At the end of April, thousands of world leaders, ministers, diplomats, and central bankers traveled to Washington for the traditional spring meetings of the International Monetary Fund and the World Bank. On the agenda were doubts about the global economy, geopolitical instability, and chaos in the markets, but above all something completely unthinkable until now: the possibility that the United States may decide to leave both organizations and put an end to the system designed almost tailor-made for it 80 years ago.
Donald Trump believes that, in the economy, as in politics or in life, there are no middle terms and everything is a zero-sum game. If others win, the only possible conclusion is that he is losing. And since the U.S. economy is the largest and strongest in the world, if there are countries that have enriched themselves in parallel or more, it is because they have "abused and violated". "We have been looted and plundered by nations near and far, both friends and enemies (...) by foreign leaders who steal our jobs, foreign scammers who loot our factories, and foreign vultures who have destroyed our once beautiful American dream," he said on the day dubbed as the "liberation", imposing tariffs on all its trading partners and almost fatally wounding the World Trade Organization.
Trump was not referring to a specific affront, but was making a complete amendment to the post-World War II world. Of all his lies, exaggerations, inventions, and fantasies, the one that claims that the 20th century has been negative for the United States, and that free trade, globalization, and the system built by his predecessors have been detrimental to Americans is undoubtedly one of the most incredible.
At the end of June 1944, 730 delegates from 44 nations began to arrive at the United Nations Monetary and Financial Conference at the Mount Washington Hotel in the mountainous town of Bretton Woods, New Hampshire. The goal, just a few weeks after the Normandy Landings, was to try to agree on the foundations of a new post-war economic order to articulate a true international monetary and financial system. One capable of strengthening stability and allowing a devastated continent to recover from the greatest bloodshed in history.
The war, still ongoing, left millions dead and widespread bankruptcies, but the economic problems had been brewing for a long time. The first half of the century had been characterized by protectionism, aggressive devaluations, and unstable exchange rates. From Bretton Woods emerged the International Monetary Fund and the World Bank. A system of fixed (but adjustable) exchange rates centered on the U.S. dollar, and capital controls emerged. Nearly three decades of high growth and moderate interest rates and inflation followed. But above all, an idea emerged: a worldview that has shaped trade, relationships, and global geopolitics ever since.
The delegates gathered in New Hampshire "sought to create a system that not only avoided the rigidity of previous international monetary systems but also addressed the lack of cooperation among countries in those systems," in the words of Sandra Kollen Ghizoni, a researcher at the Federal Reserve Bank of Atlanta. The irony is that this framework of stability and cooperation - the idea that, in the economy and finance, each individual actor fares better when the whole does - emerged from a meeting that, despite appearances, was anything but harmonious.
The U.S. Treasury Department, led by Harry Dexter White (a top spy for the Russians), sought to sideline the United Kingdom as a future rival and establish the supremacy of the dollar. The legendary John Maynard Keynes, eager to introduce a global currency of his own design - the Bancor - and aware of the mistakes made by the great powers in 1918 at Versailles, aimed to preserve the global position of his nation, as well as its trade preferences within the sterling area. "Deeply indebted to the United States after the long and costly Second World War, the United Kingdom inevitably lost the battle," explains Bell Steil in his book The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order
The United States held all the cards and yet did not hesitate to play a final trick. In the final stages of the conference, Dexter White and his team replaced the term "gold" with "gold and U.S. dollars" in the final draft agreement, thus enshrining the U.S. currency as the international medium of exchange. Keynes would later confess that he did not read the final version of the document he signed, Steil recounts.
In his monumental work Postwar, historian Tony Judt explains how the new international institutions were one of the essential elements of U.S. policy, which "had helped to create them and sincerely desired their success." At the center was the UN, but "it was the financial and economic organizations related to Bretton Woods that perhaps held greater importance for policymakers of the time." Following the philosophy of Adam Smith, Americans believed that, just as "it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest," the same applied at the level of international organizations.
In their eyes, "the economic disaster of the interwar years seemed to be the root cause of the European and global crisis." And unless currencies were made convertible and various countries "were willing to mutually benefit from increased trade," there was nothing that could prevent the return of the terrible days of September 1931 when the post-World War I monetary system completely collapsed. The delegates wanted something less rigid than what had existed until then, and less deflationary than the gold standard, but "more reliable and mutually sustainable than a fluctuating currency system."
However, while all participants seemed to agree on the ambitious goals of the new system, the plans to implement them differed. Preparations began more than two years before the conference, and groups of experts held countless bilateral and multilateral meetings to reach a common approach. Even after the signing, the implementation was more than gradual. France or Britain itself resisted, and full convertibility of the pound and the franc did not occur until 1958 and 1959, followed by the German mark and the Italian lira shortly after.
But what was born in 1944 was, above all, a philosophy: a completely revolutionary way of understanding relationships. Something that implied not only giving a certain voice and vote to a certain supranational interference in domestic affairs but also, through the World Trade Organization and a General Agreement on Tariffs, negotiating concessions, codes of trade practices, and procedures to try to resolve disputes; something that, with more or less success, has been applied for 70 years.
Many success analyses boil down to statistical aspects. But in the case of the European Union, any examination of results must begin with the fact that its members have not gone to war or resolved their differences by force in almost a century, the Bretton Woods balance goes beyond some bailouts, annual reports, or macroeconomic rigor.
"For the 730 attendees, what was at stake was immense. Economic experts believed that the task of preventing a Third World War ultimately lay in their hands. The 30 years of previous history weighed on them. Since the peace of Versailles, they intimately knew how deeply indebted nations radicalized. They knew that attempts to restore the gold standard, which had ended in 1914, had generated international financial instability during the 1920s.They knew that the fascist infection had strengthened with economic insecurity, and that the global depression that hit the 1930s turned aggressive militarism into an attractive and effective way to solve economic problems such as unemployment and natural resource scarcity. Now, in the midst of an escalating war, they were there to break the vicious circle," historian Keith Huxen wrote.
It is often said that the Bretton Woods world ended on August 15, 1971, when President Richard Nixon unilaterally announced that the United States was abandoning the fixed exchange rate system, meaning that the dollar - the anchor of the global financial system - would float freely. It was a shock, brought inflation and many adjustments, as well as a revolution in the world of currencies, but the world eventually adapted. Institutions continued to function, basic consensuses were maintained, with the IMF (The International Monetary Fund) - a lender of last resort as Keynes dreamed of - overseeing exchange rates and providing reserve currencies to nations with balance of payments deficits, and with what is now the World Bank Group providing financial assistance for post-World War II reconstruction and the growth of less developed countries.
Until now. Until Donald Trump, who for the first time is seriously considering breaking decades of consensus into pieces. "International organizations such as the OECD, the World Bank, and the International Monetary Fund promote economic theories and policies contrary to American principles of free markets and limited government. The global elites who run the IMF regularly promote tax increases and centralized government. The IMF has intervened in U.S. policy debates, and has even recommended that the United States raise taxes (...) The Treasury Department plays a significant role in these international institutions and should push for reforms and new policies. However, the United States should withdraw from both the World Bank and the IMF and end its financial contribution to both institutions," clearly states Project 2025, the unofficial roadmap developed by a group of think tanks and prominent figures from the conservative world who now have prominent roles in the White House and are gradually implementing their arguments.
The United States began to move away from Europe and pivot towards Asia years ago. Its recent moves, which may also imply a historic change in the UN or NATO, anticipate an unprecedented change in the international economic and financial system. With the possibility of a world where the dollar is no longer at the center, the dominance of Western financial institutions is up in the air, while a more fragmented and less coordinated economic order takes shape. While this new landscape opens up suggestive scenarios for regions and powers that were previously second-tier, it also poses a clear risk to "the coherence, predictability, and standards that global institutions, imperfect as they may have been, once aimed to provide," warns Fehrid Belhaj, former president of the World Bank. Trump is willing to open the box, but he doesn't know what's inside.