US election event: Sir Christopher Meyer
In an age where opinion is so freely available, it’s a pleasure to listen to experts. Sir Christopher Meyer, British ambassador to the US from 1997 to 2003, gave our guests a fascinating insight to the government’s options following Brexit and to the US presidential elections.
Jane Sydenham, Investment Director
Referencing Boris Johnson’s speech at the recent Conservative Party conference, Sir Christopher framed the US elections in the context of global geopolitics since the end the end of the Cold War. Mr Johnson had poured scorn on the neocon ‘bible’, The End of History and the Last Man by the American political economist Francis Fukuyama, which proclaimed in 1992 that the fall of the iron curtain represented the triumph of western democracy and free-market capitalism, and that we may have reached the end stage of political development.
Instead, 24 years on, there are more conflicts than ever before and western liberal democracy is under attack from authoritarian states, such as Russia and China. Furthermore, the organisations that underpin our system are either failing or impotent, including the UN Security Council, International Monetary Fund, World Trade Organisation and European Union.
Sir Christopher calls this ‘the Great Unravelling’ and believes it has almost existential implications for the world. Many of the agreements and protocols between the US and Russia are breaking down under President Putin’s aggressive foreign policy, and these form the framework that has kept the world safe over the last 70 years. It is against these high stakes developments that Brexit and the US presidential election are taking place, and both could either exacerbate or reverse this process.
He believes Brexit will be hard work, not least because the EU team will be led by a wily French diplomat as well as the elections that will take place next year in Germany, France and the Netherlands. He gave an interesting perspective on the calls for the government to set out their approach to Brexit: the policy (what you want) should not be confused with diplomacy (how you get it). While the government should set out its vision, under no circumstances should it discuss how it will approach the negotiations.
Sir Christopher sees parallels between those in the UK and Europe who are concerned about the EU and what it stands for and those who will vote for Donald Trump. Just as those who voted to leave the EU aren’t all anti-immigration fascists, neither is it right to characterise all those who want ‘to make America great again’ as uneducated white working-class people. The voters aren’t the problem – instead, Sir Christopher blames the politicians who cynically exploit their grievances.
While Mr Trump may be opposed to nation building and regime change (which were central to the neoconservative agenda of many of George W. Bush’s foreign policy advisors), he is protectionist and opposed to NAFTA, the Trans-Pacific Partnership and the US trade deal with the EU. He also wants to take on China in a trade war, starting with 45% tariffs on imports. This would certainly exacerbate ‘the Great Unravelling’, as would ending NATO’s mutual defence commitment and undermining the nuclear non-proliferation treaties.
Sir Christopher warned that it would be unwise to rely on Congress or presidential advisors to rein in Mr Trump. There had been no sign that he would accept such moderation: where a ‘normal’ politician would have tempered their excesses to attract a broader electorate after securing the Republican nomination, Mr Trump had instead raised the stakes. He does not strike Sir Christopher as a cool-headed president-in-waiting.
In contrast, he believes Hillary Clinton has the experience and personal qualities to lead America and to reverse the unravelling of the post-war ecosystem. When asked in the Q&A whether she was the ‘least worst’ candidate, Sir Christopher said that she was far better than this implied and would be a very sound president with a sensible foreign policy.
Before Sir Christopher spoke, our asset allocation strategist, Edward Smith, explained why the US election could be a key turning point for the global economy. Protectionism and other populist responses to the disillusionment felt be large sections of the electorate could lead to a global trade war that would have grave implications for investment returns.
Edward believes the scale of this risk isn’t appreciated by the market and cites the rise of protectionism as one of the biggest risks facing investors. Read more about his investment report on the risks presented by protectionism, Trade of the Century.