[Marko Papic, Geopolitical Alpha. An Investment Framework for Predicting the Future (Hoboken, New Jersey: Wiley, 2021), 286 pages].

review / Emili J. Blasco

"In the post-Trump and post-Brexit era, geopolitics is all that counts," says Marko Papic in Geopolitical Alpha, a book on political risk whose purpose aims to provide a method or framework from work for those involved in foresight analysis. consultant in investment funds, Papic condenses here his experience in a profession that has gained attention in recent years due to growing national and international political instability. development Whereas risk factors used to be concentrated in emerging countries, they are now also present in the advanced world.

With the book's degree scroll , Papic designates a process of analysis in which geopolitics proper, in its most geographically related sense, is only one part of the considerations to be taken into account, as the author argues that political and then economic (and financial) determinants matter first. For the whole of the analysis and the estimates it gives rise to, Papic uses the qualifier "alpha geopolitics" (or "alpha geopolitics"), as referring to a plus or reinforced geopolitics: one that takes into account political or macroeconomic constraints in addition to traditional geopolitical imperatives.

At bottom it is a nominalist question, in a collateral battle in which the author unnecessarily entangles himself. It is arguably a settling of scores with his former employer, the George Friedman-led Stratfor, whom Papic praises in his pages, but who he seems to covertly criticise for basing much of his foresight on the geography of nations. To suggest that, however, is to make a caricature of Friedman's solid analysis. In any case, Papic has certainly reinforced his training with programs of study financials and makes useful and interesting use of them.

The central idea of the book, leaving aside this anecdotal rivalry, is that in order to determine what governments will do, one should look not at their stated intentions, but at what constrains them and compels them to act in certain ways. "Investors (and anyone interested in political forecasting) should focus on material constraints, not politicians' preferences," says Papic, adding a phrase that he repeats, in italics, in several chapters: "Preferences are optional and subject to constraints, while constraints are neither optional nor subject to preferences.

These material constraints, according to the order of importance established by Papic, are political conditioning factors (the majority available, the opinion of the average voter, the level of popularity of the government or the president, the time in power or the national and international context, among other factors), macroeconomic and financial constraints (budgetary room for manoeuvre, levels of deficit, inflation and debt, value of bonds and currency....) and geopolitical ones (the imperatives that, derived initially from geography - the particular place that countries occupy on the world stage - mark the foreign policy of nations). To that list, add constitutional and legal issues, but only to be taken into account if the aforementioned factors do not pose any constraint, for it is well known that politicians have little trouble circumnavigating the law.

The author, who presents all this as a method or framework of work, considers that the fact that there may be irrational politicians who entrance do not submit to objective material constraints does not derail the approach, since this status is eventually overcome because "there is no irrationality that can alter reality". However, he admits as a possible objection that, just as the opinion of the average voter conditions the actions of the politician, there may be a "hysterical society" that conditions the politician and is not itself affected in the short term deadline by objective constraints that make it bend to reality. "The time it takes for a whole society to return to sanity is an unknown and impossible prognosis," he acknowledges.

Papic proposes a reasonable process of analysis, broadly followed by other analysts, so there is no need for an initial, somewhat smug boast about his personal prospective skills, which are indispensable for investors. Nevertheless, the book has the merit of a systematised and rigorous exhibition .

The text is punctuated with specific cases, the analysis of which is not only well documented but also conveniently illustrated with tables of B interest. Among them is one that presents the evolution of pro-euro opinion in Germany and the growing Europhile position of the average German voter, without which Merkel would not have reached the previously unthinkable point of accepting the mutualisation of EU debt. Or those that note how England, France and Russia's trade with Germany increased before the First World War, or that of the United States with Japan before the Second World War, exemplifying that rivalry between nations does not normally affect their commercial transactions.

Other interesting aspects of the piece include his warning that "the class average will force China out of geopolitical excitement", because international instability and risk endangers Chinese economic progress, and "keeping its class average happy takes precedence over dominance over the world". "My constraint-based framework suggests that Beijing is much more constrained than US policymakers seem to think (...) If the US pushes too hard on trade and Economics, it will threaten the prime directive for China: escape the middle-income trap. And that is when Beijing would respond with aggression," says Papic.

Regarding the EU, the author sees no risks for European integration in the next decade. "The geopolitical imperative is clear: integrate or perish into irrelevance. Europe is not integrating because of some misplaced utopian fantasy. Its sovereign states are integrating out of weakness and fear. Unions out of weakness are often more sustainable in the long run deadline. After all, the thirteen original US colonies integrated out of fear that the UK might eventually invade again.

Another suggestive contribution is to label as the "Buenos Aires Consensus" the new economic policy that the world seems to be moving towards, away from the Washington Consensus that has governed international economic standards since the 1980s. Papic suggests that we are exchanging the era of "laissez faire" for one of a certain economic dirigisme.