Shipping must now prepare for an era of nationalists

 

The election of Jair Bolsonaro as president of Brazil has propelled another controversial nationalist into control of a major economy. The success of the former military man builds on a global trend of populists replacing left or social liberal candidates as the leaders of their nations.

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Even Germany’s Angela Merkel — that former beacon of European stability — has announced she will stand down as chancellor in 2021 after a series of electoral setbacks.

Expect the unexpected

In a keynote speech at the Shipping and the Law conference in Naples two weeks ago, the head of the Italian Institute for International Affairs told shipowners to expect only the unexpected.

Do not think of Black Swan — highly unlikely and unexpected — events as the exception but more the rule, Vincenzo Camporini said.

You only have to hear that the British government has considered chartering 10 cross-channel ro-ro ships to head off a post-Brexit trade stand-off with France to know we are in unchartered waters.

Certainly, one might have thought Bolsonaro — a man who has praised military governments and made disparaging remarks about women, gay and black people — stood no chance of leading South America’s biggest economy.

But it has come to pass in a world where the US — the most widely respected modern democracy — has put in the White House an admirer of Russia’s Vladimir Putin who questions the loyalty of the country’s Federal Bureau of Investigation and his own Washington judiciary.

54ce584b2b5e9bf5587bb2bf082d434dBlack swans: US President Donald Trump and Brazilian counterpart Jair Bolsonaro Photo: MANDEL NGAN

“You only have to hear that the British government has considered chartering 10 cross-channel ro-ro ships to head off a post Brexit trade stand-off with France to know we are in unchartered waters”

Donald Trump and Bolsonaro have already promised to cooperate on “trade, military and everything else”, according to the US president on Twitter.

So shipowners face a new world where anything can happen. But they also face one where countries are run by men — and it seems to be largely men — with strong nationalist tendencies and a prime commitment to their local economy.

International governance

This means that international governance and agreements around trade, the rule of law or climate issues are more unpredictable.

And Brazil plays a key role in the world’s economy — not least through Vale shipping vast amounts of iron ore to China.

Bolsonaro may have made some pretty ugly comments on a range of social issues but he has also promised a crack down on law and order, plus action to sort out a crumbling local economy.

The Brazilian stock market hit a new record high on Monday amid hopes that he would sort out a mounting budget deficit and free up markets.

His electoral success was aided, of course, by voter exasperation around the sheer ineptitude and corruption of his opponents from the Workers’ Party (PT).

The last nail in the leftist coffin was the Car Wash scandal surrounding Petrobras, which landed former PT leader and the country’s former president, Luiz Inacio Lula da Silva, in jail.

Deteriorating law and order was also a major reason why voters gave the green light to an overt authoritarian who promised to bring some retired generals back into government.

Rise of the right

But Bolsonaro’s victory follows the rise of other right-wing figures such as Narendra Modi in India, Recep Erdogan in Turkey and Viktor Orban in Hungary.

It follows the Brexit vote in the UK and the election of a Five Star populist government in Italy, plus assertive nationalists in Poland.

Trump has already initiated protectionist trade wars with China and the European Union, which are having an impact on shipping.

133241bca30fdc20d59e8f708be8e87cIron ore activities at Vale’s port of Tubarao Photo: Vale

The US has just blocked a Chinese bid for finance from the Green Climate Fund to help Shandong province shift from coal to clean technology.

Bolsonaro previously warned he may follow Trump and pull Brazil out of the Paris Agreement on climate change.

Power and promises

We know these new political leaders have risen to power on promises that they will look after their own country’s interests first.

We have seen from Trump what this can mean in practice: promises to rebuild domestic and declining coal and steel industries, deregulation and tax breaks.

So social democracy and neo-liberalism are out, while autocracy and nationalism return, but is this good for seagoing business or not?

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No-one has yet really identified their local shipping interests as paramount, although the Five Star party in Italy has hinted at it.

Emanuele Lauro the chairman and chief executive of Scorpio group, said recently that he was happy to see his government promise help to boost Italian shipping and jobs. But he points out a difficult truth: “Our business is, by its nature, international not national.”

Certainly, rules driven by local pre-occupations will bring tensions to global institutions, including the IMO. In the meantime, another black swan has flown in: Bolsonaro.

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