However, not just darkness but a deeper malaise lies at the heart of the populist revolt. The tacit promise of a global economy is that it will lift living standards for everyone. Its success depends on the prosperity it should spread for everyone. While criticism about policies set by international financial institutions has been present since the turn of the century, the 2008 financial meltdown deepened public mistrust in the global economy’s beneficial consequences.
The costs of massive global financial mismanagement were unfairly distributed. International financial markets failed to prevent the effects of their reckless frenzy, but taxpayers in the US and Europe undertook the burden of the rescue plans implemented to cover banking losses. In contrast, everyday citizens were left to face on their own the challenge of adjusting to the financial crisis. Once the storm settled, some financial leaders received huge dividends and people with lower incomes lost their homes, savings, pensions, or jobs.
Discontent with globalization swiftly mutated into rejection, and became a political force to be reckoned with. In sum, the split between winners and losers of the financial crisis sparked today’s populist backlash against globalization. It also set free the appetite to choose, almost at random, the most convenient culprits.
Political consensus can withstand increasing income inequality if economic and social benefits are spread generally, although they may be distributed in differing proportions. However, public support wanes when costs of economic downturns are distributed unevenly. Nearly a decade after the 2008 financial meltdown in the world’s main market economies, and after all individual efforts made to overcome its dislocating effects, income inequality continues to grow, job markets remain unstable, and, above all, concrete benefits of globalization are not seen clearly by most people, whether they live in Detroit, Brighton, or Madrid. Under those conditions, anti-globalization populism has found the stage ripe.
Populist discontent with the global economy fuels distrust in the international system, and vice-versa. The results of Brexit and the recent presidential election in the US continue to raise doubts, fears, and uncertainty. Ongoing political, social, and economic transitions threaten to erode support for the complex international order in existence.
Paradoxically, public confidence in developed democracies turns against the world order they created, based upon liberal policies, free trade, and multilateral practice. Nation-states are forced to face the challenge and to adjust their foreign policies to this rapidly changing and unpredictable world.
To what extent can the US government redefine its international commitments remains to be seen, but the political will to persist in a course of undefined global retrenchment is evident. Intense nationalism –both political and economic– and lagging confidence in global involvement is a combination of instability for the US.
Likewise, Britain’s complex divorce process from the EU entails not just untried but confusing perspectives. The future international role of the “Global Britain” envisioned by its Prime Minister is only barely sketched out.
In this international context, Peru –and other emerging states– must take into account these phenomena, so as to set a tentative course. It must evaluate available options to readjust its foreign policy in regional, extra-regional, and multilateral arenas, within the framework of a geopolitical redesign still in the making.
Peru’s government has put in motion initiatives to improve significantly bilateral relations with neighboring countries and regional powers, amidst elections and signs of political tensions in the region. Venezuela’s humanitarian crisis and corruption scandals complicate Latin-America’s political landscape. The corruption network that is being unveiled already is damaging the fabric of political institutions throughout the region.