To understand Lebanon’s financial collapse, look to its politics.

The country has been deeply damaged by an increasingly dysfunctional political system. A series of compromises have alienated it from its main markets in the Gulf and strangled its economy; anyone that has glanced at fluctuations in Lebanese bank deposits over the last 10 years can see the correlation.

Imagine if Boris Johnson or Donald Trump were obliged to form joint governments with Jeremy Corbyn or Bernie Sanders. The result would be paralysis and lack of accountability as each party pulls the country in opposite directions and blames the other for the state of limbo. This has been the state of affairs in Lebanon since the Doha agreement of 2008. 

That agreement followed an 18-month siege that paralyzed Beirut and an attack on the city by Hezbollah’s ‘black shirts’. The Doha formula imposed governments of national unity between Prime Minister Saad Hariri’s pro-Saudi camp and Hezbollah’s pro-Iran camp and their respective internal allies.

The pattern was set: each period of subsequent paralysis was followed by further compromise as the tug of war pulled the country away from its principal economic partners, the Arab Gulf states, with the regional balance of power tilting towards Hezbollah. 

It was not supposed to be like this. The Baabda Declaration in June 2012, reached after a process of national dialogue, was meant to secure Lebanon’s neutrality in regional conflicts, with both sides promising to hold back on external alliances and coexist despite difference over major regional issues like the war in Syria, the standoff between the US and Iran or relations with Israel or the Gulf states.

This has worn away. The Baabda declaration itself became a sham when Hezbollah inserted itself into the war in Syria in support of the Assad regime and overtly got involved in Iraq and Yemen as an Iranian proxy. This was followed by Saudi opposition to concessions by Hariri that led to the election of General Michel Aoun, an ally of Hezbollah, as president in October 2016; again, after a political paralysis that lasted 29 months with no active government and no head of state.  

The Saudis were also furious when President Aoun’s son-in-law, Foreign Minister Gebran Bassil, abstained from condemning the burning of the Saudi embassy in Tehran at an Arab League meeting in Cairo in January 2016, citing the need to preserve national unity.

Fearing that he was simply providing Hezbollah with protection in the guise of compromise, the Saudis pressured Hariri to resign in November 2017 during a trip to Riyadh, but he later challenged that by retracting on his resignation when back in Beirut. Lebanon was caught between two sides, and as the regional conflict intensified from tension to open confrontation, neutrality was no longer an option.

Gulf connections

An estimated 350,000 Lebanese expats live and work in Saudi Arabia, the UAE, Qatar and Kuwait. These countries are also the main clients for Lebanese contractors, consultants and advertising companies, some of which have offices there. The domestic tourism industry relies heavily on Arab Gulf visitors and they are a principal source of foreign investments especially in the real estate sector.

Lebanon also enjoyed a certain degree of political and economic protection from the US and the Gulf, and Hezbollah benefited indirectly from that protection, as it also shielded it to a certain degree from sanctions.

The deterioration of relations meant that the country was cut off by its Gulf partners. This was manifested in travel bans for Gulf Cooperation Council (GCC) nationals to Lebanon and a decrease in investments and bank deposits, as well as a decrease in remittances from Lebanese expats, partly because of economic crisis in the Gulf countries themselves.

Saudi Arabia withdrew $4 billion of aid to the Lebanese army and internal security forces, and no aid or deposits were forthcoming as the economic and financial situation deteriorated. 

The costs to the Lebanese economy include the opportunity cost created by the annual threat of war with Israel, after which trips are cancelled and projects postponed. Hezbollah also controls a section of Beirut port where it pays no duty or taxes. Add to that the economic fallout from the war in Syria, such as the impact on exports, the inflow of refugees and the cost of Hezbollah’s involvement.

The burden of these political factors is difficult to estimate but it constitutes the ransom that the Lebanese economy bears as a cost of the compromise. This is not to absolve Lebanese politicians from corruption or bankers of mismanagement but to add that political factors cannot be ignored.

The cumulative cost and economic impact of being cut off from its main economic partner eventually bankrupted the country. The fiscal and financial aspects, with Lebanon’s inability to service its debt, are but a reflection of these political factors. In the long run, the key to avoiding complete collapse is to restore relations with the GCC and free Lebanon from that very costly grip.

Given the international context, it is in Britain’s best interests to treat Europe as the ‘inner circle’ of its foreign, security and international economic policy, argues Dr Robin Niblett, director of Chatham House, in a new paper.

The British government’s approach since 2010 of seeking to enhance the UK's relations with the world’s emerging powers while balancing these with relationships with the United States and Europe has had only limited success. With constrained resources, and in the face of intense global economic competition, mounting security challenges and decaying international institutions, trying to commit the UK equally on all three fronts will not succeed in the future.

Britain, Europe and the World: Rethinking the UK’s Circles of Influence calls for a different mindset and strategy towards the UK’s place in the world – one in which Britain is surrounded by three concentric circles of influence:

• The first or ‘inner circle’ is the EU, the region with which the UK’s relationships need to be strongest and most active.
• The ‘second circle’ consists of the protective and enabling set of economic and security relationships with the US.
• Finally, an ‘outer circle’ comprises the UK’s other key bilateral and institutional relationships.

Should the UK vote to remain in the EU, policy-makers should commit to placing the EU at the centre of Britain's foreign policy, using the country’s economic weight, diplomatic skills and networks to play a leading role in leveraging more effective EU-wide policies.
 
Should the country vote to leave, the UK and the EU would enter an extended period of dislocation before arriving at a new, mutually diminished settlement. British policy-makers would be forced to deal and negotiate with the EU on critical policy issues from the outside. It is hard to see, argues Dr Niblett, how that could lead to EU policies or an international context more in line with British interests.                          

Despite its structural flaws and competing national interests, the EU offers the best prospects for managing the rapidly changing global context, for three main reasons:

First, it allows the UK to leverage the EU’s global economic weight to enhance the UK’s economic interests internationally, including securing beneficial trade agreements and contributing to EU and global standard-setting and rule-writing. Conversely, leaving would require the UK to renegotiate over 100 trade agreements, and would disadvantage UK interests in EU markets, including making EU governments less likely to liberalize services.                          

Second, it gives the UK a say in designing new EU initiatives to strengthen both British and European security in the face of diverse threats, whether managing the flow of refugees and other emigrants; combatting terrorism; or managing a more assertive Russia and the fallout from a disintegrating Middle East.                          

Third, cooperating with other EU members offers a way of maximizing opportunities to find joint solutions to shared problems, whether in terms of responding to climate change; managing growing cyber insecurity; reversing the decay of governance in failing states; or combating the rise of dangerous non-state actors.

Dr Robin Niblett said:

‘Britain is likely to be richer, safer and more influential in the coming decades if it treats Europe as the ‘inner circle’ of its foreign policy. For a mid-sized country like the UK, being a major player in a strong regional institution can offer a critical lever for international influence. In the UK’s case, this means choosing to be a leading player in the world’s principal civilian power, the European Union.’

                          

Nigeria’s booming informal trade is costly for society, business and government, yet a critical opportunity exists to formalize such trade and drive more sustainable and less volatile growth, argues a new report from Chatham House.

According to one estimate, informal activity accounts for up to 64 per cent of Nigeria’s GDP. Nigeria's Booming Borders: The Drivers and Consequences of Unrecorded Trade finds that this is a result of obstacles that impede trading through formal channels. These drivers include bureaucratic burdens and other factors, such as:

• The need for Nigerian businesses to produce at least nine documents in order to send an export shipment and at least 13 in order to bring in an import consignment.
• Rigid and dysfunctional foreign-exchange regulations that push most smaller traders into the incompletely regulated parallel exchange market.
• Corruption and unofficial ‘taxation’, especially on major border highways, which delegitimize formal channels and encourage the use of smuggling routes.

As a result, the state loses direct tax revenues that would be generated by formal cross-border trade. This is not just siphoned into the informal economy; some is lost entirely. For example, many shippers opt to dock in neighbouring countries rather than deal with the expense and difficulty of using Nigeria’s ports.

Informal trade also undermines the social contract between the private sector and government. The state lacks tax revenues to pay its officials, improve infrastructure or implement reforms, while traders feel the government provides no services in return for any taxes they might pay.

‘Every day tens of thousands of unofficial payments are made, none destined for the government. Policy-makers need to create an environment that encourages trade to flow through formal channels and capture lost revenue’, says co-author Leena Koni Hoffmann.

‘Formalization would assist Nigeria to pursue more high-quality, high-tech economic activity at a time when rising labour costs in Asia are creating scope for Nigerian manufacturers to compete’, she adds.

The report makes a number of recommendations for how Nigeria could encourage more formal trade, including:

• Strengthening the resources and capacity of the Federal Ministry of Industry, Trade and Investment to coordinate action across key government ministries, departments and agencies, as well as public and private stakeholders.
• Prioritizing engagement in the development of Economic Community of West African States (ECOWAS) trade policies and fully implementing the ECOWAS Protocol on Free Movement of Persons to reduce harassment at borders.
• Allowing banks to operate simple services for small and medium-sized businesses to make trade payments directly from Nigerian naira to CFA francs and vice versa.
• Improving basic facilities that support traders, including improving the efficiency of border posts, installing truck parks and all-weather surfacing on market access roads, and introducing online booking for trucks to enter ports.
• Separating responsibilities for assessing duty and tariff liabilities from revenue collection in order to reduce opportunities for corruption, an approach already tested with success by the Lagos State Internal Revenue Service.
• Increasing funding and technical support for the National Bureau of Statistics, which has a significant role to play in measuring and capturing more of Nigeria’s external trade.

Interviews conducted for the report reveal that business people would welcome the opportunity to pay taxes, but only if they received assurance that these payments would represent a contract with government guaranteeing that conditions for business would be improved.

‘As Africa’s largest economy, formalizing external trade would allow Nigeria to fulfil its potential as the trading engine of the West and Central African economy and shape the business landscape across the region,’ says co-author Paul Melly.

Even though President Barack Obama cautioned that the UK would be at the ‘back of the queue’ for a trade agreement with the US if the country chose to leave the EU, in the post-Brexit world a deal might be struck more swiftly. Various ideas for bringing the UK and US into a formal trade arrangement have been floated – ranging from a bilateral UK-US trade deal, or the UK joining NAFTA (the North American Free Trade Agreement between the US, Canada and Mexico), to the UK becoming a part of the TPP (the Trans-Pacific Partnership that the US is pursuing with 11 other countries along the Pacific Rim). However, one option stands out: opening the Transatlantic Trade and Investment Partnership (TTIP), which the US and EU are currently negotiating, to the UK after Brexit.

Good reasons for Britain in TTIP

First, from the perspective of the UK, signing up to TTIP would mean a more comprehensive deal with the US than a bilateral UK−US trade agreement. For instance, Britain is very keen to include financial services regulation in any trade agreement with America, but given Washington’s reluctance, this ambition might only be achievable if other countries like France and Germany throw their financial weight into the negotiations.

Second, continuing involvement in the TTIP negotiations allows London to begin securing its trade position with the US now. Though its influence in the EU may weaken as it heads for the exit, Britain could make the best use of influencing the EU position on TTIP while it is still a member. It could then accept the terms of TTIP and accede as a third party relatively quickly after exiting the EU. Official negotiations on a UK−US-only deal would have to wait until the UK has left the EU, as trade talks fall under the exclusive competence of the EU.

Third, for the US and EU, having the UK as a party to TTIP would ensure the scale of the deal is not reduced, and thereby maintain the strategic appeal and ability to set global standards. At the moment, the UK is the EU’s second-largest economy, accounting for approximately 18 per cent of GDP. With Britain in TTIP, the sheer size of the transatlantic market space will have more pull for other countries to adopt the common transatlantic rules in order to gain market access.

Fourth, the UK joining TTIP as a third party would establish the agreement as an ‘open platform’ that is available for other countries to join. Michael Froman, the United States trade representative, has characterized TTIP as being such an open agreement. EU representatives have been more ambivalent, though this is starting to change in the wake of Brexit. David O’Sullivan, the current EU ambassador to the US, recently said that as ‘we’ve always seen TTIP as a potential open platform, [the] UK could still benefit [from it] even not as a member of the European Union’. While now might not be the right time to expand the TTIP bloc beyond its original participants given that negotiations are already complex and drawn out, it would be beneficial for the negotiating partners to send a strong message that countries that are willing and able to commit to the high TTIP standards will be welcomed later on.

Obstacles to Britain in TTIP

But before the UK could be added to TTIP after Brexit, major hurdles will have to be jumped and crucial questions answered. The first obstacle is actually getting a TTIP deal, which will require significant efforts by political leaders and negotiators on both sides of the Atlantic.

Second, selling the ‘UK in TTIP option’ to Brexiteers will not be an easy task. After all, Leave campaigners argued that the US−EU deal might undermine the NHS and was thus presented as one of the reasons to cut loose from Brussels. As the major rationale behind TTIP is regulatory harmonization, if the UK were to sign up to TTIP it would still have to apply many EU rules. This, however, would go counter to the arguments for leaving the EU in the first place.

Third, it will be a challenging job for the UK to untangle its trade relationship with the EU while at the same time negotiating TTIP together with the EU. It would be easiest if the UK decided to remain a member of the EU customs union. Britain would then be required to impose the EU’s external tariffs on countries like the US. This would fit seamlessly with the ‘UK in TTIP’ option. But as the UK will most likely pull out of the customs union, it will be more complicated than that.

Finally, the timing of Brexit and the TTIP negotiations could cause complications. In the unlikely event that a US-EU free trade deal is concluded and ratified while the UK is still a member of the EU, the agreement (or the parts of it that fall under national competence) would most likely continue to apply to Britain after Brexit without the need for accession. If the TTIP negotiations continue beyond Brexit, then the UK would move from negotiating as part of the EU bloc to becoming a third party. This raises the issue of whether the UK and EU continue to negotiate as one bloc vis-à-vis the US.

Special economic relationship

Still, the depth of the economic ties between the US and UK means that the TTIP option is likely to be welcomed favourably by both countries. The US is the most important single export market for the UK, with goods and services worth £45 billion shipped in 2015. Last year, the US ranked third (after Germany and China) as a source for UK imports. With nearly $1 trillion invested in each other’s economies, the US and the UK are also each other’s largest investors. Given this special economic relationship, Britain is unlikely to be at the ‘back of the queue’ in any event. But the TTIP option is the best path to preserving and strengthening the relationship post-Brexit while also realizing the wider strategic benefits of a transatlantic trade agreement.

A version of this article appeared on Real Clear World.

To comment on this article, please contact Chatham House Feedback

As coronavirus spreads across the globe, states grapple to find the ideal strategy for coping with the global pandemic. And, in China, Singapore, South Korea, the US, the UK, and Europe, divergent policies are a product of state capacity and legal authority, but they also reveal competing views about the optimal role of centralized state authority, federalism, and the private sector.

Although it is too soon to know the longer-term effects, the apparent capacity of centralized state authority in China, South Korea and Singapore to respond effectively and rapidly is making headlines. In the United States, the opposite has been true. 

America’s response is being shaped by its federal structure, a dynamic private sector, and a culture of civic engagement. In the three weeks since the first US case of coronavirus was confirmed, state leaders, public health institutions, corporations, universities and churches have been at the vanguard of the nation’s effort to mitigate its spread.

Images of safety workers in hazmat suits disinfecting offices of multinational corporations and university campuses populate American Facebook pages. The contrast to the White House effort to manage the message, downplay, then rapidly escalate its estimation of the crisis is stark.

Bewildering response

For European onlookers, the absence of a clear and focused response from the White House is bewildering. By the time President Donald Trump declared a national emergency, several state emergencies had already been called, universities had shifted to online learning, and churches had begun to close.

By contrast, in Italy, France, Spain and Germany, the state has led national efforts to shutter borders and schools. In the UK, schools are largely remaining open as Prime Minister Boris Johnson has declared a strategy defined by herd immunity, which hinges on exposing resilient populations to the virus.

But America has never shared Europe’s conviction that the state must lead. The Center for Disease Control and Prevention, the leading national public health institute and a US federal agency, has attempted to set a benchmark for assessing the crisis and advising the nation. But in this instance, its response has been slowed due to faults in the initial tests it attempted to rollout. The Federal Reserve has moved early to cut interest rates and cut them again even further this week.

But states were the real first movers in America’s response and have been using their authority to declare a state of emergency independent of the declaration of a national emergency. This has allowed states to mobilize critical resources, and to pressure cities into action. After several days delay and intense public pressure, New York Governor Andrew Cuomo forced New York City Mayor Bill de Blasio to close the city’s schools.

Declarations of state emergencies by individual states have given corporations, universities and churches the freedom and legitimacy to move rapidly, and ahead of the federal government, to halt the spread in their communities.

Washington state was the first to declare a state of emergency. Amazon, one of the state’s leading employers, quickly announced a halt to all international travel and, alongside Microsoft, donated $1million to a rapid-response Seattle-based emergency funds. States have nudged their corporations to be first movers in the sector’s coronavirus response. But corporations have willingly taken up the challenge, often getting ahead of state as well as federal action.

Google moved rapidly to announce a move allowing employees to work from home after California declared a state of emergency. Facebook soon followed with an even more stringent policy, insisting employees work from home. Both companies have also met with World Health Organization (WHO) officials to talk about responses, and provided early funding for WHO’s Solidarity Response Fund set up in partnership with the UN Foundation and the Swiss Philanthropy Foundation.

America’s leading research universities, uniquely positioned with in-house public health and legal expertise, have also been driving preventive efforts. Just days after Washington declared a state of emergency, the University of Washington became the first to announce an end to classroom teaching and move courses online. A similar pattern followed at Stanford, Harvard, Princeton and Columbia - each also following the declaration of a state of emergency.

In addition, the decision by the Church of the Latter Day Saints to cancel its services worldwide followed Utah’s declaration of a state of emergency.

The gaping hole in the US response has been the national government. President Trump’s declaration of a national emergency came late, and his decision to ban travel from Europe but - at least initially - exclude the UK, created uncertainty and concern that the White House response is as much driven by politics as evidence.

This may soon change, as the House of Representatives has passed a COVID-19 response bill that the Senate will consider. These moves are vital to supporting state and private efforts to mobilize an effective response to a national and global crisis.

Need for public oversight

In the absence of greater coordination and leadership from the centre, the US response will pale in comparison to China’s dramatic moves to halt the spread. The chaos across America’s airports shows the need for public oversight. As New York State Governor Cuomo pleaded for federal government support to build new hospitals, he said: ‘I can’t do it. You can’t leave it to the states.'

When it comes to global pandemics, we may be discovering that authoritarian states can have a short-term advantage, but already Iran’s response demonstrates that this is not universally the case. Over time, the record across authoritarian states as they tackle the coronavirus will become more apparent, and it is likely to be mixed.

Open societies remain essential. Prevention requires innovation, creativity, open sharing of information, and the ability to inspire and mobilize international cooperation. The state is certainly necessary, but it is not sufficient alone.

On 12 December, Britain will hold the most consequential election in its postwar history. The outcome of the election will influence not only the fate of Brexit but also the likelihood of a second referendum on EU membership, a second independence referendum in Scotland, the most economically radical Labour Party for a generation, Britain’s foreign and security policy and, ultimately, its position in the wider international order.

If you look only at the latest polls, then the outcome looks fairly certain. Ever since a majority of MPs voted to hold the election, the incumbent Conservative Party has averaged 38%, the opposition Labour Party 27%, the Liberal Democrats 16%, Brexit Party 10%, Greens 4% and Scottish National Party 3%. Prime Minister Boris Johnson and his party continue to average an 11-point lead which, if this holds until the election, would likely deliver a comfortable majority.

Johnson can also point to other favourable metrics. When voters are asked who would make the ‘best prime minister’, a clear plurality (43%) say Johnson while only a small minority (20%) choose the Labour Party leader, Jeremy Corbyn. Polls also suggest that, on the whole, Johnson is more trusted by voters than Corbyn to deal with Brexit, the economy and crime, while Jeremy Corbyn only tends to enjoy leads on health. All of this lends credence to the claim that Britain could be set for a Conservative majority and, in turn, the passing of a withdrawal agreement bill in early 2020.

But these polls also hide a lot of other shifts that are taking place and which, combined, make the 2019 general election unpredictable. One concerns leadership. While Boris Johnson enjoys stronger leadership ratings than Jeremy Corbyn, it should be remembered that what unites Britain’s current generation of party leaders is that they are all unpopular. Data compiled by Ipsos-MORI reveals that while Johnson has the lowest ratings of any new prime minister, Labour’s Jeremy Corbyn has the lowest ratings of any opposition leader since records began.

Another deeper shift is fragmentation. One irony of Britain’s Brexit moment is that ever since the country voted to leave the European Union its politics have looked more ‘European’. Over the past year, one of the world’s most stable two-party systems has imploded into a four-party race, with the anti-Brexit Liberal Democrats and Nigel Farage’s strongly Eurosceptic Brexit Party both presenting a serious challenge to the two mainstream parties.

In the latest polls, for example, Labour and the Conservatives are attracting only 61 per cent of the overall vote, well down on the 80 per cent they polled in 2017. Labour is weakened by the fact that it is only currently attracting 53 per cent of people who voted Labour at the last election, in 2017. A large number of these 2017 Labour voters, nearly one in four, have left for the Liberal Democrats, who are promising to revoke Article 50 and ‘cancel Brexit’. This divide in the Remain vote will produce unpredictable outcomes at the constituency level.

At the other end of the spectrum, the Conservatives are grappling with a similar but less severe threat. Nigel Farage and the Brexit Party are attracting around one in ten people who voted Conservative in 2017, which will make Boris Johnson’s task of capturing the crucial ‘Labour Leave’ seats harder. There is clear evidence that Johnson has been curbing Farage’s appeal, but it remains unclear how this rivalry on the right will play out from one seat to the next.

One clue as to what happens next can be found in those leadership ratings. While 80 per cent of Brexit Party voters back Johnson over Corbyn, only 25 per cent of Liberal Democrat voters back Corbyn over Johnson. Johnson may find it easier to consolidate the Leave vote than Corbyn will find the task of consolidating the Remain vote.

All of this reflects another reason why the election is unpredictable: volatility. This election is already Britain’s fifth nationwide election in only four years. After the 2015 general election, 2016 EU referendum, 2017 general election and 2019 European parliament elections, Britain’s political system and electorate have been in a state of almost continual flux. Along the way, a large number of voters have reassessed their loyalties.

As the British Election Study makes clear, the current rate of ‘vote-switching’ in British politics, where people switch their vote from one election to the next, is largely unprecedented in the post-war era. Across the three elections held in 2010, 2015 and 2017, a striking 49 per cent of people switched their vote.

This is not all about Brexit. Attachment to the main parties has been weakening since the 1960s. But Brexit is now accelerating this process as tribal identities as ‘Remainers’ or ‘Leavers’ cut across traditional party loyalties. All this volatility not only gives good reason to expect further shifts in support during the campaign but to also meet any confident predictions about the election result with a healthy dose of scepticism.

This article adopts a constructive approach to examining the problem of the Indo-Pacific construct. Through reflection on the east Asian experience, it proposes an analytical framework of developmental peace as a constellation of international practices, which means that the more economic development is prioritized by states in regional processes, the more likely it is that a sustainable peace will be achieved. States participating in regional integration comprise a community of practice. On the basis of a shared understanding that development is of overriding importance and underpins security and state legitimacy, the community takes economic development as the anchoring practice; this practice embodies and enacts constitutive rules and fundamental norms for a broader set of practices in regional processes, such as peaceful coexistence and non-interference. The more economic development is prioritized on domestic and regional agendas, the more likely it is that conflicts in the security realm will be relaxed or even resolved to protect security interests. The author draws some useful implications from the developmental peace in east Asia for the Indo-Pacific construct, among which the most important include building shared understandings on the prioritization of economic development, taking advantage of the Regional Comprehensive Economic Partnership (RCEP), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Asian Infrastructure Investment Bank, and using the code of conduct process as a vehicle and best practice to facilitate rule-making for the maritime order. Finally, the author briefly discusses the contributions of the study and limitations of the model.

This event is part of the US and Americas Programme Inaugural Virtual Roundtable Series on the US and the State of the World and will take place virtually only.

This event will take place from 14:00 – 15:00 BST.

America is changing. So too is the rest of the world. But will America's internal changes carry broader implications for its role in the world, the influence and power it wields, and the foreign policy choices it makes?

While proving causality would be difficult, commonsense logic might suggest that a youthful America, one that has a more diverse ethnic and cultural makeup and that is more aware of its economic inequality, is also one that might hold more open, accepting (and perhaps liberal) views on a number of issues. However the record is mixed: while in some areas America is becoming more liberal, in others such as gun control and abortion, the trend seems to be towards the conservative.

But America is undergoing some fundamental transformations. America's demographics are changing. Unlike many in Asia and Europe, the US is remaining a relatively young country. It is also becoming more diverse. In 2011, there were more births in the US among minorities than Caucasians (minorities made up 50.4 per cent of the nation's population under one year old). Hispanics are the fastest growing segment of the population.

America, in common with many other countries, is also seeing a dramatic rise in the level of economic inequality. While the 2011 Occupy Wall Street movement spread to 900 cities around the world, the US is perhaps exceptional in the speed with which the social gap is widening and its size. These populations are also swiftly urbanizing.

The number of Americans who do not identify with any religion is growing rapidly. According to Pew Research polling, one-fifth of the US public are religiously unaffiliated today, the highest numbers recorded by them. Younger adults are more likely to have no religious affiliation than their elders, suggesting that this trend is likely to continue.

These changes could be contributing to the possible trend towards more liberal views in the US, led for the main part by cities and states. For example, while federal law continues to ban cannabis, in the summer of 2013, two states – Washington and Colorado – legalized it. Since Massachusetts in 2004 made gay marriage legal, 16 other states (and the District of Columbia) have followed suit, with nine of these decisions taking place in 2013. And, at a federal level, after 18 years of 'Don't Ask, Don't Tell' (the law that prevented military personnel from disclosing that they were gay), the law was finally repealed in 2011 after years of debate.

One could also argue that the slow creep of some Republican platforms towards a more open social agenda is also an indication that, at least politically, some on the right recognize that to be reelected they need to move where they perceive the population to be (i.e. left of their position).

These demographic and political changes are taking place in a backdrop of some other important national trends. Over the past 10 years, the arrival of new technologies, most notably fracking, has led to an energy revolution in the United States. America's trend towards energy self-sufficiency is having a direct impact on the US economy and will have implications for its diplomacy. It is supporting 're-shoring' (the return of jobs to the US) which is rebuilding America's manufacturing and industrial base, and it is helping the US (along with the stimulus and other policies) climb out of recession faster than many of its European allies.

This is taking place in the context of the highest ever levels of political polarization (as measured by Congressional voting). For the first time last year, the most liberal Republican was to the right of the most conservative Democrat; the traditional overlap that facilitated the two political parties working together has now disappeared.

These trends are joined, and at times reinforced, by two other profound global factors: faster technological shifts and the dispersal of power.

As all these dynamics interact it will have implications for America's foreign policy and, as such, should be of interest to an international audience – with a caveat: Americans generally don't appear to care much about foreign policy and as such their impact on it is limited.

At a basic level, a youthful America is a productive one that is likely to retain relatively high growth rates. This is vital for its trading and investment partners, not least in Europe and Asia. While the US will soon have to deal with unaffordable entitlements (such as social security and health care) and needs to reenergize its early education, the fact that it still has a relatively low ratio of retirees to workers, means that it has a bit more time to manage this transition.

America's young and diverse population could also have an impact on America's soft power. The fact that increasing numbers of Americans affiliate as Asian-Americans or Hispanic-Americans (to name but two groups) could have profound effects on how the nation manages its relationships with these regions and is seen by their citizens. The proliferation of communications channels and the empowerment of the individual will only reinforce these tendencies.

The increase in people-to-people links likely to result is also a manifestation of the broader trend of the diffusion of power to other non-state actors. Over the long term, foreign policy is no longer going to be the exclusive right of the state, but other actors, from individuals to philanthropists and businesses, will play a role.

However at some level, while the young are taking advantage of new technologies to engage with their neighbours, and a more diverse population is linking with their families and friends overseas, the rising income inequality could be pushing the globalization agenda in the opposite direction. As those towards the bottom strata find technology taking away their jobs or corporates moving them overseas they are likely to push back. And their ability to be heard (individual empowerment once more) is only increasing.

Two regions in particular are likely to see specific foreign policy changes. In Latin America the inevitable shift on immigration (although it could still be some time in coming) will have potentially huge implications on migration of workers north. At the same time, America's 'war on drugs' has already begun to change under the Obama administration from a historically supply side driven policy to one that accepts (at least rhetorically) the need for addressing the demand side. This more nuanced policy could allow a more balanced policy agenda between the US and its southern neighbors.

And for Europeans, the young increasingly don't remember the Cold War and the importance of the Alliance in and after World War II (Obama is the first US president who didn't live through it). The ties that bind could in time weaken. This is only being reinforced by immigration trends; fewer citizens from Europe come to the US than from any other region of the world.

America is not, as some assert, becoming isolationist. 'Nation-building at home' may be Obama's focus, but this does not precipitate an abandonment of international engagement. These trends suggest instead that America might become more nuanced and collaborative in its relationships. America's diversity has always been a strength and as it increases, will continue to be one. America, more than any other nation, truly continues to be the global melting pot.

This article was originally published by the Huffington Post.

To comment on this article, please contact Chatham House Feedback

This expert-level workshop will bring together around 30 Gulf scholars, experts and practitioners from a variety of professional and academic backgrounds to share their analysis and research on the role of Islam in social and political movements in the GCC countries, as well as alternatives to Islamism. It will place political Islam in historical context, explore the differences between different strands of political Islam and the ways in which different country contexts have shaped the behaviour of movements that claim to have religious legitimacy, such as the institutions and legal regulations governing political movements.

This event is part of Chatham House’s Future Trends in the GCC research project, and is held in partnership with Qatar University’s Gulf Studies Center in Doha, Qatar.

As coronavirus spreads across the globe, states grapple to find the ideal strategy for coping with the global pandemic. And, in China, Singapore, South Korea, the US, the UK, and Europe, divergent policies are a product of state capacity and legal authority, but they also reveal competing views about the optimal role of centralized state authority, federalism, and the private sector.

Although it is too soon to know the longer-term effects, the apparent capacity of centralized state authority in China, South Korea and Singapore to respond effectively and rapidly is making headlines. In the United States, the opposite has been true. 

America’s response is being shaped by its federal structure, a dynamic private sector, and a culture of civic engagement. In the three weeks since the first US case of coronavirus was confirmed, state leaders, public health institutions, corporations, universities and churches have been at the vanguard of the nation’s effort to mitigate its spread.

Images of safety workers in hazmat suits disinfecting offices of multinational corporations and university campuses populate American Facebook pages. The contrast to the White House effort to manage the message, downplay, then rapidly escalate its estimation of the crisis is stark.

Bewildering response

For European onlookers, the absence of a clear and focused response from the White House is bewildering. By the time President Donald Trump declared a national emergency, several state emergencies had already been called, universities had shifted to online learning, and churches had begun to close.

By contrast, in Italy, France, Spain and Germany, the state has led national efforts to shutter borders and schools. In the UK, schools are largely remaining open as Prime Minister Boris Johnson has declared a strategy defined by herd immunity, which hinges on exposing resilient populations to the virus.

But America has never shared Europe’s conviction that the state must lead. The Center for Disease Control and Prevention, the leading national public health institute and a US federal agency, has attempted to set a benchmark for assessing the crisis and advising the nation. But in this instance, its response has been slowed due to faults in the initial tests it attempted to rollout. The Federal Reserve has moved early to cut interest rates and cut them again even further this week.

But states were the real first movers in America’s response and have been using their authority to declare a state of emergency independent of the declaration of a national emergency. This has allowed states to mobilize critical resources, and to pressure cities into action. After several days delay and intense public pressure, New York Governor Andrew Cuomo forced New York City Mayor Bill de Blasio to close the city’s schools.

Declarations of state emergencies by individual states have given corporations, universities and churches the freedom and legitimacy to move rapidly, and ahead of the federal government, to halt the spread in their communities.

Washington state was the first to declare a state of emergency. Amazon, one of the state’s leading employers, quickly announced a halt to all international travel and, alongside Microsoft, donated $1million to a rapid-response Seattle-based emergency funds. States have nudged their corporations to be first movers in the sector’s coronavirus response. But corporations have willingly taken up the challenge, often getting ahead of state as well as federal action.

Google moved rapidly to announce a move allowing employees to work from home after California declared a state of emergency. Facebook soon followed with an even more stringent policy, insisting employees work from home. Both companies have also met with World Health Organization (WHO) officials to talk about responses, and provided early funding for WHO’s Solidarity Response Fund set up in partnership with the UN Foundation and the Swiss Philanthropy Foundation.

America’s leading research universities, uniquely positioned with in-house public health and legal expertise, have also been driving preventive efforts. Just days after Washington declared a state of emergency, the University of Washington became the first to announce an end to classroom teaching and move courses online. A similar pattern followed at Stanford, Harvard, Princeton and Columbia - each also following the declaration of a state of emergency.

In addition, the decision by the Church of the Latter Day Saints to cancel its services worldwide followed Utah’s declaration of a state of emergency.

The gaping hole in the US response has been the national government. President Trump’s declaration of a national emergency came late, and his decision to ban travel from Europe but - at least initially - exclude the UK, created uncertainty and concern that the White House response is as much driven by politics as evidence.

This may soon change, as the House of Representatives has passed a COVID-19 response bill that the Senate will consider. These moves are vital to supporting state and private efforts to mobilize an effective response to a national and global crisis.

Need for public oversight

In the absence of greater coordination and leadership from the centre, the US response will pale in comparison to China’s dramatic moves to halt the spread. The chaos across America’s airports shows the need for public oversight. As New York State Governor Cuomo pleaded for federal government support to build new hospitals, he said: ‘I can’t do it. You can’t leave it to the states.'

When it comes to global pandemics, we may be discovering that authoritarian states can have a short-term advantage, but already Iran’s response demonstrates that this is not universally the case. Over time, the record across authoritarian states as they tackle the coronavirus will become more apparent, and it is likely to be mixed.

Open societies remain essential. Prevention requires innovation, creativity, open sharing of information, and the ability to inspire and mobilize international cooperation. The state is certainly necessary, but it is not sufficient alone.

This event is part of the US and Americas Programme Inaugural Virtual Roundtable Series on the US and the State of the World and will take place virtually only.

This event will take place from 14:00 – 15:00 BST.

This event is part of the US and Americas Programme Inaugural Virtual Roundtable Series on the US and the State of the World and will take place virtually only.

This event will take place from 14:00 – 15:00 BST.

Although protests successfully ended Abdelaziz Bouteflika’s 20-year sultanistic rule a little over one year ago, demands have been continuing to dismantle the system, get rid of the old personnel, and institute democracy.

The controversial election in December of Abdelmadjid Tebboune — who has inherited a disastrous situation — has not tempered the determination of the Hirak protest movement. As a former minister and prime minister under Bouteflika, the new president has won little legitimacy, and protests have continued.

Now COVID-19 is worsening already dire economic conditions, such as a sharp drop in oil prices. By the beginning of May, statistics showed 10% of confirmed cases have ended in fatality, the highest percentage in the region.

Maintaining an authoritarian style

Hirak had already called for the suspension of the marches — mobilising online instead — before the government’s measures, which include curfews and lockdowns, demonstrating a high sense of duty. But instead of appeasing Hirak’s demands, the government has maintained the authoritarian style of its predecessors.

Tebboune released more than 5,000 prisoners on March 31 but kept prisoners of conscience and leaders of the hirak imprisoned, then subsequently imprisoned journalists and activists. It even passed a controversial penal law, that also covers fake news, and may be used to justify actions against journalists.

The regime wishes to see an end to the Hirak, and rejects accusations of totalitarianism by insisting freedom and a democratic climate exist in Algeria.

Tebboune’s actions contradict his praise for the ‘blessed’ hirak and his promises of instituting the rule of law. In proclaiming the measures, the government has shown disappointing leadership, acting in an authoritarian fashion.

Tebboune also declared proudly that Algeria was fully prepared to fight the coronavirus epidemic, an optimistic claim given the country has only 400 intensive care unit (ICU) beds, or one per 100,000 people. Despite hundreds of billions of hydrocarbon dollars accumulating during the Bouteflika-era, Algeria’s health system ranks 173 out of 195 countries.

Algerians often refer to hospitals as ‘mouroirs’, meaning ‘places for the dying’. Not only has the state failed to build modern hospitals but basic hygienic conditions are lacking, and government officials prefer being treated overseas. A 2014 project to build five university hospitals was abandoned, leaving the health sector in deplorable shape.

Before Chinese assistance arrived, the glaring lack of equipment to protect caregivers and care for the sick was evident. Prime Minister Abdelaziz Djerad admitted the health system required a ‘total overhaul’. The president recently stated Algeria’s doctors are among the 'best in the world' but didn't address why almost 15,000 Algerian doctors practice in France.

Strict containment measures are in sync with most countries but implementation is challenging when most people live in overcrowded urban dwellings (the average household consists of 5.9 members).

Water shortages in many areas makes good hygiene and decontamination impossible, while schools and universities find online teaching difficult when many students do not possess laptops or internet connections. And only 20% of Algerians have debit cards in a cash-dominated economy because of low trust in the public-dominated banking sector, making online shopping capability low.

An already declining macroeconomic situation is worsening due to COVID-19. The IMF revised its 2020 estimates for Algeria, forecasting a catastrophic contraction of -5.2% in a country where hydrocarbons account for 93% of export revenues and 60% of its budget.

Foreign currency reserves are now an estimated $55 billion (expected to fall to $44billion by the end of 2020), down from $200 billion in 2014, and Algerian crude has recently traded close to production costs, with the fiscal breakeven oil price at $157.

In line with its historic aversion to external borrowing, Tebboune recently ruled out seeking financial support from the ‘IMF or other foreign banks’, as he argued such borrowing undermines sovereign foreign policy because - when indebted - ‘we cannot talk about either Palestine or Western Sahara’, two causes dear to Algeria. ‘Friendly countries’ - most likely a reference to China - are said to have offered to grant loans which have been declined for now.

The government is forecasted to face a 20% budget shortfall this year, but Algeria’s fiscal response to COVID-19 is actually the largest among the regional hydrocarbon exporters at an estimated 8% of GDP, compared to an average of 3.2%. However, the government revised downwards its 2020 public spending by 50% (a second cut in a month, from an initial 30% reduction), halting state projects and slashing its $41 billion import bill by 25% while expanding agricultural production. National oil company SONATRACH will also cut planned investment by half to $7 billion but plans have been revealed to develop other natural resources including gold, uranium and phosphates.

But recent growth rates are insufficient to create jobs for those entering the labour market. Despite government attempts to support a rather anaemic ‘formal’ private sector, estimates are 700,000 jobs could be lost due to potential bankruptcies from reduced activity and a loss of markets abroad.

Facing potential social unrest and the quasi-preservation of a tired social contract, the government has committed to upholding public sector wages - including for 50% of the civil servants told to stay home - protecting sacrosanct, unsustainable subsidies, and increasing health expenditure to strengthen the capacity to combat COVID-19.

A supplementary finance law will include various measures that support businesses and the economic fallout. However, while the government is to be commended for its efforts to aid businesses, supporting large swathes of the population is challenging as approximately 50% of the workforce operate in the informal economy.

Weak administrative capacity and insufficient data to implement cash transfers makes the planned ‘solidarity allowance’ of 10,000 dinars ($80) for Ramadan difficult to allocate to those who most need it (especially those in the informal sector). Families, communities, and religious organisations continue to be a social safety net.

So COVID-19 has not created new problems, it has merely magnified and exacerbated the numerous inequalities and failures of the Bouteflika regime to sufficiently invest in human security (economic, food, health environmental, personal, community, and political). Typically, whenever oil prices and related earnings dwindle, the political system promises to reform and diversify the economy. Tebboune is repeating this same old tune.

There are positive elements, such as the government’s realization it must initiate genuine reforms. And local enterprises have been successfully producing artificial respirators, surgical masks, and other materials. Algerians, including the Hirak, are showing great social solidarity.

But the government must capitalize on these positive actions by introducing real change. Because, if not, Hirak will certainly be back in force once the crisis is over, and operating in an environment of worsening socioeconomic problems. The medicine of the past will not work.

The President of the European Commission, Ursula von der Leyen, has declared that she wants Europe to become ‘the first climate-neutral continent by 2050’, and in December 2019, the Commission presented the European Green Deal in order to achieve this objective. However, even though greenhouse gas emissions from the EU have fallen by more than 20 per cent since 1990, the Union remains the third largest emitter in the world, after the United States and China.

What are the opportunities and challenges for raising climate ambition in Europe?  Will the EU increase its Nationally Determined Contribution and what impact might this have globally? How might Brexit affect climate action in the EU and the UK?  The second event in the Chatham House COP26 Diplomatic Briefing Series will address these critical questions.

This article adopts a constructive approach to examining the problem of the Indo-Pacific construct. Through reflection on the east Asian experience, it proposes an analytical framework of developmental peace as a constellation of international practices, which means that the more economic development is prioritized by states in regional processes, the more likely it is that a sustainable peace will be achieved. States participating in regional integration comprise a community of practice. On the basis of a shared understanding that development is of overriding importance and underpins security and state legitimacy, the community takes economic development as the anchoring practice; this practice embodies and enacts constitutive rules and fundamental norms for a broader set of practices in regional processes, such as peaceful coexistence and non-interference. The more economic development is prioritized on domestic and regional agendas, the more likely it is that conflicts in the security realm will be relaxed or even resolved to protect security interests. The author draws some useful implications from the developmental peace in east Asia for the Indo-Pacific construct, among which the most important include building shared understandings on the prioritization of economic development, taking advantage of the Regional Comprehensive Economic Partnership (RCEP), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Asian Infrastructure Investment Bank, and using the code of conduct process as a vehicle and best practice to facilitate rule-making for the maritime order. Finally, the author briefly discusses the contributions of the study and limitations of the model.