LISTEN BACK: https://www.newstalk.com/podcasts/breakfast-business/will-europe-look-to-trade-more-with-china-and-india
TRANSCRIPT:
JOE (00:00):
1914, 1939, 1989, 2001. All years that have proven to be pivotal in how the world works. Is 2025 set to join that list? Is the Western Alliance and Trading System about to break up? If so, does Europe look to trade more with China and India and less with its natural ally in the us? Key European leaders meet later this morning in Paris as part of an emergency meeting to discuss what Europe does if America abandons Ukraine and imposes tariffs on its erstwhile allies. Michael Sullivan is the author of The Levelling, which predicted the Consequences of Deglobalization. He's also a director of UNIO Wealth Managers. Good morning, Mike.
MIKE (00:43):
Sure. Very good morning to you,
JOE (00:44):
Mike. Does it feel like a ‘fin de siecle’ to you?
MIKE (00:48):
I don't think it feels like the end, Joe, because I think globalisation has already come to an end with events like the first Trump presidency andBrexit. My sense is that this is the beginning of something new in that it's an attempt to build a new model for America across the world, and it's one that will probably look and feel like the opposite of what we've come to to experience to enjoy in the last 30, 40 or more years. And it's people in Ireland should pay attention because we are very, very close to America. And this is a model I think of American exceptionalism, American isolationism. It's one that's hostile to the rest of the world. Europe has never felt, I think in the last few months an America that has been as aggressive in taking the narrative vis-a-vis to Europe and effectively degrading and denigrating Europe. We see the same across the rest of the world. Relations between Canada and the states are breaking down. Very interesting comment far away in Singapore where their minister of defence said that America instead of being a force for good for democracy, is now like a landlord extracting rent from people. So it opens up a period of uncertainty and great tension
JOE (02:11):
And great tension is of course, what trading partners don't like. What do you think Macron et al can achieve this week in this emergency summit today in Paris?
MIKE (02:22):
To extent this saves Macron because I would've said that maybe two or three weeks ago we were going into the post Macron era in France in the sense that he's something of a lame duck, and I think this will suit him in terms of his own skills. It's really important that it's not about Macron, it's also about Frederick Merz, who I think in a week's time will be the new chancellor of Germany who has a political outlook very much like Macron. And also I think Keir Starmer and the UK become very important here as well. Specifically in terms of what Europe can do, I think that the first task is really to bolster security vis-a-vis Russian meddling in Europe. And there's been plenty of instances of Russian assassinations in Europe, attacks on infrastructure, so they have to push back quite hard. And that it brings into question the role of countries like Hungary, in particular in Europe, and whether Hungary now as an apologist for Russia will see more sanctions.
(03:25):
Big question mark as well over Austria, where there's attempts to form a government that have up until recently been led by a far right pro-Russia party. Then in terms of defence, I think we're going to see more joint defence spending across Europe, bonds on heavy equipment like transport aircraft. We'll see the issuance of EU defence bonds and Ireland will be invited to invest in those. Talk about a pan-European nuclear shield. And I think the patience of European leaders is now so exhausted by Mr. Trump and his cabinet that there'll be a big pushback against American attempts to try and force Europe to soften this regulation on the big social media companies. Again, an important touch point for Ireland.
JOE (04:17):
Yeah. Now, what about trading patterns? Does Europe start to seriously examining, tilting more towards China if America has become the unreliable boyfriend?
MIKE (04:29):
We're already seeing that, Joe. I think if you look at say, China trading more with Latin American countries, I think when we step back from this and say five years time, I think migration, financial flows and in particular trade patterns and investment patterns will have been changed fundamentally by the Trump administration and probably to the negative of the us. I don't think Europe moves closer to China in a strategic way, but because I think Europe has already disabused of the notion that China has been using intellectual property espionage effectively on many European sectors, I think it would be open to trade with China in terms of goods and services that are not strategic. I think the big winner from this is the region that spans India, the Emirates, Saudi Arabia, and this is what I would call the fourth pole. So in a world of three multipolar centres, the us, China, and Europe, we're now going to have a new big trading zone, which is sort of in the middle of these zones. If you look at Abu Dhabi, it's effectively sits at the centre of gravity of world economic activity. And I think that region is going to thrive because many of the countries and regions who perhaps would've chosen to trade directly with the states will trade more with each other, and this would become a new centre point effectively.
JOE (06:06):
And what about Ireland? It is utterly dependent on the US at the moment.
MIKE (06:11):
Well, Joe, we are poor innocents because we are totally unprepared for this kind of world. Ireland is having what I would call a diplomatic crash in that everything we have invested in diplomatically, geopolitically in the last 30, 40 years has now crashed or lost its relevance: a close relationship with the White House, the UN, et cetera. And we haven't prepared all of the other things you need to have in a tougher geopolitical world, a bigger army. We treat our soldiers very badly, an incoherent security apparatus. And it reminds me, without being too dramatic, it's a bit like 2010 when Brian Lenihan was at the airport heading off to Brussels. We are at a moment where we are effectively defenceless where other nations patrol our seas and our skies. We don't really have a good security apparatus, and many people have been warning about this for some time, but nothing has happened. And I think Ireland now is even though it's attached culturally, politically to the US and also in terms of investment flows, it is in the European camp and we will find ourselves being drawn closer into Europe. Europe is going to become, I think, more coherent, and it'll be put to us that you have to invest in European defence bonds, you have to contribute to the European defence effort. So there is a geopolitical crisis coming for our leaders.
JOE (07:48):
Mike, thanks very much for sharing your thoughts. That's Michael Sullivan there, the co-founder of Unio, as well as the author of the Levelling Back in a moment with the boss of the FinTech Association of Ireland.