U.S. foreign policy under the current administration can seem idiosyncratic. In this, the 30th year since the end of the cold war, change is brewing.
“The administration sometimes seems to treat old allies as threats and despots as partners, and at other times, [President Trump] seems committed to staying in these relationships,” said John Owen, a senior fellow at the Miller Center and professor of politics at UVA, who served as moderator for this panel.
The president’s foreign policy moves have unsettled allies and critics, Owen noted, although some critics quietly support his initiatives in North Korea and his tough talk about trade with China. Though the United States and NATO allies have always had disagreements, President Trump’s recent references to NATO as a foe could affect the U.S.-Europe relationship.
Could they break up? It’s a fair question.
“We’re seeing an American president question the fundamental underpinnings of this relationship, like calling the EU an economic foe, by cheerleading for Brexit, by encouraging other countries to think about leaving the European Union, by questioning the American commitment to…NATO,” said Amanda Sloat, senior fellow at the Brookings Institution.
His questioning is corrosive. She used the analogy of a couple that breaks up and then gets back together: It’s never quite the same again because the infallibility of the romance has been called into question.
With regard to Brexit and the EU, private equity investment is down by 12 percent in the U.K and up by 13 percent in the EU, said Yiorgos Allayannis, professor of business administration at the Darden School of Business at UVA. “The beneficiaries of this are Germany and France. Where is this all going? The messages from the market are not as positive for the U.K.”
Markets don’t like uncertainty.
China is growing through trade and becoming more assertive, said Dale Copeland, also professor of business administration at Darden. China is actually pessimistic about the future; it had been growing at 10 percent to 12 percent, but that growth has declined to 5 percent or 6 percent. The question is whether we can create a level playing field,” said Copeland. “China is growing faster than we are. We can push China to rewrite internal policies—that also can go with strong trade. We can have trade that benefits both and gives both sides incentives.”
Chinese banks are also growing. Banks reflect the economic opportunity of a nation, and, more broadly, economic activity of that country globally, said Allayannis. In 2007, there was no Chinese bank among the top 10 banks. In 2019, there were four U.S. banks and four Chinese banks in the top 10.
What does this tell us? “That Chinese banks are out in force funding projects,” said Owen, adding that this sounds like a deeper issue that might corrode U.S.-China relations in the long-term.
“The liberal dream has been trade with China, and China will remain at peace with the United States and become a liberal democracy,” Owen said. “That dream seems in tatters. Are we moving toward a very different world where the two biggest economies in the world are not going to be trading much because of these structural problems?”