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Donald Trump’s America and China

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] A [/yt_dropcap]ccording to official news agencies, the recent phone call of February 8 last and the subsequent letter by President Trump to his Chinese counterpart, Xi Jinping, was “long” and “extremely cordial”.

In particular, official sources recall that, just upon the Chinese leader’s request, the US President reaffirmed he would honour the so-called “One China” policy in the US bilateral and multilateral relations, which means that the United States do not oppose – now or in the future – the Chinese ambitions over Taiwan that China still considers the “renegade province.”

As reported by Chinese sources, President Trump also formulated to the Chinese people his wishes for the New Lunar Year – the year of the Rooster, running from January 28, 2017 to February 16, 2018 – and for the upcoming Lantern Festival, celebrated on the fifteenth day of the first month of the new year.

Those who really know how to make foreign policy are always very attentive to symbols and traditions. They are not befuddled by GDP percentages or daily talk, but set great store by the various peoples’ symbols and old traditions, which are the fabric of each State community.

According to Xi Jinping who made his first phone call to President Trump, the two major countries, namely China and the United States, are bound to cooperate to manage the world’s fate. The Chinese leader also defined the substantial and non-formal mainstay of China’s foreign policy in recent years: the reaffirmation of the peaceful, but primary role played by China among all world countries.

The concept of a “win-win” relationship, the cornerstone of Xi Jinping’s foreign policy, was expressed – for the first time – by the Chinese President in his speech delivered at the Moscow Institute for International Relations in March 2013.

Later the concept was reiterated and applied in China’s State visits to Serbia, Poland and Uzbekistan last June, as well as in the Shanghai Cooperation Organization’s 12th Summit – and this is certainly not a coincidence, but a symbol.

In Xi Jinping’s mind, the “win-win” relationship between States can be defined as an organism consisting of a skeleton of political mutual trust, blood vessels of economic cooperation and nerves of cultural exchanges, with concrete cooperation projects as its cellular tissue.

Within this intellectual and political horizon, when the countries develop a clear understanding of the international situation and unite to meet security and economic challenges, they form a community shouldering responsibility together, namely a “responsibility community”. When they respect the various cultures and political systems, they form a group sharing a common fate, namely a “fate community”.

Finally, in Xi Jinping’s mind, a “win-win” relationship enables the traditional multilateral and bilateral treaties to work better.

This will be exactly China’s great offer to the European Union, which is based on three levels: the EU as the nerve centre of world economy, as well as a great Mediterranean region – and, in the future, China will focus on the Mare Nostrum – and finally as a strategic factor for rebalancing Asia, the United States and the emerging countries.

I wish there was – within the European Union – at least some strategic and geopolitical thinking about Europe living up to China’s.

The theory of “win-win” relations also means that China plans to extend its theory of “creative, coordinated and green” development to the rest of the world.

This is exactly the conceptual foundation of the Belt and Road Initiative that Xi Jinping launched by following up Li Keqiang’s policy line during his state visits to Asia and Europe of September and October 2013.

It is worth noting, however, that while Trump only called the Heads of State and Government of allied and friendly States, in the case of Xi Jinping he even wrote a letter – which is clearly a sign of great respect for China and its government.

The tension recently mounted between President Trump and the Australian Prime Minister, Turnbull, is the last thing that China wishes to see. In fact, China is very interested in a strategic – and hence economic, political and military – relationship with Australia. In particular, it wants a special link to be created with the United States through that country.

Hence, in Xi Jinping’s mind, America is a factor of stability and multipolar balance, in a Pacific Ocean where China is expanding northwards and is establishing new “win-win” relations and bonds with all coastal countries and with Japan, in particular.

Trump had also alarmed the Chinese government by calling the President of the Republic of Taiwan, Tsai Ing-wen, last December.

Furthermore, Donald Trump repeatedly stated – during the election campaign and after rising to power – he would impose additional tariffs on Chinese imports to the United States, by accusing China of artificially devaluing its currency so as to stimulate its exports and “stealing jobs from Americans” – just to recall the terminology used by the future President during the election campaign.

Furthermore, the Secretary of State, Rex Tillerson, stated in the Senate that China should not have free access to the artificial islands it built in the South China Sea. He also stated that the United States would anyway protect the free waterways between the Pacific Ocean and the China Sea.

However, is it true that China manipulates its currency?

Let us see whether this is true.

The (Chinese) capital is fleeing the country because international investors – and many of these are also Chinese – are not optimistic about the future of the Chinese economy.

The pace of growth is slow, the lowest rate in 25 years. A reduced growth rate, which is recorded for many good and useful reasons. In fact, the government is reducing the interest rate of government bonds and is also cooling real estate prices, as well as implementing reforms that will reduce excess production capacity and increase the production efficiency of public companies.

Hence a vicious cycle has been triggered off, which shows that the market is not suitable for playing the role of supreme judge of economies.

Therefore investors are selling yuan and buying US dollars or other hard currencies. This creates downward pressure on the yuan exchange rate, which further stimulates the sale of Chinese currency and the purchase of US dollars and other hard currencies.

If there is capital fleeing the country, the yuan lowers its exchange rate, as always happens in these cases.

Since the time of double devaluation in August 2015, 1.2 trillion US dollars have left China. The Chinese currency reserves dropped by as many as 800 billion dollars in two years, just to defend the yuan parity – dollars obviously sold only to support the yuan.

Over time, the Chinese government has blocked the companies’ yuan transfers until rebalancing revenue and expenditure. It has also restricted the purchase of foreign currency by Chinese traders and businessmen, stimulated State enterprises to sell foreign currency and blocked the use of credit cards up 5,000 US dollars of spending.

These efforts now seem to be successful.

The latest data shows that capital is coming back to China and, therefore, the currency value should stabilize quickly.

Hence it is true that the Chinese government is “manipulating” its currency – although rescuing its reforms, economic stability and domestic policy – but said manipulation takes place upwards and not downwards. Therefore there is no yuan devaluation which favours Chinese exports in the United States or in the rest of the world.

Furthermore, it is worth recalling that the accusations of currency manipulation were also typical of Barack Obama and Hillary Clinton.

It is also worth recalling, however, that the Sino-US trade deficit is currently 232.25 billion dollars and that this is a problem that must be solved anyway.

In other words, the government keeps the yuan value “up”, thus de facto subsidizing imports from China.

Furthermore, China needs to provide jobs to a much greater mass of unemployed people than the US workforce and it does not want to encourage downward competition by Japan, India or Vietnam.

Moreover, Donald Trump’s economic positions, or what the Republican candidate maintained during the election campaign, are such as to strengthen the dollar, while the US economy is still the locomotive of global recovery.

And we assume it will remain so for long time.

In Trump’s mind, the maximum income tax rate will be   33% as against the current 39.6%; the real estate tax will be abolished altogether but, anyway, no company shall pay over 15% of their income in taxes.

On the other hand, however, there will no longer be domestic tax havens or tax tricks and stratagems, which has greatly alarmed many traditional voters and especially funders of the Republican Party.

Moreover, President Trump has threatened China also with regard to intellectual property and subsidies to exports he deems illegal.

Another theme in common with the previous Administration. In partial contradiction with these opinions, Trump has also supported the idea of transforming the United States into a more attractive country for foreign investment than China itself, by also trying to reduce the US public debt so as to avoid the hidden pressure of China, which is still the largest holder of US Treasury Bonds.

However, as international economic experts show, the United States record an aggregate trade surplus with 20 of the countries with which they have trade agreements, while 1 billion US dollars worth of exports supports approximately 6,000 US jobs, bearing in mind the fact that the jobs resulting from export activities are paid, on average, 18% more than the others.

Hence, finally President Trump will greatly change the recent Trans-Pacific Partnership (TTP), i.e. the trade agreement between the United States, Brunei, Australia, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

However, currently the export tariffs of North American products to Asia are too high and the cooling of the TTP would largely favour only China.

No one in Trump’s administration likes TTP and the President prefers bilateral trade agreements rather than multipolar economic alliances.

Hence the paradox of the bilateral situation between the United States and China is the following: if the yuan rises – as it is expected to happen soon – the US dollar will fall significantly and it will be easier for President Trump to stimulate US exports.

And, for the law of unintended consequences, the freezing of TTP could become the primary stimulus to the recovery of the Chinese economy.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Transition 2021: How Biden is likely to approach the Middle East

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In terms of foreign policy, the new President of the United States, Joe Biden,is likely to face numerous challenges, especially when it comes to the Middle East because of the disastrous policies of the former President, Donald Trump, in the region. Even in his inauguration speech, Biden made it clear that it was going to be testing time. Some of the challenges that the new administration would be facing includethe nuclear deal with Iran, the ongoing war in Yemen, issues of human rights issues and the current deadlock between Israel and Palestine. There is some possibility that Biden’s foreign policy towards the Middle East would either be a revival of Barack Obama’s former policies or new strategies would be formulated based on the nature of the challenges faced. However, it is certain that Biden will address or undo Trump’s terrible policies in the region. 

The Biden administration’s top foreign policy agenda is the policy towards Iran. The Iran nuclear deal (2015) or JCOPA was considered to be a milestone in multilateral diplomacy that was irresponsibly abandoned by Trump in 2018. Trump’s “maximum pressure campaign” of sanctions against Iran aimed to please the traditional allies as they faced a common enemy in Iran. Biden has promised to return to the 2015 JCPOA agreement, and he would also discuss Iran’s nuclear program and exchange for sanctions relief. In this process, it is expected that Washington might pressure Iran to withdraw its support for regional proxies in Iraq, Syria, Yemen, Lebanon and the Palestinian territories. Moreover, the US would also seek to curb Iran’s export of precision guided missiles to her regional allies. Iran though, has already made it clear that these issues would not be discussed in the event of a renegotiated JCPOA. Furthermore, this plan may be complicated by the recent assassination of Iran’s top nuclear scientist, which was not condemned by the White House that Iran blames on Israel. Public outrage had not even subdued at the point due to the assassination of Qasim Sulemani. Currently, the architecture of the Middle Eastern region is even more complex and challenging than it was four years ago butthe fact is that Iran cannot afford military conflict at this point when its economy is already crippling amidst the COVID-19 pandemic along with the sanctions imposed by the US.

Trump administration’s “Israel-first” approach in the region brought severe criticism at the global level. The Abraham Accord, signed in September of last year,which normalized Israel’s relations with UAE & Bahrain, is widely seen as Donald Trump’s most significant foreign policy achievement. This Accord altered the decades long regional perception that Arab-Israel peace could not be achieved without first addressing the issue of statehood for Palestinians. Biden has said that he supports more countries recognizing Israel but at the same time Israel needs to work towards genuine solutions between the two states. Moreover, the new administration at the White House will not show the same tolerance for Israel’s settler expansionism as its predecessor. However, there are certain foreign policies by the Trump administration that the new US leadership does not want to renew. The normalization of Arab-Israel relations is something that enjoys bipartisan support. And also, the shift of the US embassy to Jerusalem seems unlikely to be undone.

The US policy inthe Middle East under the new leadership will be less ideological and would be more based on fundamental principles.  These principles will greatly focus on human rights as some analysts view human rights as the core foreign policy agenda of the Biden administration. Thus, it does not seem not to be good news for the traditional allies of the US including the Kingdom of Saudi Arabia and Israel. There are a variety of issues in addition to the human rights issues: the KSA intervention in Yemen, arms sales to Saudi Arabia, the lingering mistrust, the jailing of activists and Jamall Khashoggi’s murder case, which are creating uncertainties between the Washington and Riyadh. Hence, KSA is going to have a very difficult time with the Biden administration. Similarly, the new administration can also be expected to take a less tolerant view towards Moscow and Ankara because of the extraterritorial activities in the Middle Eastern region.

Certainly, returning to the Iran nuclear dealofficially, the Joint Comprehensive Plan of Action-will take a longer time to review because of the complexity of the issue and the domestic problems that the US is currently facing. There is also a possibility of a dangerous escalation without a nuclear deal due to Iran’s aims of buildingmilitary scenarios. Therefore, multilateral diplomacy is the best option for regional peace and security, which has been tried in the previous years.Even the JCPOA was a result of such diplomacy. The US ending its support to Saudi Arabia’s war in Yemen might turn away the traditional allies for some time but not permanently due to the common interests in the region. Biden is also likely to alter Trump’s decision to withdraw US forces from the region as it would decrease US influence in the region. The top priority of the US administration in the Middle East would be to try and manage Iran’s problems and to maintain reasonable relations with Israel. Traditional allies of the US in the Middle East were content and supportive of Trump’s policies in the region but they view Biden, not as a President, but Vice President of the Obama Administration. Trump’s bilateral relations were often based on personal ties with the foreign leaders while Biden is expected to adopt a more multilateral approach in engaging with the allies. Still, scholars believe that there would be no fundamental change in the US foreign policy towards the Middle East, especially when it comes to protecting its vested interests in the region.

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Rejoining the UNHRC will be the State Department’s first diplomatic mistake

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As over the last days US Vice President Harris swore in Linda Thomas-Greenfield as the new US Ambassador to the UN, US Secretary of State Blinken announced in parallel that the US is now seeking election to the UN Human Rights Council, in an attempt to rejoin the UN system. But that’s not the right first move back at the UN that the US should be making. And that’s not what the progressive left had in mind when the real left groups put in office the new Biden Administration.

My perspective comes from having worked in the UN human rights system and as a finalist for UN Special Rapporteur on freedom of speech last year – but also as a progressive left voice.

The days when UN engagement defined Democrats vis-a-vis Republicans are over.

Shunning the UN has always been a Republican hallmark but backing and pouring so much funding into an old style, corrupt bureaucracy that has little to do with “diplomacy” is not what the new, awaken progressive left wants either.

Several weeks ago, I made the estimate that the 10bln dollars which the US government pours into the black hole called the UN equals the Covid relief that 16mln struggling American people could be getting now. The Biden Administration’s State Department diplomats have to remember who put them in office.

Democrat centrist diplomats have more in common with the UN in terms of ways, goals, style and world view than they do with the progressive left. Backing the UN means backing the old, corrupt ways, which the real progressive left voted to break last year.

The decision to announce the US’s goal to rejoin the UN Human Rights Council comes in the same week when President Biden finally announced his real stance on the Black Lives Matter ‘defund the police’ goals. Biden, it turns out, unsurprisingly does not support that. That’s not what the progressive left signed up for, either.

The UN institutional funding inertia by the US government does not define the Democratic Party anymore. That’s not what the left voters want. 

The left’s reasons for not embracing the UN and the UN Human Rights Council have little to do with the usual Republican ‘go it alone’ at the international stage.

Yes to diplomacy and multilateralism. No to the corrupt, faceless UN. “International diplomacy” is no longer the same thing as the UN system.

The wave that rose across American political life last year, with so many young black activists and so many people voting for the first time, signaled a big resounding No to old ways and old institutions, which have little concern for the actual needs of the people.

The new US Ambassador to the UN, Thomas-Greenfield, will have the tough job of reforming the UN, and in my opinion, even defunding the UN.

The days when love for the UN defined Democrats are certainly over. It’s time for the Biden Administration to do what it was elected for, which is to not simply go back to the same old, same old corrupt, faceless bureaucratic institutions swimming in money. This is not what we want. The progressive left voted for change and now that also includes the UN.

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U.S. Climate Policy Could Break the Ice with Russia

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Photo: Fiona Paton/ flickr

“In the midst of every crisis, lies great opportunity” — Albert Einstein

Within the climate crisis lies strategic opportunity for the United States. Climate change offers the chance to earn back the good will of allies, to prepare American cities for an urgently needed increase in immigration, and to reinvent U.S.-led institutions that have gone stale. Perhaps most of all, foreign policymakers should remain cognizant of how climate action can help the U.S. navigate relations with the other great powers.

As a recent report from the Center for a New American Security details, synergy between China and Russia is more problematic for U.S. interests than the sum of the challenges that each nation poses individually. Similarly, a recent Atlantic Council publication observed that “allowing Russia to drift fully into China’s strategic embrace over the last decade will go down as the single greatest geostrategic error.” Chinese and Russian interests do currently align on defense, economics, and the degradation of the U.S.-designed world order, but the nature of their alignment does not constitute an alliance.

In characterizing the relationship, this distinction is paramount. For as long as China and Russia remain merely convenient partners, rather than ideologically kindred allies, it is possible to keep these neighbors at arm’s length. To this end, the U.S. must reorient its approach to Russia. It is the Russian perception that world politics are rigged to benefit the U.S. at Russia’s expense that has prompted its support for China.

Russia’s national interests are rooted in the desire for respect. With this in mind, Russia could pull back from synergy with China if a better opportunity to advance these interests presented itself. Ultimately, the ability of the U.S. to offer a mutually acceptable alternative will hinge on two related factors: the Arctic and NATO. Critically, the issue of climate change is central to both of these factors.

In the Arctic, rapid warming removes barriers to resource exploitation, shipping activity, and great power competition. This has drawn many non-Arctic states to the region. Yet, even with China inserting itself as a “Near-Arctic State,” Russia has expressed the need for a hierarchy of regional influence in which the interests of Arctic states are prioritized over non-Arctic states. On this, American and Russian interests align.

Russian distrust of the U.S. complicates matters, however. Arctic military assertiveness from Russia is evidence of its sensitivity to the NATO alliance. In response, U.S. military branches have been releasing strategies for Arctic-specific forward defense. Such militarism is not conducive to improving relations, securing sovereign influence, or addressing climate change. 

In order to limit undue Chinese influence in the region and stabilize its relations with Russia by securing a multilateral agreement that formalizes an Arctic hierarchy, the U.S. will need to alter its foreign policy so that Russia perceives it to be a viable partner. The alteration should be sufficient for reducing friction with Russia’s core interests, but not so extreme that liberal values or American security are put in jeopardy. Such transactional considerations should include fashioning a new climate-positive role for the U.S. in NATO. After all, the permanent physical presence of roughly 76,000 U.S. troops on the European continent not only irks Russia, but this posture is also expensive, carbon-intensive, and perhaps not even the most effective approach to conflict deterrence. 

Indeed, research has shown that rapid deployment of new forces is significantly more likely to stymie aggression. This suggests that the U.S. should reduce its troop levels in Europe by at least 75 percent while bolstering rapid deployment readiness. This would allow the U.S. to simultaneously reduce its military’s fuel demand and greenhouse gas emissions, earn the good will necessary for stronger diplomacy with Russia, and still honor its security commitment to NATO in the event of a crisis. Moreover, the U.S. could then reinvest the potential savings into both Arctic sustainability and NATO’s capacity to manage climate insecurity.

Through the establishment of a bounded Arctic order and the greening of American leadership in NATO, the U.S. can dispel Sino-Russian synergy in the region and help maintain balance between the great powers. Specifically, these actions would both politically distance China from Russia and give the Kremlin substantial reason to begin feeling more optimistic about its relations with the West. To be sure, similar measures will be necessary in other regions to fully assure balance. However, the Arctic is a natural place for the U.S. to begin this endeavor. Usefully, the themes of climate mitigation and adaptation provide a blueprint for what countering Sino-Russian synergy elsewhere ought to generally entail.

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