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President Trump’s tariffs and duties and the transformation of the world economy

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The 45thPresident of the United States, Donald J. Trump, keeps on repeating he wants to make America “great again”.

Hence, first and foremost, he wants to reindustrialize his country which, in fact, is currently the world champion in  the loss of productive, manufacturing or industrial companies.

The birth of a country that now consumes without producing much, namely the USA, materialized initially under Reagan’s Presidency, but continued rapidly with the successive Presidents.

For example, at the end of the 1960s, the US industrial labour force was at least 35% of the total number of people employed, while currently this labour force is only 20%.

Since 2001 over 70,500 companies with more than 500 employees have been closed down definitively.

The Gospel of Matthew (4:1-11) perfectly clarifies the situation of the post-productive post-economy – if we can use this expression.

Jesus Christ, who was hungry after having fasted forty days and forty nights in the desert, was tempted by the devil who told him: “If you are the Son of God, command these stones to become loaves of bread”.

Jesus answered to the devil: “Man shall not live by bread only, but by every word that comes from the mouth of God”.

Hence Jesus – as a great economist – explains to the devil that we must not change the Creation and replace God, but  instead follow Smith’s liberal and socialist labour theory of value.

Without the processing and transformation of materials – according to their laws – there is no value and therefore not even price.

Only manual or intellectual work, in fact, does transform materials, but never creates and hence does not even destroy them.

Hence we should produce only those goods and services that the market really asks for, without useless miracles, which are already incorporated in the Being as it is.

But let us revert to the economy of the powerful and stable North American de-industrialization process.

However, some sectors of US companies are still active, such as semiconductors and electronics, while clothing, for example, has fallen by 60% despite the US population has almost doubled since 1950.

When this happens, high value-added work increases, while all productive activities having a low incidence of unit value have definitively been delocalized outside the  USA (and the EU – although in this case, the debate has a political, military and strategic nature).

It is worth recalling that immediately before the first subprime crisis of 2016, the US industrial production had fallen by 15% – and this was certainly not by mere coincidence.

Later it started to grow again by approximately 4% – with many sectoral differences -in the years in which the United States managed to move their financial crisis elsewhere.

But let us revert to the factories that the US President deems necessary to make America great again, and to the specific policy of import and export duties imposed by President Trump in record time.

In fact, on March 1, 2018, the President announced it would imposed a 25% customs duty on steel imports from China and a 10% additional one on aluminium imports from China.

This, however, increases the production costs of the aforementioned US sectors that still handle and stand up to global competition, which obviously recoup the money lost from end customers, by increasing prices.

If – like the USA, but perhaps not for much longer – a country still lives on electronic manufacturing and components, the increase in the factory unit prices leads to an increase in the final price and, hence, restricts domestic or foreign markets.

Any price increase, albeit small, leads to a decrease in the buyers of those goods. Pareto taught this to us ad nauseam.

But clearly it was not enough.

Later, on April 3, President Trump announced he would  impose further 25% duties on additional 50 billion Chinese imports of electronics and aerospace products, as well as  machine tools.

This means that – paradoxically, but not too much –  President Trump wants to slow down precisely the  productive sectors that China deems strategic for the future, as shown in its Plan for 2025.

In 2017 China produced a total of 23.12 trillion US dollars, calculated on the basis of power purchasing parity (p.p.p.).

Currently the EU only ranks second, with 19.9 trillion US dollars, again calculated as p.p.p. In 2016 it was the world’s top  producer.

The United States only ranks third, with a yearly product of only 19.3 trillion dollars.

Financial stones cannot be turned into loaves of bread.

In spite of everything, China has a yearly per capita income of 16,600 US dollars, while the US yearly per capita GDP is equal to 59,500 US dollars.

Scarce domestic consumption, all focused on exports, is the Chinese model that has developed since Deng Xiaoping’s “Four Modernizations”, which survives only in an area in which all macroeconomic variables are not left to some “market” invisible hands, but to a central authority.

However, this is exactly the reason why China is the largest world exporter.

Hence it rules end markets.

In 2017, it shipped abroad 2.2 trillion US $ worth of goods and services.

Currently 18% of Chinese products are exported to the United States.

This much contributes to the US trade deficit, which currently amounts to 375 billion US dollars.

China is also the second largest importer in the world, to the tune of 1.7 trillion dollars in 2017.

The mechanisms of interaction between China and the United States, however, are even more complex than we could guess from these scarce data and statistics.

It is not by mere coincidence that China is still the largest holder of US public debt.

In January 2018, China held 1.2 trillion in US government debt securities, i.e. 19% of the US public debt held by foreign investors.

A very powerful monetary, political, strategic and even military leverage.

Obviously China buys US securities to back the value of the dollar, to which the yuan is pegged.

However, it devalues its currency (and hence the US dollar) when Chinese prices need to be kept competitive.

Therefore, while the United States wants to increase the yuan value, with a view to favouring its exports, China threatens to sell its US public debt securities immediately.

The dollar increased by 25% between 2016 and 2016, but since 2005China has devalued the yuan.

A very clear example of aggressive monetary pegging.

Moreover, the issue of China’s unfair commercial behaviour is now long-standing and it was also raised by many candidates to the US presidential elections.

In fact the success of Paulson, the former US Treasury Secretary, was to reduce the American trade deficit with China and to later ask for opening to foreign investment in key sectors of the Chinese economy.

For example in the banking sector, thus putting an end – in some cases – to the Chinese practice of export subsidies and administered and capped prices.

Just deal with realism and intelligence and Chinese Confucianism can find solutions to everything.

The other side of the Chinese miracle, however, is the very high debt of companies and households, which is obviously  still connected to the balance between the yuan and the US dollar.

In this case, however, the programmed slowdown of the Chinese GDP growth and the limits on strong currency exports, as well as the control of wages and profits are enough.

But let us revert to President Trump’s tariffs and duties.

In fact the US President has imposed these new tariffs and duties on Chinese imports to force China to remove the  foreign investors’ obligation to transfer technology and patents to their Chinese partners.

Nevertheless China trades many productsit could also manufacture on its own just because it wants to fully open Western intellectual property rights for its companies.

A few hours later, however,  China responded to President Trump with a 25% increase in duties on 50 billion dollars of US exports to China.

On April 6, President Trump further reacted by stating he would call for the imposition of other duties on additional  100 billion dollars of imports from China.

It is worth noting, however, that this accounts for only  a third of total US imports from China, which is considering the possibility of responding harshly to President Trump by steadily increasing tariffs and duties for all US products entering Chinese markets.

Besides the issue of relations with China, however, the other side of the US tariff and duty issue is the NAFTA  renegotiation, officially requested by President Trump on August 16, 2017.

It should be recalled that the North American Free Trade Agreement is the largest commercial agreement currently operating in the world, signed by Canada, USA and Mexico.

Firstly, President Trump wants Mexico to cut – almost entirely – VAT on imports from the USA and put an end to the programme of maquiladoras, i.e. the factories owned by foreign investors in Mexico, in which the components temporarily imported into that country under a duty-free scheme are assembled or processed.

The maquiladoras programme started in 1965 to reduce the huge unemployment in the North Mexican regions, but currently there are at least 2,900 such factories between Mexico and the USA producing 55% of total Mexican export goods.

They mainly manufacture cars and consumer electronics, which are exactly the sectors that – as already seen – President Trump  wants to revitalize.

Obviously the current US Presidency wants to dismantle the maquiladoras on its Mexican border, where 90% of such companies are located.

Thanks to these special factories, Mexico competes directly with US workers, considering that the local Central American workforce is much cheaper.

Thanks to this mechanism of cross-border production outsourcing – between 1994 and 2010 alone – 682,900 US jobs moved to Mexico, with 80% of US jobs lost in the manufacturing sector.

Moreover, again due to NAFTA, as many as 1.3 million jobs in Mexican agriculture were lost.

In fact, following the removal of duties between the USA and Mexico, the latter was flooded with US produce below cost and subsidized by the State.

All this happened while the Central American administration cut agricultural subsidies – which will soon happen also in the crazy EU – and focused the little State aid left for agriculture to the big haciendas, thus destroying and ruining small farmers.

Liberal and free-trade masochism.

NAFTA, however, also has many advantages for the United States.

Without the tripartite inter-American agreement, North American food prices would be significantly higher, while also oil and gas from Mexico and Canada would be much more expensive for US consumers.

As Carl Schmitt taught us, the American Monroe Doctrine (epitomized by the slogan “America to the Americans”) was developed above all against Europe. Nevertheless, the agreements like NAFTA allow to share – at least partially – the benefits of increased trade between the USA, Canada and Mexico in a less asymmetric way than usual.

The US primacy theorized by Monroe in 1823 and later rearticulated by Roosevelt in his State of the Union address in 1904, with the Roosevelt Corollary whereby  “chronic wrongdoing may in America, as elsewhere, ultimately require intervention by some civilized nation and force the United States, although reluctantly, in flagrant cases of such wrongdoing, to the exercise of an international police  power”, holds true also at economic level.

But are we currently sure that the most civilized nation is still the Northern one?

Just to better understand what we are talking about, it should be noted that the NAFTA agreement is made up of 2,000 pages, with eight sections and 22 chapters.

As such, it is currently worth 0.5% of the US GDP.

Since the official implementation of this agreement in the three countries which have adopted it, North American exports have created as many as 5 million jobs, with the creation of 800,000 additional jobs in the USA alone.

Nevertheless approximately 750,000 other jobs have also been lost in the United States alone, mainly due to the transfer of US activities to Mexican maquiladoras.

Hence a slight surplus.

Moreover, NAFTA has anyway ensured the status of “most favoured nation” to Canada and Mexico and has removed all tariffs and duties for the goods produced in one of the three Member States. It has finally established certain and clear procedures for settling trade disputes between the companies of every country belonging to it.

But above all NAFTA enables the United States to better compete with EU and Chinese products, by reducing the prices of the NAFTA goods wherever they are produced.

Also in this case, however, President Trump has threatened to walk out of the inter-American trade treaty and impose a 35% duty on imported Mexican products.

The aim is obviously to bring back investment in the maquiladoras to the United States.

Is this useful, also with regard to an evident trade war with the EU, Japan and China, as usual?

Is there currently sufficient real liquidity in the United States to back the supply increase which is thus created, with the return of all these productions back home?

Or is the idea prevailing of having everything be bought on credit, with all the consequences we can easily imagine?

Or is it possibly a matter of sending the NAFTA productive surplus back to European, Chinese and Asian markets?

Moreover, with specific reference to another multilateral trade agreement, the Trans-Pacific Partnership (TPP), President Trump announced he would like to establish a series of new bilateral trade relations that the US President likes more than the multilateral ones.

It is worth recalling that the TPP applies to the USA and to other 11 countries around the Pacific Ocean, namely Australia, Brunei, Canada, Chile, Malaysia, Japan, Mexico, New Zealand, Peru, Singapore and finally Vietnam.

All these countries together account for 40% of the total global GDP, which is currently equal to 107.45 trillion US dollars annually. They are also worth over 26% of world trade per year and as many as 793 million global consumers.

Obviously the list does not include China and India, considering that the TPP architecture has been designed to surround, close or at least limit the growth of the two great Asian countries.

President Trump also wants to renegotiate the TPP, which  by2025 is expected to increase trade among all Members States to the tune of 305 billion us dollars per year.

Hence if President Trump walks out of the TPP, many Member States will look to China for replacing the USA – and, indeed, many of them are already doing so.

Therefore the US President’s idea is to make the United States grow – through this wave of various forms of protectionism – by at least 6% a year, with an expected 3% net tax increase.

Too much. It would inevitably lead to high inflation and the classic boom-bust cycle.

If the economy grows by 2-3% a year, the cycle can expand almost indefinitely.

Conversely, if there is too much money looking for too few goods to buy, inflation will always come and the booming phase will stop all of a sudden.

Hence the bust materializes, with the quick reduction of wages and credits, as well as with an increase in prices and interest rates.

Therefore President Trump’s very dangerous idea is that –  in such a monetary and economic context -the United States can keep on borrowing all the liquidity needed because, as he said recently, “we never default, because we can print our currency”.

This is true. But if too many green bucks are printed, interest rates will rise immediately and this new version of Reagan-style supply-side economics will be stopped.

Finally a very serious recession would materialize, which currently would not be so easy to export to “friendly” countries.

Recently the dollar area has much shrunk.

It is no longer true –  as the former US Treasury Secretary John Connally once told to his European colleagues – that “the dollar is our currency, but it is your problem”.

So far, however, President Trump has decided 29 commercial or financial deregulation operations and over 100 internal guidelines and directives to the Administration, as well as other 50 new global market rules discussed by the Congress.

On February 3, 2017, the US President also decided to reform and almost repeal the rationale of the Dodd-Frank Wall Street Reform Act, with rules and regulations further reducing checks and audits on banks, which are no longer obliged to send to the Treasury Ministry data and information about the loans granted.

Moreover the banks with clients’ deposits lower than 10 billion US dollars must not even abide by the Volcker Rule, which forbids banks to use clients deposits to make profit.

Therefore, since 2015, banks cannot hold hedge funds and private equity funds.

Nowadays, however, with the reform of the Dodd-Frank Act, many credit institutions can avoid these difficulties and restrictions and play roulette with clients’ deposits.

For the new US lawmaker, Volcker’s and Greenspan’s policy was a way to avoid the implosion of the US financial system, after the fatal end of the Glass-Steagall Act which had been lasting since 1933.

It is worth recalling that the Glass-Steagall Act had come into force when the Roosevelt’s Presidency decided to imitate the Fascist legislation of the new separation between deposit banks and merchant or investment banks.

Banks did not want the Glass-Steagall Act because they wanted to be “internationally competitive”.

They also wanted to create money at will, regardless of the relationship between investment and collection.

What happened is before us to be seen.

President Trump wants to abolish even the Departments of Education and Environmental Protection, with an increase in military spending that is supposed to lead to a total public deficit of 577 billion US dollars.

Hence, in this new context, can the US Presidency avoid the Chinese commercial pressure and also ensure that the jobs repatriated to the USA from NAFTA, from negotiations with Japan, from the TPP and the rest of the multipolar trade system are such as to back the dollar without creating excessive inflation?

Moreover, all international trade experts agree that it is not the simple and traditional tariff barriers – but rather the non-tariff ones, which are very fashionable today – to cause real problems.

In short, we need to consider trade policy together with  strategy: if US protectionism increases, the growth of peripheral economies will decrease.

Thust here will be increasing possibilities of crisis in developing countries, while China’s desire to replace the USA in multilateral economic mechanisms that directly affect it may increase enormously.

Also the desire of global US competitors, such as the EU, to replace US exports at unchanged rates – at least for a short lapse of time – may increase.

There is no need for dumping – non-tariff transactions and the quality standard of made-in-Europe products are enough.

Therefore, nowadays, nothing is certain.

Certainly not US protectionism, of which we have noted  the dangers for North America and also for its geo-economic partners. Not even universal free trade, which does not consider the political evaluations and the economic, monetary and military planning of the various world commercial areas, is feasible and practicable.

Indeed, as in military policy, a great agreement – as the initial GATT was – is required in the current world market, with a view to establishing – for at least ten years – the areas and spheres of economic and productive influence and their possible future changes.

There is no free trade without planning.

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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Biden’s victory: An Opportunity for Transatlantic Reconciliation after Trump and Brexit?

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Joe Biden’s victory Last November came at a critical point during the Brexit negotiations between The European Union and the United Kingdom. There has been a lot of speculation as to whether a change in the American presidency will substantially affect the talks between Europe and Britain. Realistically speaking, the effect the Democrats’ victory in the US will have, at least on Brexit talks before the end of this year, will be minimal.

On a positive note, now that Donald Trump has been defeated, this leaves very little room for the UK to use the threat of a quicker and better deal with the US to try to subdue the EU and make them accept a more pro British agenda. The UK has no longer the US is an alternative to fall back onto if no deal is the result of the negotiations by December 31st.

Since the 2016 British referendum, the decision to leave the EU was enthusiastically greeted by Donald Trump. In very simplistic terms, Trump saw The British “Yes” vote as an act that vaguely resembled his campaign slogan “Let’s Make America Great Again.” The long standing, more loyal foreign policy ally of the US in Europe, was slowly showing signs to move away from the multilateralism Donald Trump greatly despised.

Ever since the outcome of the Brexit referendum became official, Donald Trump voiced his strong support for the UK to pursue a hard Brexit, and even enticed the British government with the prospect of a robust trade deal between the US and the UK, to convince the UK to drop out of the EU without a deal. In reality, none of those big American promises ever materialised. From 2016 to 2020, Donald Trump did absolutely nothing to support the UK. Biden’s victory last November, makes any past promises made by Trump impossible to fulfil.

Biden will, in principle, follow a diametrically opposed foreign policy to Trump’s. He sees the EU, and not the UK, ask the key actor that will help him advance American interests in the European continent. While there have been mutual expressions of willingness to strengthen the relationship between the Americans and the British, Joe Biden has always been skeptical of Brexit, and has made it clear from the start that one of his priorities in foreign policy will be to rebuild the relationship with the EU rather than pursuing a trade deal with the UK.

Ideally, should the UK try to have some sort of leverage to negotiate with the incoming American administration, they need to aim to strike a workable deal between with the EU before the end of this year. That, however, seems unlikely to happen. From an American perspective, it is highly probable that the Biden’s administration will not prioritise any UK-US trade deal in the foreseeable future. There is a strong possibility that Joe Biden will focus on domestic and close neighbours (Canada and Mexico) Issues during his first year in the presidency.

While this is understandable, considering the legacy of the Trump, Biden also has to be careful enough to avoid the temptation to play hardball with the UK because of Brexit. If he does, this could prove to be a fatal mistake with long lasting consequences, specially in a moment when the West is struggling with its own internal weaknesses and the rise of external threats to its unity.

One aspect that both Europe and the US have to acknowledge is that the importance of the UK goes beyond striking a trade deal with the EU. Looking at the rise of more geographically widespread authoritarian and antidemocratic pressures from central, Eastern Europe, China and Russia, the UK is still plays an important role on the continent’s security. Talks on further cooperation on how the EU and the UK will cooperate on foreign and security policy once the transition period ends on 31st of December 2020 have not yet been held. The UK, unfortunately, is likely to remain a crucial partner on such topics especially due to its role as a prominent and active member of NATO, and therefore, talks on this issues should not be left unaddressed.

The UK is aware of its importance militarily, and this explains the £24.1 billion investment announced by the UK Prime Minister, Boris Johnson, this year. This is the largest investment since the end of the Cold War and it aims to modernise the armed forces, as well as to expand the Royal Navy to turn it into the largest fleet in Europe.

This move will enhance the UK’s status as Europe’s leading military power. The UK has also been among the first respondents to recent security crisis in Ukraine and Belarus. Not engaging with the UK altogether in security and foreign policy issues may prove to be detrimental in the long run for the security in the EU, especially considering the rising tensions and instability in the Ring of Fire, from Belarus to Ukraine, Kyrgyzstan and Nagorno-Karabakh.

The EU’s Common Security and Defence Policy (CSDP) and the Common Foreign and Security Policy (CFSP) allow for intergovernmental cooperation, this means that  states can pursue their own policies and coordinate them only when they align with the EU’s. The CSDP also allows EU member states to intervene when NATO as an alliance chooses not to. To date, there are 17 of such interventions, in all of these, the UK has been the biggest contributor.

Security is an area of opportunity for Europe and the US, Biden could potentially push for the Europeans to grant the UK an observer role in the Political and Security Committee, or the Foreign Policy Council to advance a common security and foreign policy for the region that wouldn’t only benefit Europe, but also the US interests in the wider European area.

Recently, the UK has been an advocate of what is called a “Global Britain” that echoes the times of the great British Empire’s prominence as a global player. How this will be achieved is still unclear. This grand strategy may fare impossible under current economic and political conditions in the UK and in the world, as well as with the uncertainty surrounding the future relationship of the UK with its neighbours after Brexit.

Anything can happen, the UK could pursue a close, special relationship with Europe where cooperation is prioritised, or there could be a more profound break between the two, where the UK sets its own agenda against the EU’s. For decades, the terms Europe and the EU have been used interchangeably. Now that one of the major European players is out of the organisation, both sides have not yet worked out how the future relationship will be. If it continues to be antagonistic this could send the whole continent into a spiral of chaos, reduced capabilities an increased volatility.

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Exit the Clowns: Post-Trump America

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Official White House Photo by Tia Dufour

As America emerges from the election in grindingly slow fashion, with the soon-to-be-ex-President constantly tweeting frivolous accusations of voter fraud and threats about legal action, it is worthwhile to take stock currently as to just where America sits and what it faces over the next two months before the official Biden inauguration (and yes, there will indeed be a Biden inauguration, have no doubt about that). The following is simply a list of points that should continue to be considered and analyzed as the United States moves away from this four-year experiment with political nihilism:

Perhaps the only thing even remotely positive to emerge from the global pandemic known as COVID-19 is the fact that it clearly allowed the United States to get over some of its traditional political institutional inertia when it comes to encouraging and motivating voter participation. While America has always had mechanisms to allow absentee voting for those overseas and regulations permitting early voting in every single state, these tools have always been extremely minor when compared to the overall voter turnout. America has by and large always been a “turn out on election day” people. This year was clearly different, where the Biden-Harris team literally emphasized early voting for two main reasons: first, to get people to stay motivated even in the face of increasingly disturbing pandemic numbers and cases of new infections all across the country; second, to countermand the varied strategies local Republican officials in the modern day have come to constantly use to depress voter turnout amongst registered Democrats on election day (like voter ID initiatives that are confusing and/or outright illegal). This strategy, in the end, will be seen as crucially important to the Biden-Harris victory as it was the counting of early voting in the wee hours of election day that turned the tide in key states like Michigan, Pennsylvania, and Georgia while solidifying crucial leads in places like Arizona and Nevada. Eventually, this pandemic must end. So, it will be fascinating to see if the United States treats all the ways it gave voters the chance to vote in 2020 as a one-off never to be repeated or as a new approach to democratic participation that becomes a cherished new political tradition.

In my adult lifetime, most people in America celebrated breaking the 50% barrier when it came to voter turnout. This is a depressingly low number when it represents the oldest and most stable democracy in the world. 2020 saw eligible voter turnout at the 63% level. To be sure, this is still not earth-shattering. But it is without doubt a significant increase for a population that tends to always find reasons to not participate, rather than finding inspiration to get out and vote. The physical numbers overall – roughly 75 million for Biden-Harris and 70 million for Trump-Pence – reveal a true divide in American society that is likely to remain long after Trump’s departure from the White House. Which is entirely appropriate when you consider the fact that there is no such thing as Trumpism. The wave of voter dissatisfaction with Washington DC, that portion of the population that is largely white and non-affluent and feeling disenfranchised by elites, this phenomenon began long before Trump ever made a decision to run for President back in 2014. What Trump did, brilliantly it must be said, was position himself to become the figurehead of this dissatisfaction, tapping into the anger and frustration and elevating his own persona as its leader. The fact that some astute political experts are now even using the term “Trumpism” is a perfect analogy to how Trump has spent most of his business career: catching the tail-end of trends and using deft PR and brand management expertise to usurp the trend entirely. This is why people on the Left of the political spectrum in America need to be vigilant about what the 2020 election truly means. It is a worthy achievement to have won the Presidency, but most current analyses show something of a slight regression in the House of Representatives (so that Democrats’ control has slightly dwindled) and the Senate is going to remain in control of Republicans. This means the classic adage of cutting the head off the snake is irrelevant: this hydra has many heads and getting rid of the symbolic alpha head is not going to reduce the passion of the other side. In fact, given the advanced age of Biden making it unlikely that he can pursue a legitimate second term in 2024, it is far more likely America will see a resurgence of radically right conservatism by  the next electoral cycle to make sure there is no President Harris taking over after one term of Biden.

There are definitely voter trends that emerged new from 2020 that will be analyzed for years to come in terms of their long-term impact on future elections. First, it is clear the Republican cliché that only the extreme coasts of America are liberal and all the rest is conservative is dead. Nevada, Arizona, Michigan, Wisconsin, and Georgia all going blue prove that beyond a shadow of a doubt. Efforts made in the major urban cities of Michigan, Pennsylvania, Nevada, and Georgia show that ethnic minority turnout is not just becoming increasingly important, but it literally decides the fate of these given states for future elections. Not every data point, however, spelled positivity for liberals in 2020. The delivery of Florida for Trump but Arizona for Biden shows there is a sharpening divide between the political leanings of Cuban Latinx in FLA and Mexican Latinx in AZ. Also, while it was once considered a crucial part of Democrats’ presidential strategies and then became a critical “purple” state that could go either way, it seems clear that Ohio is now de facto a part of the Deep South politically, leaning solidly red with no real strategy to unhook it from Republican devotion. Finally, it will be interesting to see if the relatively unimportant states of Maine and Nebraska lead the way to a new proportional approach to electoral college votes. Both of these states actually saw a single vote out of their overall low electoral college vote counts split off and go against the overall will of the state. One EC vote in Nebraska went to Biden while the rest went to Trump. In Maine, the reverse happened: one went to Trump while the rest went to Biden. After the uproar in 2016, where Clinton defeated Trump in the popular vote by a secure margin but actually lost the electoral college handily, it would be interesting to see if Maine and Nebraska represent a new way to adapt the electoral college without actually getting rid of it.

Good-bye to the Nihilist CEO as President trend. One of the things I was most interested in seeing in the 2020 election was a reversal of the “Nihilist CEO” trend. I call it this because it basically came to be the overriding zeitgeist of the Trump presidency. Initially, Trump was interested in simply governing as a conservative President, but with a real agenda and goals. As mentioned before with the term “Trumpism,” this more traditional approach did not sit well with the radical conservatives that felt responsible for putting him in office. For them, ‘draining the swamp’ was not a process of replacing liberals with conservatives: it meant literally and figuratively razing the Washington DC establishment to the ground and salting over the earth so that nothing could ever politically grow again. This is why so many Trump appointments to the Cabinet and to major agencies were given to people who had literally spent their professional careers working against those very agencies. So, we had anti-environmentalists in charge of the EPA; an Education secretary who wanted to dismantle public education; energy appointments wedded to fossil fuels and wholly disinterested in new energy resources. The list goes on and on. In each case, what became obvious, was that those who were the most fervent for Trump were de facto anarchists about Washington, so deep-rooted was their hatred for DC. With Biden’s clear victory and his own long career in politics, it is obvious this approach will get jettisoned to the wayside. It is a return to expertise. A return to experience and traditionalism. The Trump clowns are exiting. Time will tell if they are simply replaced by Biden clowns or by true experts looking to work hard for the nation.

Ironic justice: the Electoral College Vote Count. Finally, it is deeply ironic that, in the end, the electoral college vote for Biden vs. Trump in 2020 will almost be a perfect inverse mirror of Trump vs. Clinton in 2016. Trump may have lost the popular vote in 2016, but he was always adamant that his electoral college win (304 to 227) was so “lopsided” that it meant he was sent to the White House with a decided mandate. Well, when all the votes are finally counted and verified in 2020, the electoral count will most likely be Biden 303 to Trump 228. This is why his claims of election fraud or malfeasance are so empty and ridiculous. Not only did Trump once again lose the popular vote (by a wider margin this time), he lost the electoral college vote by the same margin he claimed brought him so much political legitimacy in 2016. Ironic justice, indeed.

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A Dangerous Interregnum

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Authors: Zlatko Hadžidedić and Adnan Idrizbegović*

Less than two months are left for the transition of government in the United States of America. Not a long period, but sufficient to trigger processes that the next American administration would not be able to reverse. There are no reasons to doubt that President Trump, who still refuses to concede the election defeat, will try to make the future of the Biden Administration as difficult as possible. In this context, let us remember that President Trump hails the abandonment of the nuclear treaty with Iran as his highest achievement, so it would be reasonable to assume that he would do almost anything in his power to make this very step irreversible. The question of whether that includes the option of a military attack on Iran, therefore, hangs in the air.    

We are witnessing a current concentration of American air power in Iran’s neighbourhood. This particularly refers to strategic B52 bombers and F16s from American bases in Europe. Further arrival of F35s in the region would increase the likelihood of an attack on Iranian nuclear facilities. This likelihood might also be increased with the announced arrival of the aircraft carrier Nimitz into the Gulf waters. As news agencies reported, the military option of that type had already been seriously considered by President Trump and his advisors, although it did not enjoy a high degree of support among the highest US military officers. In the forthcoming period, as long as Trump sits in the White House, it is realistic to expect that this dispute between the military and the Administration will gain in intensity, given the fact that President Trump’s team is well-known for its stubborn sticking to its original agenda.

In this context, it must be noted that the nuclear treaty with Iran was declared as one of President Obama’s greatest foreign policy successes. The Joint Comprehensive Plan of Action (JCPOA) is a detailed agreement with five annexes reached by Iran and the P5+1 (China, France, Russia, the United Kingdom, the United States, and Germany). The nuclear deal was endorsed by UN Security Council Resolution 2231, and Iran’s compliance with the nuclear-related provisions of the JCPOA was verified by the International Atomic Energy Agency (IAEA). It was a groundbreaking agreement that satisfied security concerns of Americans, Iranians, Arabs, Europeans, as well as others, opening the gates for Iran’s readmission onto the global scene. By adopting this treaty, Iran left its position of a pariah state. By betraying the treaty, President Trump has transformed the favourite role of the US as a leader of the free world into that of a pariah state. Does that imply his willingness to go even further in his rejection of all norms of international law, by launching a military action against Iran’s nuclear infrastructure, as a logical continuation of his unlawful withdrawal from the ratified international treaty? 

From President Trump’s perspective, such an action should prevent a quick and easy return of the US to the treaty in the post-Trump period. A war in the Gulf should lead to an instant rise of oil prices; consequently, it should also lead to the strengthening of the US dollar, linked to the prices of oil. In the times of the failing global economy, additionally burdened by the crippling effects of the pandemic, this would be the most favourable impetus to the withering economy of the US. The rise of oil prices would also have a negative effect on the manufacturing-oriented economies of American competitors in China and Europe. This rise would also strengthen the military industrial interests in the US, commonly backing the Republican Party, potentially at the expense of the financial ones, which traditionally stand behind the Democratic Party. 

A thorough, or even only partial, destruction of the Iranian nuclear programme would certainly be the most favourable outcome for hardliners on both sides, and President Trump probably sees it as a chance to either remain in power despite the election results, or to undermine the position of the future Administration. No doubt, that would trigger a robust return of Iranian hardliners to power in the forthcoming elections, which would probably close the door to negotiations with Iran for the President-elect. Most likely, it would give a strong push to the Tehran radicals to renew the nuclear programme, this time exclusively for military purposes. Since an attack itself would probably be launched from the US military bases in the region, it would also trigger an Iranian retaliatory attack on these countries. Such a development would probably strengthen homogeneity among the cornered Arab NATO countries, such as Saudi Arabia, United Arab Emirates, Kuwait, Jordan, Bahrain, and Qatar, pushing them further into Israeli arms. This would also bring the Sunni-Shiite rift beyond the point of repair. Needless to say, most hardliners, not only in the West, would be absolutely delighted with that result. 

According to President Trump’s orders, the ongoing withdrawal of the American troops from Afghanistan, Iraq, as well as Syria, must be completed 5 days before the transfer of power to the Biden Administration. The withdrawal itself (complete or partial) shall leave an enormous strategic gap, for which there is no alternative to fill the void. Such an exit strategy is without precedent in the American military history, especially given the monumental costs attached to the invading enterprise that took place in these three countries. President Trump’s orders, therefore, imply that another gigantic calculus may be at play this time, a calculus of lasting global significance. Let us remember that an absolute departure of all foreign troops from the region was, actually, Iran’s demand after the assassination of the commander of the Iranian Republican Guard, Kasseem Suleymani. Does that mean that President Trump has accepted Iranian rules, or even supremacy, in the Gulf? Does it mean that President Trump would abandon American allies in the Middle East, from Israel to Saudi Arabia? And what will happen with oil, hitherto controlled by American companies, which exploited it due to the American military presence? Of course, if President Trump is not abandoning literally all American positions, alliances and interests in the region, it is likely that he must have some other strategic rationale. Perhaps cutting the military expenditures sounds acceptable to the ears of the American public. However, it is not sufficient to justify the magnitude of the shift.

The hasty withdrawal of the US troops, however, serves one clear purpose: it deprives Iran of available American targets for its potential retaliation attempts, and inevitably redirects Iranian wrath at the American allies in the Gulf. Thus the withdrawal not only increases the probability of President Trump’s military adventure against Iran, but also leaves the Arab allies between Iran and Israel, to choose their strategic sponsor. The question is, whether the recent secretive meeting between the Saudi Prince, Mohammad bin Salman, and the Israeli Prime Minister, Benjamin Netanyahu, is to be interpreted in this context?

In any case, the heaviest weight of the American absence in the region will fall on Israel’s shoulders. The Israelis know that an attack on Iran would bean option that could provide Israel with a necessary timeframe to adjust to these new realities and acquire a projected control over their Arab neighbours. A strategic importance of the attack would, therefore, require participation of Israel’s military. As the Israelis know it too well, detrimental effects on the Iranian nuclear programme are essential for the very existence of the state of Israel, since the Islamic Republic Iran is finally in the position to capitalise its long-lasting struggle against American dominance in the Middle East and gain strategic control over the entire Levant and the Gulf, so as to be promoted into a global player. The level of communication between President Trump and Prime Minister Netanyahu suggests that certain promises may have been made to the Israelis that an American attack on Iran’s nuclear facilities is imminent. However, the assassination of the Iranian main nuclear scientist, Mohsen Fakhrizadeh, attributed to the Israeli intelligence agencies, might be interpreted as an attempt to undermine the Iranian nuclear programme without a full-scale attack, either because the Israelis do not believe in its feasibility, or because they are trying to avoid it, given its long-term consequences that eventually might prove unfavourable for Israel’s position.

There might be one more option at play, bearing in mind President Trump’s favourite „art of a deal“ strategy: a secret deal between the current US Administration and Iran, that the US leaves the Shiite world (Iraq, Syria, and Lebanon, plus control over Afghanistan in potential partnership with Pakistan) to Iranian domination, in exchange for Iranian tacit permission to have the plutonium generator in Arak – suitable for development of a military nuclear programme – bombed and temporarily destroyed by the US. That option would buy several years to both the US and Israel, with a significant postponement of Iran’s eventual production of a nuclear weapon. To the other side, it would give Iran a chance to improve its geopolitical position as one of the two main powers in the region, in interim coexistence with Israel as a de facto leader of the Arab NATO alliance. Under these circumstances, a Shiite bloc led by Tehran, separating Sunni Arab countries from Turkey and Russian influence, might be a favourable development for the US. The questions are, of course, to what extent it would be acceptable to Israel, and to what extent it would draw Iran into overstretching, and effectively, into economic weakening.        

Whatever the calculus of the outgoing Trump Administration, the incoming Administration of the President-elect Biden has no interest in allowing that such dangerous developments take place. If President Trump orders an attack on Iran in the last 5 days of his mandate, right after the departure of the American troops from the region, all its negative consequences will be attributed to the Biden Administration, crippling their announced initiatives to stabilise the world affairs. For, Its geopolitical consequences could be numerous: a takeover of the Middle East by the strengthened Iranian radicals; a possible nuclearisation of Saudi Arabia, Turkey, and maybe Egypt; a further rapprochement between Iran and Russia, this time in the sphere of strategic nuclear cooperation, which would eventually terminate the Western influence in Eurasia. 

By going in that direction, President Trump would promote the strategy of „poisoning the well“ to the future Democratic Administration, depriving it of prospects for relevant foreign policy results in its next 4 years. Eventually, that might lead to the second coming of Trump; and then, to a burial of American democracy and implementation of an authoritarian one-party regime, as desired by the Republican radicals ever since the mid-1970s. 

*Adnan Idrizbegović, Independent researcher, Sarajevo, Bosnia-Herzegovina

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