What to Do If a Red Notice Is Issued Against You?
November 23, 2024
(1) Introduction
Paradoxically, populism appears to be a term that is simultaneously novel and historical. Despite having existed for centuries in Latin America (Juan Perón in Argentina), the election of populists to public office seems to be no less shocking. With Donald J. Trump obtaining a second term in office following the 2024 US presidential election, the ‘spectre’ of populism has been thrust into the spotlight once more (Cox, 2017). Yet, within the commercial sphere, there seems to be little discussion that analyses how populism impacts markets more broadly. This article will analyse the commercial impact of Trump’s election through the lens of populism and the case study of El Salvador. Populism is a perfect example of how – especially in the commercial sphere – politics cannot be neatly severed from economics, just as neither politics and economics cannot be isolated from the law.
(2) Populism
(2.1) Defining populism: a recognisable question with an elusive answer
Every definition of populism should open with a warning: populism, like democracy, is a term that is notoriously difficult to define and agree upon. To an extent, this results from the flexible, ‘chameleonic’ nature of populism itself (Taggart in Mudde and Kaltwasser 2013). For these purposes, populism divides reality into a simple binary of ‘good’ and ‘evil’, namely between ‘the people’ and ‘the corrupt elite’ (Mudde and Kaltwasser 2017). ‘The people’ are an imagined, indivisible collective who are inherently ‘virtuous’ (Müller, 2016). ‘The elite’ is a term used by the populist leader to stigmatise a concealed enemy, who purportedly controls
domestic or global political and economic structures (Müller, 2016). As purportedly the sole representative of ‘the people’, the populist leader criticises and destroys any institutions who may get in the way of their political projects or electoral victory (Weyland, 2017).
(2.2) The business of populism
Populism is a corrosive force for economies and commerce, even if it may appear beneficial in the short-term (Kleinfeld, 2023). The means by which populists have this negative effect on commerce can vary considerably, including: corruption, a reduction of ‘societal cohesion’ and confidence; economic protectionism; the mismanagement of ‘macroeconomics’; the rejection of economic expertise; nationalisation and exploitation of ‘strategic’ corporations; and attacks on perceived financial ‘elites’ (Kleinfeld, 2023). Most of these effects are explained by the fact that populist economic policies are merely means to their political goals, rather than informed, fiscally responsible policies (Mudde and Kaltwasser, 2013).
(3) Nayib Bukele (El Salvador): mano dura, X, cryptocurrency, and
‘millennial authoritarianism’
Nayib Bukele is the perfect case study for populist economics. Prima facie, his impact on El Salvador’s economy appears to be profound, and broadly positive. Until very recently, El Salvador had a homicide rate of 102 murders for every 100,000 people of the population, predictably impacting market confidence. Through Bukele’s version of ‘mano dura’ (mass incarceration), eliminating habeas corpus, the rule of law, and human rights, Bukele’s government reduced this number to 7.8 per 100,000 by
2022 (Grillo, 2023). On this short-term evidence, it could reasonably be argued that Bukele has provided a cure for the country’s commerce and economics alongside its social issues. One could also point to a renewed sense of innovation under Bukele through his use of X (reaching 4/10 Salvadorans) and his ‘millennial authoritarian’ brand (Melendez-Sanchez, 2021). Confidence in Bukele has been unprecedented, with his approval rating in 2022 standing in excess of 80% and his image holding particular appeal among the younger electorate.
Yet, with closer analysis, there are ominous undertones for the long-term, even beyond the severe human rights infringement. The sustainability of mass incarceration of this scale in such a weak economy remains in well founded doubt, with 1.7% of El Salvador’s population in prison (Grillo, 2023). Moreover, Bukele’s flagrant violations of the rule of law are symptoms of how checks on his executive power have been rapidly sidelined. Even if there is more certainty for businesses and transactions in the present, there is now very little that can stop Bukele from re-introducing uncertainty, infringing on the integrity of their property rights, or interfering with their revenue. Moreover, while the short-term impact of Bukele’s Covid-19 measures seemed highly effective relative to other jurisdictions, these actions were also founded on high spending and human rights violations, with the use of ‘containment centres’, rapid construction of hospitals, and ‘cash relief’ to over a third of the nation adding to a national debt that is already crippling.
Moreover, as part of his supposedly innovative and direct brand, Bukele has placed a considerable portion of El Salvador’s national wealth in cryptocurrency, a risk of unthinkable proportions. In 2022, El Salvador was in possession of 2,400 bitcoins, this being the
equivalent of $48 million (Blitzer, 2022). Alongside the immense volatility of Bitcoin as a currency, the lack of considered thought behind this policy is abundantly obvious. The ‘Bitcoin Law’ is poorly drafted, Bukele has spoken of a ‘Bitcoin City’ (with ‘Bitcoin Bonds’ as currency), and the confidence of El Salvadorean businesses in Bitcoin seems frail at best. Indeed, the Chamber of Commerce reported in 2022 that 86% of El Salvador’s corporations had ‘never conducted a Bitcoin transaction’, despite Bukele’s considerable effort to move transactions in this direction (Blitzer, 2022). As El Salvador proves, it is the talent of populism that it can so effectively create an image of financial success that conceals severe financial damage and uncertainty.
(4) The present & the future
(4.1) Donald Trump (USA): taxation, tariffs, and Elon Musk
Where does this leave the USA and an emerging second term for Trump? Certainly, the history and theory of populism does not give us immediate answers or absolute predictions. However, several comparisons can be made between Trump’s election promises and the history of populist economics.
(a) Taxation, deregulation, and embracing ‘big business’
As part of his appeal to ‘the people’ and in response to a stalling economy, Trump placed considerable emphasis on reduction in taxation during his campaign. While superficially attractive to the ‘common man’, this policy seems to display a typically populist relationship with fiscal responsibility. In this case, it seems reasonable to suggest that voter mobilisation underpinned this political manoeuvre, more so than considerations of economic security. Such a loss of taxation revenue could have a significant impact on the ability of the US to combat its rising debt, currently at 122% of GDP.
Yet further, Trump has embraced an image of ‘deregulation’ and pro-business thinking, bringing Elon Musk into his campaign and championing him as a source of ‘government efficiency’ (Elliott, 2024). Alongside the typical examples of deregulation, Trump has
discussed a relaxation of limits and regulation on artificial intelligence, limits that are arguably loose already when compared with the EU AI Act 2024, as but one example. Specifically, Musk’s promise of $1 million to voters in the ‘swing states’ (Looker, 2024) is an
interesting combination of the populism-business clientelism and cronyism typically expected of right-wing populism and the ‘inclusionary’, welfare-for-votes strategy seen in Latin America (Muller and Kaltwasser, 2013). Whether this pro-business stance extends to benefit ‘big business’ equally or is merely instrumental remains to be seen.
(b) Economic protectionism and nationalism
Framed within his “America First” slogan, the Trump administration seems set to reduce corporation tax considerably to keep US corporations inward facing, attract foreign capital, and reduce capital flight. Yet, while tailored effectively to US nationalism and the idea of ‘the American people’, the potential impact of a renewed trade war and heightened tariffs with China could be considerable, not least for the purchasing capacity of American citizens and for the plans of businesses operating in the USA. At the forefront of Trump’s nationalist leaning populism has been anti-immigration rhetoric, a typical theme in right-wing populism across Europe especially (AfD in Germany, Viktor Orbán in Hungary, PiS in Poland). Alongside the promise of a Mexico-US border wall, Trump has been explicit in his intention to deport approximately 11 million individuals who are ‘without legal status’ to remain in the USA (Elliott, 2024). Notwithstanding the extraordinary expense of constructing the so-termed ‘wall’, commentators have highlighted that this scheme of deportation will impact the availability of ‘low-cost labour’ and result in businesses having to redesign their structures in light of increased ‘costs’ (Elliott, 2024).
(c) Conspiracies and climate change
In line with populist scepticism concerning conventional science and expertise, Trump has broadcasted his plans to give greater weight to hydrocarbons and to place prohibition on offshore wind, with the stated aim of economic benefit. This echoes his withdrawal of the USA from the Paris Climate Agreement during his first term and builds upon wider populist conspiracies that deny the extent or even existence of climate change. Although these decisions will be beneficial for oil and gas corporations, this could have significant implications for the chances of the USA to innovate in clean energy and its ability to achieve market-leader status in the global green transition and ESG. Failing to prepare the US economy for the depletion of hydrocarbons could have significant consequences in the long-term both for the domestic economy and global economic systems.
(4.2) A note of caution
It would take a much longer article than this to properly consider the future that the second episode of a Trumpist USA holds. Yet, to a degree, this is a futile exercise. Populists are perennial liars. The gap between rhetoric and substance, façade and reality is the norm, not the exception. Thus, while prediction is only prudent – much as it is in law – it is not to be relied upon. Indeed, even predictions based on the history of populism must be qualified. While one can generalise, populism is adaptable. What one must predict is the unpredictable, and such unpredictability may well have a significant impact on market confidence, business, and industry.
The true nature of Trump’s America as a climate for commerce is yet to be seen. However, what is undeniable is this. While difficult to define, to predict, and to contain, populism casts an ominous and corrosive shadow over the law, over commerce, and entire economies. It simply cannot be ignored, a lesson crucial for both corporations and legal practitioners.
(5) Sources & further reading
(5.1) The politics of populism
Michael Cox, ‘Understanding the Global Rise of Populism’, LSE Ideas, 31/05/2017,
https://www.lse.ac.uk/ideas/Assets/Documents/updates/LSE-IDEAS-Understanding-Global-
Rise-of-Populism.pdf
Roger Eatwell and Matthew Goodwin, National Populism: The Revolt Against Liberal
Democracy (Penguin, 2018)
Ian McDougall, ‘Populism and the Rule of Law’, LexisNexis Insights, 10/06/21,
https://www.lexisnexis.com/community/insights/b/blog/posts/populism-and-the-rule-of-
law?srsltid=AfmBOordNN60btLSltsZ1WUD3J1AhtLKMq2ny932eudKFjPlM9l13FhW
Cas Mudde and Cristóbal Rovira Kaltwasser, ‘Exclusionary Vs. Inclusionary Populism:
Comparing Contemporary Europe and Latin America’ in Government and Opposition, 48(2),
147-174 (2013)
Cas Mudde and Cristóbal Rovira Kaltwasser, Populism: A Very Short Introduction (Oxford
University Press, 2017)
Cas Mudde and Cristobal Rovira Kaltwasser, Populism in Europe and the Americas: Threat
or Corrective for Democracy? (New York: Cambridge University Press, 2012)
Cristóbal Rovira Kaltwasser, Paul Taggart, Paulina Ochoa Espejo and Pierre Ostiguy (eds),
The Oxford Handbook of Populism (Oxford University Press, 2017) (various contributors)
Jan-Werner Müller, What is Populism? (Philadelphia: University of Pennsylvania Press,
2016)
Kurt Weyland, ‘Clarifying a Contested Concept. Populism in the Study of Latin American
Politics’ in Comparative Politics, 34(1), 1-22 (2001)
(5.2) Populism and economics
Rachel Kleinfeld, ‘How Does Business Fare Under Populism?’, Carnegie Endowment for
International Peace, 13/06/23, https://carnegieendowment.org/research/2023/06/how-does-
business-fare-under-populism?lang=en
Kenneth M. Roberts, ‘Neoliberalism and the Transformation of Populism in Latin America:
The Peruvian Case’ in World Politics, 48(1), 82-116 (1995)
(5.3) Populism in Latin America
Cecilia Barría and Joe Tidy, ‘Bitcoin rally: is El Salvador’s Bitcoin bet paying off?’, BBC
News, 06/12/23, https://www.bbc.co.uk/news/technology-67637245
Jonathan Blitzer, ‘The Rise of Nayib Bukele, El Salvador’s Authoritarian President: The
Budding Strongman Has Ridden Bitcoin Schemes and a Repressive Crackdown on Gangs
to Become Latin America’s Most Popular Leader’, The New Yorker, 05/09/22,https://www.newyorker.com/magazine/2022/09/12/the-rise-of-nayib-bukele-el-salvadors-
authoritarian-president
Anthony Cuthbertson, ‘”We won’t sell”: Bitcoin holdings of El Salvador up 50%, president
reveals’, Independent, 05/03/24, https://www.independent.co.uk/tech/bitcoin-el-salvador-
holdings-value-b2506424.html
‘El Salvador grants Musk’s Starlink unit concession for satellite internet’, Reuters, 28/02/24,
https://www.reuters.com/technology/el-salvador-grants-musks-starlink-unit-concession-
satellite-internet-2024-02-28/
Mark Feierstein, Keith Mines, Mary Speck, and Ricardo Zúniga, ‘El Salvador’s Bukele: From
“World’s Coolest Dictator” to “Philosopher King”’, United States Institute of Peace, 08/02/24,
https://www.usip.org/publications/2024/02/el-salvadors-bukele-worlds-coolest-dictator-
philosopher-king
‘Gold fever: big mining companies circle as El Salvador prepares to reverse ban’, The
Guardian, 03/02/24, https://www.theguardian.com/global-development/2024/feb/03/gold-
why-the-fight-over-mining-el-salvador-precious-metal-may-not-be-over
Ioan Grillo, ‘Three Uncomfortable Truths About Bukele's Crackdown On Gangs: It's Effective.
It's Popular. It’s Brutal’, 29/08/23, https://www.crashoutmedia.com/p/threeuncomfortable-
truths-about
Manuel Meléndez-Sánchez, ‘Latin America Erupts: Millennial Authoritarianism in El
Salvador’ in Journal of Democracy, 32(3), 19-32 (2021)
Reuters, ‘Nayib Bukele re-elected as El Salvador president in landslide win’, The Guardian,
05/02/24, https://www.theguardian.com/world/2024/feb/05/nayib-bukele-re-elected-as-el-
salvador-president-in-landslide-win
Kurt Weyland, ‘How Populism Corrodes Latin American Parties’ in Journal of Democracy,
32(4), 42-55 (2021)
(5.4) Populism, Trump, and the USA
Larry Elliott, ‘From Higher Tariffs to Lower Taxes, will Donald Trump’s economic plan pay
off?’, The Guardian, 08/11/24, https://www.theguardian.com/business/2024/nov/08/will-
donald-trump-plan-pay-off-higher-tariffs-lower-taxes
Rachel Looker, ‘Elon Musk can Keep Giving $1m to Voters, Judge Rules’, 04/11/24,
https://www.bbc.co.uk/news/articles/crlnjzzk919o
(5.5) Elsewhere on The Student Lawyer
Timothy Chan, ‘A Look at Twitter’, The Student Lawyer, 22/06/23,
Imran Chaudhri, ‘Argentina’s Economic Turmoil – An Overview of the Economic Struggles
and Analysis of Javier Milei’s Potential Impact on the Nation’, The Student Lawyer, 19/06/24,
https://thestudentlawyer.com/2024/05/19/argentinas-economic-turmoil-an-overview-of-the-
economic-struggles-and-analysis-of-javier-mileis-potential-impact-on-the-nation/
Imran Chaudhri, ‘Fear and Loathing in the White House: Factors Influencing the Current US
Presidential Election and How the Identity of the Next President Could Radically Affect the
Global Economy and the Tech Industry’, The Student Lawyer, 27/11/23,
https://thestudentlawyer.com/2023/11/27/fear-and-loathing-in-the-white-house-factors-
influencing-the-current-us-presidential-election-and-how-the-identity-of-the-next-president-
could-radically-affect-the-global-economy-and-the-tech-industr/
Janav Singh, ‘The Fragmented Reality of Global Supply Chains: The US-China Decoupling
and Semiconductor Standoff’, The Student Lawyer, 20/09/24,
https://thestudentlawyer.com/2024/09/20/the-fragmented-reality-of-global-supply-chains-the-
us-china-decoupling-and-semiconductor-standoff/
