Putin may be disappointed that the far-right RN failed to secure first place in French elections, given his historic support for Marine Le Pen’s movement, but he is making the most of the visit of India’s Narenda Modi to his dacha on the outskirts of Moscow on the eve of the NATO summit. Questions are being raised about how long India can expect to maintain good relations with the US and Europe while it buys Russian oil at discounted rates and Modi bear hugs Putin. Perhaps indefinitely, as India seeks global superpower status. In the Middle East, the war between Israel and Hamas has spilled over into Lebanon, with markets barely taking notice. The “Danger Zone” summer that we warned about is galloping along.
These developments do not lend themselves to facile simplifications; the UK’s centre-left Labour party managed to secure a historic victory, thanks in part to a boost by the “first past the post” system and a fragmented right, and the left-wing alliance pulled off a shock victory in France , but includes firebrand populists of its own and is fragile and unwieldy. The appeal of political alternatives offering simple answers to complex problems has not been eroded, only postponed.
In our conversations with clients we continue to caution against the expectation of mean reversion, and the tendency to marginalise the impact of conflicts and political volatility, both of which weigh on leaders, drain energy and resources from improving growth prospects and boosting competitiveness, and contribute to our view that inflation will continue to stay stubbornly high—meaning the interplay between high prices and popular discontent will also carry on.
In Washington, the leaders of NATO member states are gathering and will mark the alliance’s 75th anniversary. Not long ago dismissed by many as obsolete, NATO gained newfound relevance—and support—after Russia’s invasion of Ukraine. NATO leaders will also discuss engagement in the Indo-Pacific and what role, if any, it should take on with regard to countering China. While Ukraine will not be offered membership, it will be granted another package of military aid. The increasing likelihood of a return of Donald Trump to the White House is concentrating minds on the idea that spending 2.5% of GDP annually on defence is now the floor and not a ceiling. One of the first moves by the new UK Foreign Minister, David Lammy, was to agree a new defence pact with Europe, an important signal after Brexit and in light of uncertainty about future relations with Washington.
We will be sharing our thoughts on what is in store for the second half on Thursday during our next webinar. Register below and let me know by reply what you are most interested in.
Smoke Signals - 2H Global Political Outlook Webinar - Fordham Global Foresight
Date: Thursday July 11th
Time: 9:00-9:45 am EST / 14:00-14:45 pm UK
.jpg?upscale=true&width=1120&upscale=true&name=IMG-20240704-WA0042%20(1).jpg)
