years could become the “Seven” (then is was still the “Eight”), the elite at best had condescending smiles.

The global liberal world order still appeared immutable…

Nouriel Roubini at that time was primarily concerned with the fate of reserve currencies (firstly of the dollar), pointing to an obvious problem: the “creators” of such currencies guarantee the liquidity on world markets by increasing their payment deficits and growth of government debts. Attention was paid to Roubini only in 2015 when talks began on the introduction of the Yuan (the currency of the biggest holder of Western debt) into the reserve basket of the IFM.

Bremmer also looked at the problem much broadly. The matter, according to him, was not only that financial frictions were growing between countries and regions. He warned about the growth of centrifugal tendencies, each country looking for solutions for its problems independently, loosing faith in supranational institutions and the global elite.

In May of 2012 Ian Bremmer’s book “Every Nation for Itself. Winners and Losers in a G-Zero World” was published. In a month it became first an American and then a world best seller.

In 2013 the author edited and supplemented his work and published it under the title “Every Nation for Itself. What happens When No One Leads the World”. The book was published simultaneously in Germany, where the German edition received a harsher title, “Power Vacuum. Winners and Losers in a Leaderless World”.

Despite the phenomenal popularity of the book, Bremmer’s theory, still, the powerful of this world seemed to be the main recipients of his work, to a lesser degree an exaggeration for the powerful.

The Democratic Party of the US flatly refused to believe the predictions of the author of “Group of Zero”. Barak Obama, who was campaigning for re-election for a second term, actively promoted the idea of trans-Atlantic trade and investment partnership, which he hoped by the end of 2016 to complement with the trans-Pacific trade agreement.

The wind was blowing in the right direction for the 44^th president of the USA and he rejected all that did not fold into his view of the world. We will note that at the time a conflict appeared between Obama and the military intelligence leadership of the US about the birth of the most powerful terrorist organisation on the territory of Iraq and Syria (today known as ISIS*).

Meanwhile Nouriel Roubini, after a thorough study of the labour market of the US and the economic situation in the Eurozone came to two conclusions. First, the collapse of the single economic space of the Old World was more than likely to happen. Second, the USA was moving not only towards an economic but also a political crisis.

To avoid this, it is imperative (sic!) take measures to return jobs to the US and to make significant investments in the infrastructure of the country. Those are the measures that are currently included in Donald Trump’s programme.

But in 2012 Trump did not put forward his bid for the presidency. Then the candidate opposing Obama was Mitt Romney, duty bound as a true Republican to “put Russia in her place”.

Bremmer with Roubini in a series of interviews present radical suggestions: expel Russia from the G-8 and even from BRICS. These statements by the American analysts were perceived in Russia as another attempt of a cavalry attack on our country in the spirit of good old hawks.

Since I, by the time of these interviews, have already read the book “G Zero”, I at once thought this interpretation of the statements of the two quite realistic-minded experts suspiciously simple. Comparing the arguments presented in Bremmer’s work and in the subsequent interviews, I presented my analysis of the causes of these interviews.

Roubini and Bremmer drew attention to their prognosis and were offering to present their recipes to overcome the turbulent period of world history, which, as they believed (and, judging by everything, proven correct), is imminent.

In his book Ian Bremmer predicted that after the collapse of the G-7/G-20 world order, the international system will take one of the forms: G-Zero (that is no alliances), G-2 (USA-China, or “Chimerica”), “concert” (an attempt of cooperation between surviving nations), “Cold War 2.0” (all against all), “world of regions” (separate regional unions, little contact with each other), and the “the Joker is wild” (something unexpected that will confuse all the cards).

In their subsequent works, Roubini and Bremmer were more inclined to the G-Zero variant but nevertheless were hoping that the so-called Chimerica (G-2) would be saved.

But, apparently, it is not destined. The president-elect of the USA, taking on board many recipes of Nouriel Roubini, set very strongly, if not on the destruction, then, in any case, for a substantial weakening of “Chimerica”.

In this case, as writes Ian Bremmer in his recent article in the magazine Time (on the eve of the Davos forum), at least a temporary alliance arises between Washington-Moscow-Ankara. Isn’t the Joker wild?

This is what the author writes [link to article]: “The potential is here for an unprecedented U.S.-Russia-Turkey axis… Trump’s primary goal in Syria is to grind the bones of ISIS into dust. He sees no value for American voters in defending international agreements and principles that Russia and Turkey and their allies in Syria may have violated. For Trump, America’s interest is only in eliminating a threat to the U.S.”

And further: “He cares nothing about Ukraine, he doesn’t fear a Russian annexation of Alaska, and he isn’t worried that Syrian refugees will wash ashore on North Carolina’s Outer Banks. He believes these are American advantages, and he won’t apologize for them.”

From here Bremmer gives a conclusion, disappointing those that are leaving for Switzerland: “It should be clear, even at Davos, that Cold War triumphalism and assumptions about the inevitable global adoption of liberal values are long gone.”

All this must sound like music to the ears of Russian patriots.

But I did not talk in vain about Bremmer’s book “Every Nation for Itself”. In it, he gives a rather cynical advice to the leader that will head the USA in the “G Zero” period.

This is what he writes: “Washington must come to terms with the curbing of its leadership in the “G Zero” world. The Americans must renounce from these obligations, which they cannot assume anymore, and build anew the strength of the country from within.”

It still sounds like a realistic assessment of a current international situation and part of Donald Trump’s programme. Only for one “but”!

Under “obligations”, which the USA cannot assume anymore, one can understand not only the role of the international policeman but also the US national debt, of which Bremmer writes in plain text.

Nouriel Roubini holds the same thoughts, naming this “recycling of foreign exchange reserves of countries with a debt surplus”. In other words, the dollars and securities, in which Germany, Japan, China, Russia and others keep their savings, must be re-evaluated according to a “realistic rate”.

Since every country is for itself, the international obligations can be interpreted very broadly.

It is clear also who now appears as the main addressee of Roubini’s and Bremmer’s works. It is the new president of the USA Donald Trump. And as much as he “he sees not value for the American voters” in the adherence to international law in relation to the parties in the conflict in Syria, so why this voter must resent the robbery of foreign investors?

Bremmer is his pre-Davos article gives a very subtle hint to the Chinese element, reminding the reader of the presence at the forum of the president of the PRC and the capabilities of China to “play its role in supporting world order”. Trump must choose: either the basis of the world stays “Chimerica” (not the axis, including Moscow), or all, who America should have to “forgive”.

The administration of the 45^th president ignored Davos, but it will not have to ignore the advice of Ian Bremmer and Nouriel Roubini, whom today in the West are considered almost like prophets.

In this case the “G Zero” may turn to Russia, among other things, the zeroing out of all foreign exchange reserves and a significant re-evaluation of its export positions.

Much time has passed since 2012, so that I am hopeful that someone in Russia as studied this options.

*The organisation, in respect of which the court accepted an inured decision on the liquidation or prohibition of activities on the grounds, provided in the Federal Law “On countering extremist activities”.