the Washington Consensus <\/a>brought the welfare social state model to end and
\nsocieties were anxious and angry. These countries, governed by democracy, a regime
\nwhich depends on the middle class, could no longer ignore the reactions of their middle
\nclasses. The political center of gravity has rapidly shifted towards populism and
\nxenophobia. Political movements that strengthen by using extreme right-wing rhetoric
\nand protectionist promises has risen.<\/p>\nDiscontents of globalisation<\/strong>
\nWhile the rich were unhappy, the poor were also dissatisfied with inequality and their
\nlack of sufficient representation in the global order. The deadlock at the G-20 Ministers
\nand Central Bank Governors’ meeting held in Gyeongju, South Korea, in October 2010
\nwas caused by the demand from emerging market economies for more influence in the
\nglobal financial architecture and more voice in international financial institutions. The
\nmeeting, where I represented the CBRT, lasted until 7:30 in the morning, but no
\nagreement was reached. The rich club was aware that the \u2018barbarians\u2019 had already taken
\nover the castle, but they were asking for a bit longer time for a smooth transition and
\nadjusting their positions. The speed of change was unacceptable to the Center. On the
\nother hand, representatives of emerging markets insisted that the fact \u201cthe world is
\nbigger than seven\u201d should be acknowledged not only in words, but in deeds also. As the
\nshare of developed countries in the global economy shrank from 70 percent to 46
\npercent, the share of emerging markets grew from 13 percent to 33 percent (Graph 3).
\nHowever, their influence in international fora\u2019s decision-making processes had not
\nadjusted accordingly. The uprising at the 2010 Gyeongju meeting yielded some results
\nfavouring EMs, but the improvement was very limited. Those carrying the burden of the
\nglobal order continued to be treated as second-class.<\/p>\nThe unhappy were not only from developed and emerging economies. There was
\nanother, far more critical unhappiness, the Earth! Our planet was unhappy with the
\nextensive destruction of its natural environment in the name of development and growth.
\nThe model which made emerging market economies, especially China, the world\u2019s
\nmanufacturing hub achieved a spectacular success. Markets everywhere were awash
\nwith vast amounts of products thanks to global supply chains, and costs were
\nunprecedently low. However, this achievement came only at the expense of a terrifying
\nenvironmental degradation, rainforest have been destroyed, plastic garbage patches
\nhave been expanding in oceans, pollution, global warming, and climate change threaten
\nthe delicate balance of Earth\u2019s ecosystems. The years during which the world enjoyed
\nlow inflation and high growth were made possible by converting the natural resources of
\nthe planet into cash, and eventually we have arrived on the edge of the Anthropocene
\nmass extinction. <\/p>\n
The third slogan of the French Revolution promised us a paradise on Earth, but the New
\nWorld Order turned it into hell. De facto global system lacking a global institutional
\ninfrastructure was doomed to fail and in fact it did. It could have been achieved only if
\nglobal would have been established. The Global New World Order failed to provide all
\nparties a fair, just, inclusive, and environment-sensitive global governance model, and
\nthus global integration became a burden rather than an asset. Failure to cooperate
\nagainst a global crisis, Covid-19 pandemic, marked the end of global world order. The
\ncurtain falls on the period of hope, which has lasted from 1990 to 2020, and the age of
\nfear inaugurated the reign of hope. Challenges and crises are ahead. Concepts that have
\nshaped our consciousness and perception are losing their significance. The causalities
\nand relationships we are familiar with do no longer have explanatory power. Fear brings
\nanger, anger brings irrationality, and irrationality brings hatred. We are entering a
\ndarkness where the ghosts of the past, which we thought we had buried at the turn of
\nthe millennium, are once again roaming.<\/p>\n
Quo Vadis: The Fragmented World Order <\/strong>
\nThe naming ceremony of the New World Order, conducted by a U.S. president in
\nCongress in September 1990 \u2014let\u2019s call this the First New World Order (1st NWO) to
\navoid confusion, was followed 28 years later by another U.S. president who declared its
\ndeath at the United Nations General Assembly, one of the symbol institutions of the
\nWorld Order. In September 2018, U.S. President Donald Trump, who was scheduled to
\nspeak at the UN General Assembly, was not present in the hall at the time of his speech
\nand missed his turn. In his delayed address, the message he delivered was like a nail in
\nthe coffin of the 1st NWO: \u201cAs far as America is concerned, the ICC has no jurisdiction,
\nno legitimacy, and no authority\u2026We will never surrender America’s sovereignty to an
\nunelected, unaccountable, global bureaucracy\u2026 America is governed by Americans\u2026
\nWe reject the ideology of globalism, and we embrace the doctrine of patriotism. Around
\nthe world, responsible nations must defend against threats to sovereignty not just from
\nglobal governance, but also from other, new forms of coercion and domination.<\/em>\u201d <\/p>\nEspecially with Donald Trump\u2019s victory in the presidential elections held in November
\nlast year, there has been a widespread belief that a new era is beginning. Since Trump
\nwas elected, protectionist policies would be implemented, countries would close
\nthemselves off, global norms and liberal values would be disregarded, environmental
\nconsciousness and green transformation would be shelved, and in short, a system of
\ndivision, hostility, and conservatism would reign. Mr. Trump was seen not only as the
\nrepresentative (symbolic figure) of this change but also as the cause (the factor leading
\nto its emergence). Leaders and their decisions play a role in the course of events, they
\ncan affect the speed of change, but they cannot determine the social and political
\nphenomena on their own. As previously mentioned, historical conditions bring major
\nchanges. The more one tries to explain the situation by attributing too much credit to
\nindividuals, the greater the risk of underestimating the influence of the sub-structure.
\nThis is exactly why explaining the change in the world order by the rise of far right and
\npopulist leaders would be misleading. In fact, the causality works just in the opposite
\ndirection. In other words, Mr. Trump\u2019s victory in presidential elections is not the cause for
\na tragic change in the world order, but rather the fundamental change that has been
\nhappening brings political leaders like Mr. Trump to power in many jurisdictions. <\/p>\n
However, it is clear that the political inclination of the United States will have a significant
\nimpact on the changing world order. The main axis to define both global geopolitics and
\neconomic politics in the coming period seems to be the hostile competition between the
\nU.S. and China, which will inevitably evolve into a confrontation. The tension between
\nthe U.S. and China has already started to build up and, since the root cause is structural,
\nregardless of the result of presidential elections the conflict is destined to arise. Under
\nthe Trump administration, it seems combat will be more direct, more extensive, and
\nmore intense. The problem is that, just like unrest is contagious in a herd, protectionism,
\nisolationism, and irrationality are also contagious among nations. The tension between
\nthe world’s two largest economies and most formidable military powers will load an
\nimmense geopolitical energy to the system that triggers earthquakes along fault lines,
\nshaking the entire world. <\/p>\n
John Nash’s game theory model, particularly his concept of the Nash equilibrium, is
\nessential for understanding the functioning of this Second New World Order. The Nash
\nequilibrium, named after him, describes a scenario where all parties involved, despite
\nthe outcome being the least favourable for all, are compelled to make decisions that lead
\nto that very outcome. This is best explained using the “Prisoner’s Dilemma” model.
\nIn this model, two criminals who have committed a crime together are arrested and
\ninterrogated in separate cells, with no possibility of communicating with one another.
\nThe police lack enough evidence to convict them without a confession, and both
\ncriminals are aware of this. As the prosecution pressures them for a confession, the
\ncriminals consider the following options: <\/p>\n
a) If neither confesses, they will both serve a one-year prison sentence, and hence the
\noutcome matrix for that strategy is (-1; -1).
\nb) If one confesses but the other denies, the confessor is released, whilst the other faces
\nten years in prison for misleading justice (0; -10 or -10; 0).
\nc) If both confess, the evidence against them will be solid, and their confessions won\u2019t
\nhelp them. They will each receive a six-year prison sentence (-6; -6). <\/p>\n
The dilemma arises because both prisoners face the temptation to betray the other for a
\nbetter individual outcome, yet if both betray, they both end up worse off than if they had
\ncooperated and remained silent. This paradox defines the Nash equilibrium, where
\nneither party has an incentive to unilaterally change their strategy, although they are
\naware they are going to end up with the worst outcome. <\/p>\n
As a result, the dominant strategy for both players is to betray the other, leading to a
\nworse outcome for both (-6; -6), rather than the optimal solution (-1; -1). This outcome
\nrepresents the worst possible one in the game, but escaping it is impossible. Similarly,
\nwhen countries are engaged in free trade with one another, this would lead to the best
\noverall outcome. However, if one country turns to protectionism to benefit itself at the
\nexpense of others, it could trigger the collapse of the entire system. <\/p>\n
The dynamics that will shape the next decade of the Second New World Order include
\nthe loosening of integrations created by globalisation, the disintegration of global value
\nchains, a shift towards protectionism under the banners of “localism and nationalism,”
\nand countries resorting to coercive measures to ensure production and investment
\noccur within their own borders. This will result in hostile competition and a more
\nadversarial global environment, which will mirror the Nash equilibrium of the prisoner’s
\ndilemma model. As a consequence, a world with worse economic conditions and more
\nintense competition will emerge.<\/p>\n
Global integration will weaken and be replaced by a fragmented one, more localized
\nwhere regional economic networks become more important. The model that allowed for
\nthe economic miracle of the last thirty years \u2014characterized by high growth with falling
\ninflation\u2014 was based on the production of parts at the cheapest locations, the free
\ncirculation of goods & services and factors of production through global supply chains,
\nand the sharing of added value across global value chains. This model seems to leave its
\nplace to a new one based on more limited and temporary collaboration. However, as
\nHeraclitus said, “no man ever steps in the same river twice. For it\u2019s not the same river
\nand he\u2019s not the same man.” meaning we won’t move towards a completely dystopian
\nworld like the one portrayed in Mad Max<\/em>. Instead, we will experience a fragmented
\nversion of globalisation. <\/p>\nAs a result, the economic system of the Second New World Order is estimated to bring
\na more volatile financial system, with higher inflation, and hence higher capital costs.
\nTrade volumes is expected to remain subdued. However, it is not all gloom and doom. In
\nthe past, we had several similar episodes, and it turns out they were all caused by
\nreaching boundaries of then existing\u2019s production model. Each and every time when it
\ngot the darkest, we had a technological jump, combined with the economic
\nimplementation of it, which paved the way to innovation, productivity increase, higher
\nefficiency and finally a superior production possibility boundary and thus a more
\nauspicious efficient market frontier at macro level. The revolutionary breakthroughs that
\nmay occur in artificial intelligence, materials science, molecular biology, genetics, and
\nenergy could, in reference to Kuhn’s terminology, “liberate us from the yoke of the
\nordinary economy.” <\/p>\n
This is best defined in Charles Dickens A Tale of Two Cities<\/em>, “It was the best of times, it
\nwas the worst of times, it was the age of wisdom, it was the age of foolishness, it was the
\nepoch of belief, it was the epoch of incredulity, it was the season of Light, it was the
\nseason of Darkness, it was the spring of hope, it was the winter of despair, we had
\neverything before us, we had nothing before us…in short, the period was so far like the
\npresent period, that some of its noisiest authorities insisted on its being received, for
\ngood or for evil, in the superlative degree of comparison only\u201d.<\/p>\nThe Economic Impact of the New Order <\/strong>
\nSince the Second New World Order will be with us for some time, we will have the
\nopportunity to get to know it better. Therefore, we can move away from theoretical
\nanalysis and focus on a more concrete evaluation of the effects this change will have on
\nthe world economy and the Turkish economy by 2025, when the change will be fully
\nexperienced. We know that pressures on the Chinese economy will increase. It would
\nnot be surprising if companies with Chinese investors or those with strong relationships
\nwith Chinese suppliers also come under pressure. As a natural consequence of the
\nU.S.’s siege and containment policy towards China, the global economy will also be
\naffected. However, the model that created China’s economic success worked as follows:
\nmassive amounts of mass production and, thanks to both the economies of scale and
\nnegative externalities, low costs, the export of domestic output surpluses, and the
\nprovision of financing opportunities to those who want to buy Chinese goods, supported
\nby the excess savings created by suppressing domestic consumption. What turned the
\nsuccess story into a miracle was that the capitalist economic model was run under state
\nownership, allowing this cycle to continue indefinitely. Since 2019, every obstruction
\nintroduced to the system has led to major disruptions. The Chinese economic system,
\nwhich had achieved an average annual growth rate of nearly 9% for a quarter-century
\nduring the First New World Order period, encountered growth below 5% for the first time
\nat the end of 2019. Today, even that has become an unreachable dream (Graph 4). The
\ninflation data, which further worsens this scenario, signals that China may be heading
\ntowards the “Japanification” deadlock. <\/p>\nDue to the likely production loss in China, the Chinese industry will not generate the high
\ndemand for commodities that it once did, leading to a weak outlook for commodity
\nprices. In addition, it seems that the Trump administration will pursue a policy of
\nreducing energy costs in order to balance the discomfort that U.S. consumers will feel
\nfrom cost increases due to import tariffs. Low oil prices will also help keep producers like
\nRussia and Venezuela under control. In this regard, risks related to oil prices will be
\ndownward. It is expected that the Trump administration will take steps such as
\nsupporting reserve producers like Nigeria and Libya, pressuring Saudi Arabia to loosen
\nproduction restrictions, bringing unused U.S. resources into play, including Alaska oil,
\ndue to environmental concerns, and finally easing restrictions on coal, all of which point
\nto a weaker outlook. <\/p>\n
A decrease in the United States’ interest in European affairs and, more importantly, its
\nsupport is inevitable. The slogan \u201cKeeping the U.S. out of the world\u2019s troubles,\u201d which
\nechoes a return to isolationism that formed the foundation of the Republican Party’s
\nforeign policy preferences until Roosevelt, received support from voters during the
\nelection campaign. Additionally, Trump is attempting to cut all costs that could help
\nreduce taxes domestically. Spending money on European security is one of the last
\nthings he would want to do. This means the EU will be left to face Russia alone. On the
\nother hand, isolationism does not prevent the U.S. from exerting pressure on the EU to
\nreduce its economic ties with China. Over the past year, the U.S. imported nearly $780
\nbillion worth of goods and services from the EU, while its exports to the EU were below
\n$650 billion. The likelihood that the Trump administration will impose higher tariffs on the
\nEU and even introduce non-tariff barriers is not negligible. It is known that the U.S. wants
\nto weaken the Russia-China axis in its confrontation with China. If Russia steps back
\nfrom cooperation with China, it would not be surprising if some concessions are made to
\nPutin. This would be another move that would not be well-received by the EU. <\/p>\n
The spread of protectionist policies and populism will negatively affect the global
\neconomy, international trade, and emerging market economies. Additionally, there is a
\ntrend where the U.S. dollar will likely strengthen in global markets due to both economic
\nand geopolitical factors. These developments will also negatively affect capital flows to
\nemerging market economies. <\/p>\n
Turkiye: Can opportunities overweigh threats? <\/strong>
\nGeopolitical tensions, like tectonic ones, break the system at its most vulnerable spots.
\nTurkiye, is in a position exposed to risks due to both geological and geopolitical fault
\nlines. So, nothing happening in Turkiye is solely about Turkiye. <\/p>\nTurkiye has been a country that closely monitors developments in the global system and
\ntries to respond accordingly. Therefore, it is useful to understand recent changes from
\nthis perspective. Economic policies were liberal, in harmony with the world in the 1920s.
\nIn the 1930s, Turkiye, along with the world, became more authoritarian. In the 1950s,
\nTurkiye supported the Atlantic Alliance, in the 1970s it embraced developmentalism, and
\nin the 1980s, it became a supporter of marketization and liberalization. Similarly, the
\nTanzimat reforms coincided the Congress of Vienna, the Islahat reforms followed the
\nParis Agreement, and the establishment of the United Nations inspired the shift to multi
\nparty political system. <\/p>\n
So why should it be any different now? <\/p>\n
The developments to the north of the Black Sea and in Europe, the conflict environment
\nto the south of Turkiye, the aftershocks caused by U.S.-China tensions, and the
\nreflections of the new order in the global economy constitute significant challenges to
\nTurkiye. The good news is that Turkiye has considerable experience in dealing with
\ndifficulties, this has never been an easy geography. Basically the size of the domestic
\nmarket, high private consumption, strong entrepreneurial culture and flexibility of
\ncorporates have always provided kind of immunity against external shock. There are
\nsome favourable factors too; main import item for Turkiye is commodities and thanks to
\nsoftening economic activity commodity prices expected to remain subdued. <\/p>\n
U.S. aims to restrain the expansion of China and is definitely going to increase its
\ncontainment of China, and China subsequently will take countermeasures. Excess
\nproduction capacity of Chinese economy is a clear and present threat for almost all
\nadvanced Western economies. Over the last two decades, Chinese enterprises have
\ncreated fierce competition and several production plants in Europe have had to cease
\ntheir operation. Partly because of this, those same economies have developed
\ndependencies over time on supply of merchandise from China, the sole producer with
\nthe ability to secure the sizeable amount of supply they need. Should severe restrictive
\nmeasures on China\u2019s exports be taken without a substitute, this may have devastating
\nimpacts over especially EU industries Mr. Trump has already made clear that U.S. will
\nimpose high tariffs on China, and if a vendor uses China originated feedstock in
\nproduction, it will be probably subject to the same rate of taxation. This aggravates the
\nproblem for EU. As a member of EU custom union, and with over USD300 billion of
\nhighly qualified and diversified industrial production, Turkiye is already competing with
\nChina in various segments, and seems to be the most viable candidate in the CEEMEA
\nregion for customers seeking alternative to Chinese suppliers. <\/p>\n
During Mr. Trump\u2019s first presidency he withdrew the U.S. from the Transatlantic Trade
\nand Investment Partnership (TTIP) with the EU. Trump\u2019s team has already warned
\nEuropean officials that the incoming U.S. president will demand NATO member states
\nincrease defence spending to 5 per cent of GDP, too. Thus, the relationship between the
\nU.S. and the EU is expected to be impaired by isolationism and protectionism. The
\nweakening of the alliance between the U.S. and Europe on the other hand, will increase
\nTurkiye’s relative foreign policy weight for both actors. A possible loosening of the
\nsanctions on Russia will also provide Turkiye with more flexibility. Geopolitical
\ndevelopments in the Middle East, and especially in Syria also indicate that Turkiye\u2019s
\nscope and influence will increase. Hosting millions of immigrants for more than a decade
\nwas a serious cost, but now it is paying back. Once stability will be restored and an
\nagreement will be reached, hydrocarbon resources from the Eastern Mediterranean
\nregion can easily flow to Europe through already operating pipelines. However, moving
\nopportunities from potential to kinetic requires capacity, competence, and skill. A critical
\nquestion is how much risks Turkiye will face will allow her to take advantage of the
\nopportunities that will arise in 2025. Weak global demand, reduced risk appetite,
\nincreased financing costs, and difficulties in accessing finance are challenges Turkiye
\nmust overcome. Though improvement in Turkiye\u2019s economic performance since June
\n2023 is promising, there are still a lot to do. Good news is that the base effect is helping;
\nwhile several other emerging markets are coping with a deteriorating outlook, Turkiye is
\nrelatively bettering off, because she has already left the worst behind. So, if Turkiye plays
\nher cards rights, opportunities may overweigh challenges, at least in the short term. And
\nin the long run we are all deads\u2026<\/p>\n
(1) In a speech delivered in 1946, British Prime Minister Churchill stated \u201cFrom Stettin in the Baltic to
\nTrieste in the Adriatic, an iron curtain has descended across the continent<\/em>\u201d – a phrase he used to describe
\nthe Eastern Bloc.<\/p>\nCharts<\/strong><\/p>\n![\"\"](\"https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/chart1_swo.png\")
![\"\"](\"https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/chart2_swo.png\")
![\"\"](\"https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/chart3_swo.png\")
![\"\"](\"https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/chart4_swo.png\")
<\/p>\n","protected":false},"excerpt":{"rendered":"
History shows that global ecological shocks have profoundly affected the planet, humanity, and social structures. Volcanic eruptions, such as those in Iceland in 536 and Tambora in Indonesia in 1815, caused \u201cyears without summer\u201d in many parts of the world, leading to widespread famine, migration, conflict, and even collapses of long-lived empires. While such ecological […]<\/p>\n","protected":false},"author":3,"featured_media":671,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-666","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"featured_image_src":{"landsacpe":["https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/161215111807-trump-xi-jinping-slipt-getty-1140x445.jpg",1140,445,true],"list":["https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/161215111807-trump-xi-jinping-slipt-getty-463x348.jpg",463,348,true],"medium":["https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/161215111807-trump-xi-jinping-slipt-getty-300x169.jpg",300,169,true],"full":["https:\/\/www.quanta.com.tr\/en\/wp-content\/uploads\/2025\/02\/161215111807-trump-xi-jinping-slipt-getty.jpg",1920,1080,false]},"_links":{"self":[{"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/posts\/666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/comments?post=666"}],"version-history":[{"count":1,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/posts\/666\/revisions"}],"predecessor-version":[{"id":672,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/posts\/666\/revisions\/672"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/media\/671"}],"wp:attachment":[{"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/media?parent=666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/categories?post=666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quanta.com.tr\/en\/wp-json\/wp\/v2\/tags?post=666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}