It is nearly 30 years since Rudiger Dornbusch and Sebastian Edwards published a seminal book, The Macroeconomics of Populism. Their conclusion back then was that the economic policies of populist leaders were quintessentially irresponsible. These governments, blinded by an aim to address perceived social injustices, specialised in profligacy, unbothered by budget constraints or whether they might run out of foreign exchange.

Because of this disregard for basic economic logic, their policy experiments inevitably ended badly, with some combination of inflation, capital flight, recession and default. Salvador Allende’s Chile in the 1970s, or Alan García’s Peru in the 1980s, capture this story perfectly.

These days, the macroeconomics of populism looks different. Of course there are populist leaders out there whose policies follow, more or less, the playbook of the 1970s and 1980s. Donald Trump may prove to be one of those, with a late-cycle fiscal expansion that seemed to have no basis in economic reasoning; Recep Tayyip Erdogan, by some accounts, may be another.

But a much more interesting phenomenon is the apparent surge in populist leaders whose economic policies are remarkably disciplined.

Take Mexico’s president, Andrés Manuel López Obrador. When it comes to fiscal policy, it is odd indeed that this fiery critic of neoliberalism seems fully committed to austerity. His budget for 2019 targets a surplus before interest payments of 1 per cent of GDP, and on current plans he intends to increase that surplus next year to 1.3 per cent of GDP. He has upheld the autonomy of the central bank and, so far at least, his overall macroeconomic framework is anything but revolutionary.

Hungary’s prime minister Viktor Orban offers another example of conservative populism. Under his watch, budget deficits have been considerably lower than they had been previously, helping to push the stock of public debt down from 74 per cent of GDP in 2010, the year Orban took over, to 68 per cent last year.

This emphasis on the virtues of fiscal prudence is also visible in Poland, where Jaroslaw Kaczynski’s PiS has managed public finances with sufficient discipline in the past few years to push the debt/GDP ratio below 50 per cent last year, the first time this has happened since 2009.

The obvious question is: what has changed in the decades since Dornbusch and Edwards went into print?

One answer is that today’s populists tend to strive for national self-reliance, which encourages them to avoid building up any dependence on foreign capital. And since that goal is achieved by keeping a tight rein on macro policy, fiscal indiscipline is avoided in order to limit vulnerability to foreign influences.

Perhaps this is because the 'them', or the perceived enemy, for many of today’s populists tends to be outside the country rather than inside. Broadly speaking, it is the forces of globalisation — and global capital in particular — that are the problem for these leaders, and self-reliance is the only way to keep those forces at arm’s length. This helps to explain why, for example, Orban has been so keen to repay debt to Hungary’s external creditors. He has relied instead on selling bonds to Hungarian households to finance his deficits, even though the interest rates on those bonds are much higher than he would pay to foreign creditors. It also helps explain why the PiS in Poland has presided over a decline in foreign holdings of its domestic bonds. Foreign investors owned 40 per cent of Poland’s domestic government debt back in 2015, but only 26 per cent now.

In other words, among many of today’s populists there is a blurring of the distinction between populism and nationalism. And the nationalistic urge to keep the rest of the world off your back seems to dominate the populist urge to spend money. The perfect example of that instinct is Vladimir Putin: not necessarily a populist, but his administration has been emphatic about the need to keep public spending low and to build solid financial buffers. National self-reliance is an economic obsession for the Russian government, and provides a model for other countries who wish to insulate themselves from international finance.

One of the reasons why the macroeconomics of populism have changed in this way is the historical legacy of economic disaster. If you are a populist leader in a country where financial crisis is part of living memory — as it is in Mexico, Hungary and Russia, say — you might do well to err on the side of conservatism for fear of repeating the mistakes of your predecessors.

But another reason why populism looks different for countries like Poland, Hungary, Mexico and Russia has to do with mere luck. Hungary and Poland, in particular, enjoy the luck of geography: having been absorbed into the EU, they have received financial transfers from Brussels averaging some 3-4 per cent of GDP in the past few years, so that populism in these countries has been solidly underpinned by the terms of their EU membership. López Obrador is enjoying the inheritance of his predecessor’s sound macro policy, together with a buoyant US economy and low US interest rates. Russia has had the good fortune of oil exports to rely on.

The thing about luck is that it can run out. So maybe it’s not quite time yet to bury the old macroeconomics of populism. But for the time being, it seems true to say that many of today’s populists have an unexpectedly robust sense of economic discipline.

This article was originally published in the Financial Times.

Yemen suffered from the excessive control of the central government prior to the current conflict. Federalism has been put forward by many Yemeni political parties since the National Dialogue Conference (NDC) as the supposed magic cure for this significant problem. Today, Yemen is more fragmented than ever, its state central institutions have been scattered and lack leadership and the state has lost most of its sovereignty. The prevailing narrative that decentralization through federalism is Yemen’s inevitable path post-conflict often fails to acknowledge that there are prerequisites for effective local governance, beyond political will.  

In a recent article, Osamah Al Rawhani addressed how the weakness of central state institutions is the key challenge to proceeding with federalism in Yemen and highlighted prerequisites and contextual factors that need to be addressed before reforming the structure of the state. He argued that the viability of decentralization relies on the presence of a functioning, representative central government that is capable of devolving power but also able to keep the state from further fragmentation. 

In this webinar, part of the Chatham House project on The Future of the State in the Middle East and North Africa, the article’s author will discuss recent developments in Yemen, where shifting frontlines and regional divisions are fragmenting the country in new ways. The speaker will explore alternative approaches to pursue the path of federalism that recognize the current realities and the critical need for strong central institutions. He will also survey the internal and external factors that must be considered to rebuild a stable state in Yemen.

You can express your interest in attending by following this link. You will receive a Zoom confirmation email should your registration be successful. Alternatively, you can watch the event live on the MENA Programme Facebook page.

Economic populism is on the rise on both sides of the Atlantic. In the US, both Donald Trump and Bernie Sanders have made protectionist arguments and appealed to voters who feel left behind by globalization. In Europe, left-wing groups like Syriza in Greece and Podemos in Spain as well as far-right groups like France’s Front National, Germany’s Alternative für Deutschland (AfD) and the UK Independence Party are capitalizing on the anti-globalization mood.

Manifestations of the current anti-trade and anti-globalization movements include opposition to trade initiatives like the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) as well as populist calls for an end to the austerity measures and economic reforms that were introduced in the wake of the euro crisis. There have been questions regarding whether capitalism can respond to the rise in inequality seen in many Western states. Many populists also share a distrust of those they perceive as elite policy-makers and a desire to reclaim national sovereignty from international institutions. Thus, the rise of populism could have far-reaching consequences for trade and economic policy-making and the existing trade and broader economic architectures.

The US and the Americas Programme at Chatham House and the German Marshall Fund of the United States in cooperation with the Konrad Adenauer Stiftung will convene an expert roundtable to provide insight and analysis geared towards examining key drivers behind the rise of economic populism, its implications for the international economic system, and possible ways to mitigate the effects of populism in the economic arena.

Attendance at this event is by invitation only. 

The Chatham House Rule

To enable as open a debate as possible, this event will be held under the Chatham House Rule.

The liberal international order has always depended on the idea of progress. Since 1945, Western policymakers have believed that open markets, democracy and individual human rights would gradually spread across the entire globe. Today, such hopes seem naïve.

In Asia, the rise of China threatens to challenge US military and economic hegemony. In the Middle East, the United States and its European allies have failed to guide the region toward a more liberal and peaceful future in the wake of the Arab Spring. And Russia’s geopolitical influence has reached heights unseen since the Cold War, as it attempts to roll back liberal advances around its periphery.

But the more important threats to the order are internal. For the past half-century, the European Union has seemed to represent the advance guard of a new liberalism in which nations pool sovereignty and cooperate ever more closely with one another. Today, as it reels from one crisis to the next, the EU has stopped expanding.

Other countries will probably not follow the United Kingdom out of the EU. But few European leaders appear willing to continue relinquishing sovereignty, whether to manage flows of refugees or to ensure the long-term viability of the single currency. Many European politicians are demanding more national sovereign control over their destinies rather than more integration.

Across the Atlantic, the US commitment to global leadership, which until now has sustained the liberal international order through good times and bad, looks weaker than at any point since the Second World War. After the costly wars in Afghanistan and Iraq and the chaos that followed the intervention in Libya, President Barack Obama consistently encouraged allies in Europe and the Middle East to take greater responsibility for their own security. In his presidential campaign, President-elect Donald Trump twisted this argument into an explicitly transactional bargain: America would become a mercenary superpower, protecting only those countries that paid, so that it could focus on making itself great again at home. In so doing, he ignored the hard-won lesson that investing in the security of its allies is the best way of protecting America’s own security and economic interests.

Meanwhile, America’s rebalance to Asia is in jeopardy. With Trump promising to roll back the Trans-Pacific Partnership, Beijing has wasted no time in laying out its own vision for a more integrated Eurasia that may exclude America and in which China will play the leading role. We may be on the brink of a Eurasian century, rather than a Pacific century.

Sustaining an international liberal economic order

In the past, as other political systems have crumbled, the liberal international order has risen to face its challenges. Yet so long as the economies of its leading members remain fragile and their political institutions divided, the order they have championed is unlikely to regain the political momentum that helped democracy spread across the globe. Instead, it will evolve into a less ambitious project: an international liberal economic order that encompasses states with diverse domestic political systems.

This need not be bad news if it allows democracies and their illiberal counterparts to find ways to coexist. Non-Western rising powers, China chief among them, will remain committed to sustaining the international economic order of open markets and free flows of investment. After all, only through continued integration into the global supply chains of goods, services, people and knowledge can emerging markets meet the aspirations of their growing middle classes.

It is in the West’s interests that China’s economic development continues smoothly. US and European markets for goods, services and infrastructure should remain open to Chinese trade and foreign direct investment, as long as Chinese companies abide by their WTO commitments and by US and European rules on security and transparency and the protection of intellectual property. European countries should take the same approach toward Russia, on the condition that Russian companies abide by EU rules. A mutual commitment to the international liberal economic order would help Western governments and their illiberal counterparts keep open other avenues for cooperation on shared challenges, such as terrorism and nuclear proliferation.

Meanwhile, European governments and businesses should take part in the Chinese-led strategy to connect northeast Asia with Europe across the Eurasian continent, a component of a series of regional infrastructure investments known as the Belt and Road Initiative. Today, the world is experiencing a structural decline in growth rates of trade, as emerging markets like China make more of their own products and developed countries bring some production back on-shore. Against this backdrop, ramping up investment in infrastructure that can connect the thriving coastal areas of Asia to their underdeveloped hinterlands and then to Europe could create new opportunities for economic growth in both the liberal and the illiberal worlds.

Similar cooperation will be harder to build with Russia. Russia’s system of centralized, opaque political and economic governance makes deeper integration incompatible with the EU’s market and rules-based system. And NATO members have begun a much-needed upgrading of their military readiness in the face of recent Russian provocations. EU and NATO tensions with Russia will likely persist. However, the initiative to build new Eurasian economic inter-connections could provide an alternative way for the United States and Europe to engage Russia in the future.

A period of awkward coexistence

The countries that built the liberal international order are weaker today than they have been for three generations. But liberal policymakers would be wrong to hunker down or resort to containment. An extended stand-off with those who contest a liberal international order may accidentally lead to outright conflict. A better approach would be for liberal countries to prepare themselves for a period of awkward coexistence with illiberal ones, cooperating on some occasions and competing on others. Time will then tell whose form of government is more resilient. If history is any guide, liberal democracy remains the best bet.

An extended version of this article appears in Foreign Affairs.

To comment on this article, please contact Chatham House Feedback

Even though most African states have signed and ratified the Framework Convention on Tobacco Control (FCTC), a global treaty to limit tobacco use, African states have been slow to pass and implement tobacco control policies like regulations on sales, smoke-free environments and taxes. This article examines how the ineffectiveness of local tobacco-control advocacy contributes to this suboptimal outcome. It asserts that the disconnect between the global tobacco-control advocacy network and local advocates shapes this ineffectiveness. With funding and direction predominately from the Bloomberg Initiative, local advocates emulate the funders' goal of achieving quick, measurable policy results. Their reliance on the network drives African advocates to strive to pass legislation, even in difficult political climates, and to remake their agendas when funders change their priorities. They also emulate the network's focus on evidence-based arguments that stress epidemiological data and biomedical interventions, even when this issue frame does not resonate with policy-makers. Financial dependence can draw local advocates into expectations about patronage politics, undermine their ability to make principled arguments, and lead them to downplay the ways that their home country's socioeconomic and cultural contexts affect tobacco use and control. Based on key informant interviews with African advocates, media analysis and the case-studies of Ghana and Tanzania, the article broadens the study of philanthropy in global health, it adds an African perspective to the literature on global health advocacy, and it deepens knowledge on power dynamics between external funders and local actors in the realms of health and development.

Smart Peace brings together global expertise in conflict analysis and research, peacebuilding and mediation programming, and behavioural science and evaluation. Together, Smart Peace partners are developing integrated and adaptive peace initiatives, working with local partners to prevent and resolve complex and intractable conflicts in Central African Republic, Myanmar and northern Nigeria.
 
This roundtable is an opportunity for Smart Peace partners to share the Smart Peace concept, approach and objectives, and experiences of the first phases of programme implementation. Roundtable discussions among participants from policy, practice and research communities will inform future priorities and planning for Smart Peace learning, advocacy and communication.
 
Smart Peace partners include Conciliation Resources, Behavioural Insights Team, The Centre for Humanitarian Dialogue, Chatham House, ETH Zurich, International Crisis Group and The Asia Foundation.

This article argues that despite the framing of religion in the discipline and practice of International Relations (IR) as a force for good, or a cause of evil in the world, IR fails to treat religion on its own terms (as sui generis). With a few exceptions, the discipline has pigeonholed religion as a variable of IR, one that can be discussed as one might GDP, HIV, or numbers of nuclear missiles: measurable, with causality and essential properties. IR has also tended to treat religion as equivalent to features of global politics that it already recognizes—as an institution or community or ideology, for example—but in doing so, it misses intrinsic (and arguably unique) elements of religion. Drawing on feminist insights about how gender works in IR, namely that gender is a construct, performative and structural, this article argues a similar case for religion. A reframing of religion is applied to the case of Daesh (so-called Islamic State of Iraq and Syria, ISIS) to show how our understanding of the organization changes when we view religion differently. The implications for counterterrorism policies if religion is viewed as more than a variable are explored in light of recent territorial and military losses for Daesh. The article therefore proposes a post-secular counterterrorism approach.

This article explores the role of religion in political transnationalism using the case of the Shi'a Iraqi diaspora since 2003. The article focuses on three areas that capture important trends in Shi'a transnationalism and their implications for transnational Shi'a identity politics. These include Shi'a diasporic politics, transnational Shi'a civic activism, and the cultural production of Iraqi Shi'a identity through pilgrimages, rituals and new practices. It is argued that understanding Shi'a Islam and identity formation requires adopting a transnational lens. The evolution of Shi'a Islam is not only a result of the dictates of the Shi'a clerical centres, and how they influence Shi'a populations abroad, but also the transnational interrelationships and links to holy shrine cities, Shi'i national and international politics, humanitarianism and commemorations and rituals. The article demonstrates that Shi'a political transnationalism is unexceptional in that it echoes much of the literature on diasporic politics and development where diaspora involve themselves from afar in the politics and societies of their countries of origin. At the same time, it shows the exceptionalism of Shi'a diasporic movements, in that their motivations and mobilizations are contributing to the reification of sectarian geographical and social borders, creating a transnationalism that is defined by largely Shi'a networks, spaces, actors and causes. The case of Shi'a political transnationalism towards Iraq shows that this is increasing the distance between Shi'is and Iraq's other communities, simultaneously fragmenting Iraq's national unity while deepening Shi'a identity and politics both nationally and supra-nationally.

The violence in South Sudan this week suggests there could be worse times to come for the country. It will exacerbate the deep-rooted inter- and intra-tribal tensions that have defined the political landscape in South Sudan since it gained independence in 2011. It could also create a refugee dilemma for the country’s neighbours.

The dynamics of the leadership struggle between President Salva Kiir, a Dinka, and former vice president Riek Macher, a Nuer, colours politics throughout the country, illustrating the prevalence of political tribalism at the highest office. Following Kiir’s dismissal of Machar and the entire cabinet in July, neither this week’s attempted coup nor its heavy suppression will have come as a surprise to many in South Sudan.

The perception of Dinka domination pervading the Sudan People Liberation Movement (SPLM) and the Sudan People Liberation Army (SPLA) by other ethnic groups is not new. But it has become increasingly marked in a country with a fragile economy, limited opportunities for employment and deep-rooted patrimonialism throughout all tiers of government.

While there is a long-standing rivalry for power between the Dinka and Nuer, South Sudan’s two largest tribal groups, others, such as the Equatorians, perceive both groups as monopolizing power. Addressing this perceived inequity within the government will be integral to move beyond political tribalism towards an inclusive system of government that guarantees minority representation. Without this change, discontent and frustrations within the disenfranchised rural communities that make up the majority of the population are liable to rise to the surface, as this week’s events demonstrate.

While government policies since independence have been careful to use the language of inclusivity, the reality is very different. Jonglei, the largest of South Sudan’s ten states and home of the Nuer, has seen severe fighting between the Dinka, Nuer and Murle, for example. In December 2011 tribal attacks and counterattacks between Nuer and Murle caused at least 1,000 deaths. 

These tensions have been further aggravated by the failure of the central government to provide even basic levels of local governance, made worse by systemic corruption and patrimonialism. The extent of corruption, and the government’s lack of control over it, was demonstrated in 2012 when President Kiir issued a somewhat plaintive call to his government officials to return stolen cash.

Government reforms and legislation have stripped traditional authorities of their former functions and roles within local society, without reintegrating them into new roles within the government apparatus or providing viable alternatives. This has resulted in inconsistent and disparate systems of local governance throughout South Sudan, contributing to existing perceptions of inequity. This is often assumed to be based on tribal factors, regardless of whether this is in fact the case.

With tensions appearing to be unabated in the capital, Juba, and with the dry season approaching, which will facilitate a more mobile population, there is significant potential for security to deteriorate further. And it may not recover for a long time. Disgruntled and marginalized, the tribal populations that have felt excluded from the political process, or in the case of the Nuer, undermined in that process, may use the current political turbulence to bring matters to a head and challenge the authority of South Sudan’s leading figures.

A lasting conflict in South Sudan would likely lead to further displacement of people, which would place an increased strain on host communities in neighbouring countries. Ethiopia, Kenya and Uganda already have a long history of accepting refugees from the Sudanese civil war. With the current flows of displaced populations from conflicts in Somalia, the Central African Republic and Democratic Republic of the Congo however, an additional influx of South Sudanese refugees would have the potential to overburden and destabilize the region further.

To comment on this article, please contact Chatham House Feedback

The landlocked southern African nation of Lesotho faces a number of domestic challenges in 2014. Reducing reliance on the agricultural sector, containing the prevalence of HIV and improving service delivery are all important issues that must be addressed to ensure sustainable growth. However, social achievements including literacy rates and levels of gender parity among the highest in Africa, the country’s potential for electricity exports, and the booming relationship between its textile industry and the United States, could mean Lesotho is well-placed for future growth and development. 

HE Prime Minister Tom Thabane will discuss how his government seeks to address the Lesotho’s domestic issues and how the country seeks to exert its influence in the regional Southern African Development Community.

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.

The void in governance created by the ongoing Syrian conflict has been capitalized upon by warlords, militias and extremist groups to expand and consolidate their power – but has also helped to generate activism, with new leaders born as a reaction to authoritarian governance and conflict limitations.

As public social services have been taken over as war tools, local coordination committees, local councils, humanitarian support groups, citizen journalist networks, women’s groups, and more, have mushroomed across all of Syria. But this new civil society continues to be threatened by many challenges.

It remains hindered by structural weakness and limited capacity - largely as a result of the legacy of Ba’athist policies, which did not allow civil society to exist in the so-called Damascus Spring, but only under the umbrella of the Government, First Lady Asma al-Assad and business NGOs (GoNGOs, FLNGOs and BoNGOs). Beyond this, civil society was limited to purely charitable and religious causes, known as “moujtamaa ahli”.

In addition, Syrian civil society is often a victim of counter-terrorism legislation, with laws and regulations across many countries and institutions prohibiting Syrians from registering an organization and opening bank accounts.  This makes it difficult to secure financial support in an environment where funding has already been dwindling due to a “Syria fatigue” among potential donors, and where any money available is mainly directed at large, often international, NGOs.

Trust, hope and legitimacy

To reach funds, many organizations have to submit to this “NGOization” process. But even this rarely allows for civil society to foster its own interests through core funding. Civil society in Syria is treated more as a “project” with strict indicators, deals and deadlines, when working under conflict necessitates building relationships of trust with a community over time and often has to cover the direct needs on the ground to gain local legitimacy and increase effectiveness. Trust, hope and legitimacy are not aspects you can report against or cover in a sophisticated proposal.

But despite such obstacles, activists and civil society groups continue to volunteer for various causes, ensuring many have not had to seek refuge elsewhere. And their work has included challenging authoritarian and extremist governance.

In Aleppo in 2014, it was civil society with the support of a military faction of Jaish Al Mujahideen that helped expel ISIS. Local councils have since been providing services ranging from humanitarian aid and garbage collection to re-establishing order and resolving local conflicts, thus challenging the legitimacy of jihadist institutions.

NGOs such as the Civil Defense Forces (known as the White Helmets) continually risk their lives to save others by rescuing people from bombed out buildings. On September 19, when a UN sanctioned aid convoy was attacked in Aleppo – reportedly by Russian aircraft – it was the White Helmets that responded, before then coming under attack themselves.

Human rights activists, meanwhile, persist in documenting human rights abuses in the hope that the perpetrators will eventually be held accountable.

However, a Syrian civil society tragedy is unfolding as their work is struggling to survive. To give but one example, Kesh Malek, one of the biggest groups running home-based schooling for children in Aleppo, has already had to close some of its schools.

Lacking international protection, the fate of these children in relation to arms and radicalization is all the more alarming.  Several local councils have also been much weakened, especially vis-à-vis warlords, authoritarian and/or extremists actors.

At its best, the current bombing campaign serves to kill any potential alternatives to an authoritarian regime, and only boosts human suffering, radicalization and displacement.

If this situation is to be reversed, international actors need to ensure security at the local Syrian level, showing that Syrian security is as important as that of Europe.

This means financial security through a deeper and more sustainable capacity building and funding to civil society, and it means protecting civilians and civil society groups though the creation of a safe haven.

To comment on this article, please contact Chatham House Feedback