“There are decades when nothing happens, and there are weeks when decades pass.” This quote from Lenin is widely used today, but it aptly summarizes the acceleration of History.
History is spiraling out of control, and everyone is forced to choose sides. This is a major difference from the fall of the Berlin Wall. In November 1989, the shock was perceived as the source of a shared momentum, even if its direction was uncertain. Today, everyone seems compelled to choose sides, creating a division of the world that didn’t previously exist. The global economy can no longer function in the same way.
The reasons for this upheaval are numerous. Some pre-existed but were abruptly reinforced.
The first point concerns the relationship between the United States and Europe. The turning point was the publication of the Strategic Security Report by the White House. Europe was then portrayed as aging and of little strategic importance to the US, with consequences for NATO’s status. Tensions escalated with Greenland and the harshness of the American proposal, which linked opposition to the acquisition with a sharp increase in tariffs. The reversal announced by Trump in Davos should not be misleading. Relations between the two regions are permanently damaged.
The second point is the break with the past outlined by Mark Carney in Davos. Middle powers, Canada and Europe, must gain autonomy to decide their own destiny and no longer be beholden to the United States or China. This idea is invigorating but requires a genuine reassertion of control by these middle powers. In Europe, this underscores the importance of the Letta and Draghi reports.
The third point is Taiwan. The country is a major supplier of semiconductors, particularly for AI. Can massive investments in the United States in exchange for lower tariffs be enough to reduce the risk on the island? If tensions between China and the United States were to escalate, the region would become a real source of concern due to the risk of a Chinese blockade of the island.
The fourth reason is the direct attack on the Fed. Powell’s pale face in the video illustrates a profound disrespect for the institutions.
On the economic front, a real turning point is the trajectory of Japanese interest rates. Having been very low for a very long time, they are now high, raising serious questions about global financial stability. Japanese investors used to flood the world with their savings because of interest rates that were too low in Japan. This will no longer be the case.
The final, disruptive point is the definitive loss of soft power by the United States due to what is happening in Minneapolis and elsewhere. America no longer inspires anyone.
History is accelerating, but how do we choose a side?