As is our custom, we close out the current year with our outlook for the next one. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape in the upcoming year. It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward. They are listed in order of importance.
Issue #1: The Trump Doctrine
The election of Donald Trump was the second major shock to the Western political establishment in 2016, the first being the Brexit vote. At this point, there is clearly a growing rejection of the policy consensus that has been in place since at least 1990, with the fall of communism, and perhaps even 1944, with the Bretton Woods agreement.
Although Trump’s foreign policy is still evolving, there are two key emerging themes:
There is lots of “brass” in the administration. Trump is putting a number of former generals in positions of power. Although this has raised concerns among some commentators about the loss of civilian oversight, we suspect it will make the new administration more cautious about deploying military force. We view Trump as a Jacksonian.1 This particular archetype of foreign policy figure tends to intervene abroad less than Wilsonians or Hamiltonians. The military men in the government will likely be reluctant to deploy troops and, if they do, they will likely insist on following the Powell Doctrine which places hurdles before deploying troops. Specifically:
1. Is there a vital national security interest being threatened?
2. Do we have a clear and attainable objective?
3. Have all the risks and costs been fully and frankly analyzed?
4. Have all non-violent policy tools been fully exhausted?
5. Is there a plausible exit strategy?
6. Have the consequences of our action been fully considered?
7. Is the action supported by the American people?
8. Do we have broad international support?
It is worth noting that the Iraq War, the Afghanistan War and the intervention in the Balkans would not have passed these conditions.
Jacksonians deplore limited war that ends without a clear victory. They do not brook anything but unconditional surrender. Those objectives mean that war is only undertaken if necessary. And, having former military figures in these roles means that these people have personal experience with the costs of war and will probably use it sparingly. Thus, we would expect less military activity, but if intervention is required then it would be reasonable to expect targeted operations with overwhelming force.
In contrast, Hamiltonians tend to use foreign policy to support American firms and Wilsonians deploy troops for moral causes. We would expect neither to occur under Trump which means that other nations may not be able to rely on American support without a direct U.S. interest.