Over the last 12 months, the world’s political and economic status quo has been turned on its head; the UK voted to leave the European Union (meaning, probably, the Single Market and Customs Union as well). And the United States has just witnessed one of the biggest political upsets in its history.
It was an unusual presidential election by any standards – the fact that both candidates’ negative ratings were consistently higher than their positive ones meant it was the first race in history to be an unpopularity contest rather than a vote for the best candidate for the job. Elsewhere, Russia continues to intervene politically, economically and militarily in neighbouring countries, while China is also asserting its increasing influence on the world stage.
Both the UK’s Brexit referendum and the US presidential election blind-sided the pollsters and exposed deep national and international divisions that have been festering for some time. Millions of citizens feel left behind by a system that doesn’t work for them, and from their perspective, the wild card of the unknown seemed like a better bet than the status quo.
It’s not just Brexit and President Trump that have gone against the grain of expectation; the outlook for further political upset remains. The Netherlands, France and Germany all go to the polls in 2017 and the rise of right-wing populist parties continues. Even in Asia, President Duterte of the Philippines has made his mark as a populist, unconventional and ruthless leader.
In every democracy, centrist parties will need to strike a careful balance between appeasing the popular view and maintaining economic stability, while securing peace and security. Doing so will be hard in the face of increasingly protectionist messages coming from the world’s largest economy, and the distraction of the world’s most complex divorce which, although negotiated within Europe, will have consequences that reverberate much further afield.
The role of globalisation and social media
Much continues to be written about the factors that have led us to this point, but two in particular deserve closer attention: globalisation and social media.
Over the last 70 years, globalisation has been the fuel that allowed many of our businesses to prosper, and created the multitude of opportunities that we as global mobility professionals help to facilitate. As technology has advanced and global connectivity improved, millions have been lifted out of poverty, healthcare has improved and, at a macro level, the world has continued to grow richer. But despite these advances, the economic divide has grown wider and large proportions of the population feel disconnected from these advances and economically disenfranchised.
Social media is a classic example of technological development whose long-term impact has been grossly under-estimated. Widely welcomed as being a major factor behind the Arab Spring, this new medium has come back to bite the West with a vengeance. While democratising opinion, it gives everyone an unfiltered and equal voice without any of the editorial standards of more traditional media.
Social media has become hugely influential in the political process allowing those who seek power to communicate directly with those who elect them. At the same time, it has become a megaphone for arguments that are light on detail, high on emotion and ignore inconvenient facts. Repeated and reposted, these have clearly influenced popular opinion.
While globalisation and social media may have contributed to the current wave of anti-establishmentarianism, there are undoubtedly other factors too. Whatever the causes, we have moved into an era in which the free-trade, open-border world of liberal values is threatened by introspective and protectionist sentiments.
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The impact on global mobility?
For those of us in global mobility, there will be plenty of challenges ahead. The opportunities and threats created by a changing world order are yet to be defined. However, what is certain is that organisations will need to be responsive to change. In the past year, we have seen (and will continue to see) major reforms to countries’ socio-economic policies that will likely impact both expatriates and global mobility teams alike.
The proposed break-up of regional free-trade structures between the UK and EU, and the United States’ withdrawal from the Trans-Pacific Partnership (TPP), will lead to an increase in bilateral trade arrangements. International trade is likely to become harder if tariffs are introduced and the risk of trade wars increases. Many countries may also increase their focus on immigration as we saw with the US’ sudden temporary travel restrictions imposed on nationals from seven countries. These, along with other geo-political considerations, may result in organisations having to re-evaluate the locations in which they manufacture, operate and trade.
The scale of human tragedy as desperate refugees attempt to cross the Mediterranean is greater than the world has seen for a generation. This, along with uncontrollable immigration from other EU countries, was a significant factor in the UK’s vote to leave. In the US, removing illegal immigrants and building a wall with Mexico were cornerstones of Trump’s manifesto. Whatever happens in Europe and however Trump decides to deal with these issues now he is in power, we can expect to find it harder to move even skilled staff around the world.
Global mobility professionals will do well to ensure that their companies remain compliant with immigration rules, and leave plenty of time for visa applications to be granted before physically moving staff to their postings. Finding ways to keep track of business travellers and cross-border commuters will help keep organisations out of immigration trouble. This issue often gets little traction with senior management, but is increasingly essential as part of a risk-management strategy.
The likely break-up of regional trade arrangements has also had an impact on exchange rates this year. Following the UK’s decision to leave the EU, the decline in the pound will have affected the purchasing power of international assignees working in Britain, and those from Britain working abroad. The price of oil (Russia's dominant export) is rebounding following December's OPEC deal to cut production. Rising oil prices and hopes of warmer relations with the West (increasing the likelihood that international sanctions against Russia might be lifted) boosted the rouble against the dollar and euro in recent months.
In our initial advice following the Brexit vote, we urged caution (and continue to do so), but global mobility teams will have to weigh up the effects of currency fluctuations on a case by case basis and act accordingly. It is imperative that organisations gauge their response on a medium-term basis to avoid knee-jerk reactions while ensuring expatriates are no better or worse off during their assignment overall.
A threat to regional security?
The US’ introspective trends could also have significant consequences for regional security. “It will always be America first,” President Trump declared in his inauguration address. “Protection will lead to great prosperity and strength.” That may be his conviction, but history has usually proved otherwise. Protection has rarely led to either, and more worryingly, has often ended up with war.
While the domestic impact of Trump’s actions may be moderated thanks to checks and balances within the American political system, the impact for other countries and regions could be profound. The US’ withdrawal from the TPP and its desire to renegotiate NAFTA will have far-reaching consequences in Asia and the wider Americas. This impact won’t just be on trade, but by extension on regional power bases and security too. The stability of NATO and the delicate balance of power in Asia-Pacific could also be thrown off balance.
Trump’s proclamation that “It is the right of all nations to put their own interests first” is self-evidently correct, but ignores the vested interest all countries have in broader international co-operation. Power vacuums that emerge will undoubtedly be filled by those with hegemonic ambitions, with China and Russia prime candidates to increase their spheres of influence.
The new US administration, populist movements in Europe, a powerful China and a resurgent Russia mean that we stand on the brink of a new era in global politics. 2017 will be the year in which we all need to get our heads around what the new world order means for our people, our businesses and for all of us as citizens of an increasingly inter-connected world.
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Global mobility and the world context in 2016
Global mobility and the world context in 2015