The dangerously simple story about radical populists

That wrenching noise you hear is the sound of political narratives rapidly being refashioned following elections in Europe. The UK Labour party sweeping to power (expected) and the success of the leftwing coalition in France (unexpected) has rather undermined the “populist right takes over the western world” thesis. Today I look at this shift of perspective in the context of trade and globalisation, and also at whether Sir Keir Starmer’s government can resurrect the UK’s leading role in development aid. Charted waters is on the British public’s attitude to Brexit. A question for you: am I looking the right way through the kaleidoscope of European politics?

Patterns EU finds in the windmills of its mind

Not exactly Trade Secrets’ normal fare, but here’s a thought about political narratives. An art teacher at my old school showed us a trick where he played one of those old-school coloured disco lights that flash in time to the beat. He then disconnected it from the music and had it flash at random. It still looked to us as if light and sound were synchronised. His point was that human minds look for patterns and create them even when they’re not objectively there.

There’s recently been much talk of the populist surge sweeping across the rich democracies. The European segment of this is apparently undermining the EU and abandoning Ukraine to Russian President Vladimir Putin, both of which would of course be disastrous for open trade. But in fact we’ve got a dominant populist rightwing government in precisely one major country, Italy, which in any case supports Ukraine and quite likes the EU and trade. Even those Putin sympathisers in smaller countries (Hungary, Slovakia) aren’t mindlessly destructive. Governments led by the centre-left are currently in power in the UK, Spain, Germany, Australia and Canada. Poland and the Czech Republic have centre-right pro-EU anti-Putin governments.

The recent European elections were mainly a victory for the centre-right. Italian Prime Minister Giorgia Meloni had much less say in the selection of the European Commission president than she had hoped.

Of course you can select facts that tell a different story. The coalition to push back the populist right in France looks shaky and in any case feeds the Rassemblement National narrative of being thwarted by an elite establishment. There are populists on the left as well as the right: Jean-Luc Mélenchon, one of the coalition’s leading figures, is also no great fan of the EU or free-market globalisation and is disturbingly keen on Putin. Support for the anti-EU Alternative for Germany (AfD) party is growing rapidly in Germany. The populist right is the strongest single force in the new Dutch coalition. And looming like a towering black cloud is the potential re-election of Donald Trump, who will do God knows what to the world trading system.

In complex and technical subjects, such as globalisation in particular, simple political narratives are unlikely to be helpful. Not all rightwingers, or indeed leftwingers, are the same. (Nor, as I have correctly been reminded, is the left-right spectrum the only or even the best way of looking at things). In the EU, orientation on trade issues is often more about national traditions than pan-EU ideologies. Policy is set at different levels in different trading powers. It’s laborious to sit down and work out exactly what the dynamics will be, given the idiosyncrasies of trading blocs and countries. It is, however, likely to be more accurate than being dazzled by disco lights into seeing patterns that aren’t there.

Aid donor kebabbed

Killing the ridiculous asylum-seekers-to-Rwanda plan, closing the door to more freeports (though not abolishing existing ones), showing warmth towards the EU: Starmer’s government showed more sense on trade in its first three days in power than the Conservatives did in the past decade.

There’s a good rundown of the trade challenges facing Labour here from Sam Lowe’s Most Favoured Nation newsletter. Today I want to focus on aid and development, and whether the government can resurrect the leading role there the UK took in the Sir Tony Blair and Gordon Brown governments from 1997-2010.

Those were heady days: creating a state of the art development department (DfID) superbly headed by Clare Short, which argued for treating low-income countries as something other than arms customers; becoming the world’s second-biggest aid donor; playing a leading role in the World Bank and other multilateral institutions and creating international policy frameworks for development assistance.

But the legacy was vulnerable. Blair and Brown, cheered on by an echo-chamber of UK development NGOs, became obsessed with giving ever more aid, particularly the international target of 0.7 per cent of GDP, without focusing enough on quality or results. Blair’s messianic plan to save Africa, a continent he had apparently just discovered, mainly revealed his thirst for publicity: it certainly didn’t have much substance.

The mechanical focus on the 0.7 per cent target had unfortunate consequences. Succeeding Conservative governments initially kept the target but progressively hollowed it out by redefining aid to include defence spending and the housing of asylum seekers in the UK. Having abandoned the target, the Tories finally took the retrograde step of folding DfID into the Foreign Office. Britain’s reputation in international development has plunged.

Labour in opposition has gone back and forth on restoring DfID as an independent department, suggesting development might instead be run from an agency within the foreign office. (That’s essentially what the UK had before DfID was created: it didn’t work very well, and anyone who doesn’t remember the Pergau dam scandal should read up on it.) It’s fair enough to want to better combine development with defence and diplomacy, particularly when the UK is helping in conflict zones. But an early priority should be to restore credibility to what counts as development assistance. Better to have smaller and more substantive budgets than carry round a big sack marked “aid” into which an increasingly unrelated series of spending programmes are stuffed.

Charted waters

A large majority of the British public think leaving the EU was bad for the economy, which it obviously was. Well spotted. But Starmer reckons the UK won’t rejoin in his lifetime, so tough luck, British public.

Trade links

The Financial Times opines that reducing the “de minimis” threshold for charging customs duties is a risky policy that will reduce the availability of cheap goods for consumers. A paper by two US academics concurs.

The provisional EU antisubsidy duties on Chinese electric vehicles went into force last week amid a great chorus from both the Chinese and the European side that they should negotiate a mutually beneficial solution.

Relatedly, the Chinese car company BYD is investing in Turkey, a traditional supplier of cars and car components to the EU.

A bunch of the goody-goody teachers’ pets of the global trading system (New Zealand, Costa Rica, Iceland and Switzerland) have concluded an agreement on climate change and sustainability.

David Henig writes in Borderlex about the search for a new EU trade commissioner.

Written before the general election, Politico has a nice story about the potential for large-scale lithium extraction in the picturesque English county of Cornwall.

Trade Secrets is edited by Jonathan Moules