November 15, 2017 / 5:24 PM / a month ago

Breakingviews - Hadas: Unintended consequences may be new normal

By Edward Hadas

U.S. President Donald Trump meets with Saudi Arabia's Deputy Crown Prince and Minister of Defense Mohammed bin Salman (center L) at the Ritz Carlton Hotel in Riyadh, Saudi Arabia May 20, 2017. REUTERS/Jonathan Ernst

LONDON (Reuters Breakingviews) - From Brexit to Donald Trump to Saudi Arabia, the world is full of surprises. But those cheering wrenching change may face further upsets. The UK rejoins the EU, the U.S. president discredits small government, and Saudis become poorer. The next shock may be the rise of dullness.

For experts, this is an era of surprises. Few predicted Donald Trump’s rise to the U.S. presidency or British voters’ decision to leave the European Union. Most recently, Saudi Arabian specialists have been shocked to see decades of complex political-economic balance swept away by 32-year-old Crown Prince Mohammed bin Salman.

The list of unexpected novelties is long and global: a separatist crisis in Spain, a political novice elected president of France, a fairly popular president impeached in Brazil. Yet while those who cheer wrenching change are in the ascendant, they may get something different from what they had in mind.

Take Britain’s divorce from the EU. Many of those most keen to separate their homeland from its largest partner in trade, regulation, diplomacy, culture and education crave a “hard Brexit”. For them, taking back control means starting again.

That view is not universally popular, but time is on the extremists’ side. Unless the British government manages to secure an agreement with the EU, or decides to revoke the notice of departure, the British exit will be hard by default. Right now, it looks like the weak and divided government could fight its way off the Brexit cliff.

What would happen then? An economic disaster seems certain. In the absence of contingency plans, a sudden separation from EU regulation would ground flights, devastate trade and quite possibly lead to financial panic. Daily news reports would consist of a grim litany – closed factories, rising prices, falling property values, and key workers leaving the country.

Political revulsion could culminate in a government of national unity, whose first move would be to apply to rejoin the EU. Although permission for this extraordinary reversal would probably be granted, a new deal would not include any of the special treatment the United Kingdom currently enjoys. Its discount contribution to the EU budget would end and Britain would be required to join the Schengen system of borderless travel. Rejoining the EU might even come with the condition of adopting the euro.

Such an outcome – where “hard Brexit” leads to what might be called “hard Remain” – might be unlikely, but not beyond the realms of possibility. It would be an extreme example of what is sometimes called the law of unintended consequences.

A similar historical about-face is possible in the United States. Trump’s most fervent supporters want the return of traditional industries, the retreat of intrusive government and the disempowering of the current elite. They are not getting anything like that, thanks to congressional infighting and the American president’s own inability to articulate or follow through on a clear agenda.

The Trump administration might simply stumble along. After all, the economy is strong and Americans have learned to cope with bitter political stalemate. However, it is easy enough to imagine this inexperienced and insecure leader ending up in a bad enough foreign or domestic disaster to create a political backlash.

What would happen then? With Trump’s team and vision discredited, his successors would probably be some reshaped and reinforced version of the old elite. The new rulers could create an even bigger and pushier federal government. A vote for Trump might turn out to have been a vote against his claimed goals. Unexpected consequences again.

In Saudi Arabia, the crown prince and his supporters seem to believe they can neutralise rivals in the country’s gigantic ruling family, reduce the economy’s dependence on oil and restore the Saudis’ regional pre-eminence. There are many ways that incredibly ambitious plan could go deeply wrong. The list includes military defeat, economic setbacks, or domestic rebellion.

If the crown prince fails, what happens then? Most likely, the direct opposite of what he intended. Saudi Arabia would be more divided, less influential and poorer due to wasteful investments in the implausible plan to overtake regional star Dubai.

After the surprises of the last few years, it may be foolish to keep making predictions. But the habit is hard to break. So here is one: in many parts of the world, the unexpected consequences of radical change will be a rejection of revolutions. The next worldwide trend could be for stable governments with consistent policies.

The apparent fizzling out of the Catalan separatists’ violent confrontation with the Spanish government might be a precedent. The result of a bold declaration of regional independence may prove the direct opposite of what the revolutionaries wanted – a retreat to national unity. Spain’s transition to democracy in the 1970s was an early example of the global trend towards elected and economically focused government. Perhaps it will once again be a world leader.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below