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Will the world have to choose between US and China?

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As the US-China trade war heats up, more and more experts tend to believe that the world may be heading into a breakup again, just like it did during the years of the Cold War. This time – into two conflicting trade and economic camps, pro-US and pro-China, with almost every state apparently having to choose which side to join. How realistic such forecasts really are?

When the specter of an unfolding trade war between the United States and China loomed at the end of 2017, most analysts doubted that this rivalry could reach Cold War intensity. Still, a world split along economic lines poses a serious threat to global economy and finances and could bring about dramatic changes in relations between the world’s leading powers.

As a result, companies of countries representing the rival camps would find themselves largely isolated, if not entirely cut off, from sources of funding and new technologies available on the other side of this divide, thus sending  commercial enterprises’ revenues down and unemployment up.

In today’s world any country, which claims to be a sovereign one, faces the hard choice of either trying to establish its own order, integrate with other states and seek an adequate status as part of a certain collective order, or just refuse to change. At the same time, attempts to build a new world order are hampered by the increasingly inefficient and inflexible nature of many existing institutions of international politics. And, finally, no “world order,” either current or new, exists or emerges all by itself, without decision-making centers and mechanisms of implementing decisions.

Such an “order” should also meet the needs and requirements of the countries and their people as well as ensure efficient means of monitoring compliance with its fundamental principles. Since foreign policy and economy are all-important for any country, achieving a high degree of necessary cooperation is extremely difficult and fraught with conflict.

It looks like all of the world’s leading powers now anticipate a possible collapse of the modern world order and Donald Trump’s moves to destroy many international institutions only serve to exemplify this foreboding.

Whether new chaos, or even a war of all against all, is really what Trump is going for is hard to say, even though this is a conclusion one could make after reading his National Security Strategy, published in December 2017. Or, maybe, Trump is using such threats as blackmail meant to extract concessions from America’s rivals.

A new pyramidal system of global dominance with the United States at the top, would certainly suit both Donald Trump, his supporters and also many of his political opponents in Washington. However,common sense is prompting many rationally-minded politicians elsewhere in the world to realize that a new balance of power in the global economy, namely a dynamic equilibrium between the two financial and economic centers – the US and China – could be the lesser evil.

Ideological prerequisites for a new bipolarity are already there with the US political establishment already viewing China as a “strategic rival.”

The US Senate accused Beijing of “imposing” itself on the world “as an alternative model … without a democratic system of governance” and trying to “undermine the free and open order” based on the rules that the United States helped establish after World War II . Simultaneously, officials in Europe, Japan, Australia, Canada, and a number of other traditional US allies are worried by a lack of “clarity” about the true nature of China’s global initiatives.

The logic of the new economic bipolarity is already going beyond the realm of academic discourse. In November 2018, Brussels started considering a proposal for exercising coordinated control over foreign, primarily Chinese, investments in strategic sectors of the EU countries’ economy, as well as their logistical and technological infrastructure. During the second half of last year, the Western countries ramped up coordinated pressure on a number of major Chinese high-tech companies, primarily Huawei, which is the world’s largest maker of high-tech equipment. Despite the lack of direct evidence, a number of EU countries have significantly limited the import of Huawei products. The United States, for its part, has completely banned the purchase of Chinese-made equipment for public institutions, and is going to extend the ban to the private sector. This pressure culminated in the December 2018 arrest in Canada at Washington’s request of Huawei’s chief financial officer, Meng Wanzhou. In January 2019, a Huawei employee was arrested in Poland on suspicion of espionage.

In addition to the trade war, the US and China spent most of last year waging a diplomatic battle over bilateral trade issues. In autumn, Donald Trump initiated new trade talks with Japan, the EU and Britain. He also announced plans to ink new agreements with the Philippines and Vietnam as part of his policy of signing bilateral accords, which contain a provision preventing the signatories from concluding trade agreements with China.

This is exactly the provision that already features in the new trilateral free trade agreements the US has signed with Canada and Mexico. What remains to be seen, however, is just how far Ottawa and Mexico City are ready to go to stick to these provisions in practice.

Beijing, in turn, is staking on multilateral trade deals in order to use the size and competitive edge of its economy to expand its foothold in the countries it is working with. Moreover, instead of trying to destroy the existing international and regional institutions of collective management, China is working hard to constructively reform them.

The result is a paradoxical situation where America blames China for threatening “freedom of trade” and “values of an open society,” while President Trump is accused by his opponents both at home and abroad of doing exactly the same thing.

As a result, the idea of geo-economic flexibility is now gaining traction in the world. In 2018, in response to Washington’s increasingly hostile policy, the EU came up with its own rules of the game whereby any two parties are free to conclude or reject virtually any agreement. It was intentional bluff on the part of European politicians and diplomats aimed at offsetting Donald Trump’s “escalation – getting concessions” tactic. When in Washington, European Commission officials supported the US against China, while in Beijing they sided with China against the United States. A graphic example of this tack was provided by Britain, which, while supporting the ban on the use of Chinese equipment in its IT infrastructure, still allows China’s CGN Company to participate in the construction of the Hinckley Point NPP.

This reflects a great deal of interest on the part of the European “West” in a multi-polar world order where, according to many European experts, the EU could lead the camp of supporters of liberal norms of international trade, which are embraced, one way or another, by all the leading nations of the world, with the notable exception of the current US leadership. With the economic potential of the EU being commensurate with that of the United States, it is exactly the area where the EU could implement its “strategic autonomy” plan where a united Europe is now able to act on a par with, and even independently, from the United States. In 2017, the European Union signed a raft of important trade agreements with Canada, Singapore and Vietnam. In the summer of 2018, it concluded a free trade zone deal with Japan and intensified similar parleys also with Mexico, the South American trade bloc MERCOSUR, Australia and New Zealand.

The Asian countries are equally eager to pursue a multi-vector economic policy. Following Trump’s withdrawal from the Trans-Pacific Partnership Agreement (TPP), the 11 remaining participants quickly revived the project. Moreover, the US exit gave them greater freedom of hand in choosing a strategy for further development of the trade pact. No longer instrumental in Washington’s policy of “deterring” China, the TPP can be more flexible in its relations with the world’s second largest economy, all the more so since almost all TPP members have close trade ties with the People’s Republic. Meanwhile, some European countries have been showing interest in the TPP, and negotiations on a 16-state Asian agreement on regional trade that will cover half of the global economy – the Regional Comprehensive Economic Partnership (RCEP), have also received a new boost. Unlike the United States, China is also involved here. At the same time, some of Washington’s traditional allies in Asia, such as Australia, New Zealand and Japan, are actively building up ties as part of both forums.

Finally, Donald Trump’s two-year tenure in the White House has significantly exacerbated the financial and economic differences between the leading Western economies. According to the Austrian newspaper Der Standard, by the mid-2018, direct cross-border investment in the world’s affluent countries had dropped by more than a third. Even if individual economies could benefit from restrictive measures, this won’t last long. Globalization as a whole is losing momentum. Although this may somewhat mitigate the countries’ discontent with developmental imbalances, it will not be enough to rectify the general structural problems the global economy is facing today. What is needed is a long-term strategy, and this can only be implemented through dialogue and multilateral interaction.

Meanwhile, economic multi-polarity is fast becoming a fait accompli. Wall Street and the London City are no longer the sole sources of investment as money could also come from China, the Persian Gulf countries and Europe even though there certainly are some nuances and conditions to have in mind here. Many countries are now openly playing on the contradictions existing between the world’s economic powerhouses, now counterweighing Beijing with Washington, now portraying both as powers others are wary of.  Central Asia is actively maneuvering inside the Moscow-Beijing-Washington triangle, and Canada announces plans to further develop trade and economic ties with China despite, and possibly, because of the stuttering negotiations with Washington about changes to the NAFTA treaty.

The future of the ongoing trade wars will be determined by the world’s growing financial and economic interdependence on the one hand, and by most countries’ desire to guard against the dangerous impact a protracted, and, possibly, escalated US-China standoff could have on the global economy.

Amid the growing rivalry between Washington and Beijing, a sort of an economic nonaligned movement could become even more popular than its political counterpart of the Cold War era. After all, the liberal economic ideology was very popular even then, as neither the West nor the East was able to impose strict bloc trade discipline on its allies. Therefore, many countries of the so-called “golden billion” may eventually join the less affluent developing nations in such a nonaligned coalition.

If, in the foreseeable future, the global economy is bound to split into supporters of Washington and Beijing, this will most likely be about the choice of technologies and infrastructure projects vital for the security of states and societies, namely IT, artificial intelligence and payment systems. In most of the other, more traditional sectors of international trade, customary competition will continue, just like it has always done before.

First published in our partner International Affairs

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Americas

A Disintegrating Trump Administration?

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If Donald J. Trump wanted a historic presidency, he certainly seems to have achieved it — he is now the only president to have been impeached twice.

According to the rules, the House impeaches followed by a trial in the Senate.  There is precedent for the trial to continue even when the office holder has left office.  Should that trial result in conviction, it prevents him from seeking any future elected office.  Conviction is unlikely, however, as it requires a vote of two-thirds of the members present.

It has been reported that Trump wanted to lead the crowd in the march to the Capitol, but was dissuaded from doing so by the Secret Service who considered it much too dangerous and could not guarantee his safety.

Various sources attest that Trump’s mind is focused on pardons including himself and his family members.  Whether it is legal for him to pardon himself appears to be an unresolved question.  But then Trump enjoys pushing the boundaries of tolerated behavior while his businesses skirt legal limits.

He appears to have been greatly upset with his longtime faithful vice-president after a conversation early on the day of the riot.  As reported by The New York Times, he wanted Mike Pence to overturn the vote instead of simply certifying it as is usual.  The certification is of course a formality after the state votes already certified by the governors have been reported.  Pence is reputed to have said he did not have the power to do so.  Since then Trump has called Vice President Pence a “pussy” and expressed great disappointment in him although there are reports now that fences have been mended.

Trump’s response to the mob attacking the Capitol has also infuriated many, including lawmakers who cowered in the House chamber fearful for their lives.  Instead of holding an immediate press conference calling on the attackers to stop, Trump responded through a recorded message eight hours later.  He called on his supporters to go home but again repeated his claims of a fraudulent election.

Aside from headlining the US as the laughingstock among democracies across the world, the fall-out includes a greater security risk for politicians.  Thus the rehearsal for Biden’s inauguration scheduled for Sunday has been postponed raising questions about the inauguration itself on January 20th.

Worse, the Trump White House appears to be disintegrating as coordination diminishes and people go their own way.  Secretary of State Pompeo has unilaterally removed the curbs on meeting Taiwanese officials put in place originally to mollify China.  If it angers China further, it only exacerbates Biden’s difficulties in restoring fractured relationships. 

Trump is causing havoc as he prepares to leave the White House.  He seems unable to face losing an election and departing with grace.  At the same time, we have to be grateful to him for one major policy shift.  He has tried to pull the country out of its wars and has not started a new one.  He has even attempted the complicated undertaking of peace in Afghanistan, given the numerous actors involved.  We can only hope Biden learned enough from the Obama-Biden administration’s disastrous surge to be able to follow the same path.

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Flames of Globalization in the Temple of Democracy

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Authors: Alex Viryasov and Hunter Cawood

On the eve of Orthodox Christmas, an angry mob stormed the “temple of democracy” on Capitol Hill. It’s hard to imagine that such a feat could be deemed possible. The American Parliament resembles an impregnable fortress, girdled by a litany of security checks and metal detectors at every conceivable point of entry. And yet, supporters of Donald Trump somehow found a way.

In the liberal media, there has been an effort to portray them as internal terrorists. President-elect Joe Biden called his fellow citizens who did not vote for him “a raging mob.” The current president, addressing his supporters, calls to avoid violence: “We love you. You are special. I can feel your pain. Go home.”

That said, what will we see when we look into the faces of these protesters? A blend of anger and outrage. But what is behind that indignation? Perhaps it’s pain and frustration. These are the people who elected Trump president in 2016. He promised to save their jobs, to stand up for them in the face of multinational corporations. He appealed to their patriotism, promised to make America great again. Arguably, Donald Trump has challenged the giant we call globalization.

Today, the United States is experiencing a crisis like no other. American society hasn’t been this deeply divided since the Vietnam War. The class struggle has only escalated. America’s heartland with its legions of blue-collar workers is now rebelling against the power of corporate and financial elites. While Wall Street bankers or Silicon Valley programmers fly from New York to London on private jets, an Alabama farmer is filling up his old red pickup truck with his last Abraham Lincoln.

The New York banker has no empathy for the poor residing in the southern states, nothing in common with the coal miners of West Virginia. He invests in the economies of China and India, while his savings sit quietly in Swiss banks. In spirit, he is closer not to his compatriots, but to fellow brokers and bankers from London and Brussels. This profiteer is no longer an American. He is a representative of the global elite.

In the 2020 elections, the globalists took revenge. And yet, more than 70 million Americans still voted for Trump. That represents half of the voting population and more votes than any other Republican has ever received. A staggering majority of them believe that they have been deceived and that Democrats have allegedly rigged this election.

Democrats, meanwhile, are launching another impeachment procedure against the 45th president based on a belief that it has been Donald Trump himself who has provoked this spiral of violence. Indeed, there is merit to this. The protesters proceeded from the White House to storm Congress, after Trump urged them on with his words, “We will never give up, we will never concede.”

As a result, blood was shed in the temple of American democracy. The last time the Capital was captured happened in 1814 when British troops breached it. However, this latest episode, unlike the last, cannot be called a foreign invasion. This time Washington was stormed by protestors waving American flags.

Nonetheless, it is not an exaggeration to say that the poor and downtrodden laborers of America’s Rust Belt currently feel like foreigners in their own country. The United States is not unique in this sense. The poor and downtrodden represent a significant part of the electorate in nearly every country that has been affected by globalization. As a result, a wave of populism is sweeping democratic countries. Politicians around the world are appealing to a sense of national identity. Is it possible to understand the frustrated feelings of people who have failed to integrate into the new global economic order? Absolutely. It’s not too dissimilar from the grief felt by a seamstress who was left without work upon the invention of the sewing machine.

Is it worth trying to resist globalization as did the Luddites of the 19th century, who fought tooth and nail to reverse the inevitability of the industrial revolution? The jury is still out.

The world is becoming more complex and stratified. Economic and political interdependence between countries is growing each and every day. In this sense, globalization is progress and progress is but an irreversible process.

Yet, like the inhumane capitalism of the 19th century so vividly described in Dickens’ novels, globalization carries many hidden threats. We must recognize and address these threats. The emphasis should be on the person, his dignity, needs, and requirements. Global elites in the pursuit of power and superprofits will continue to drive forward the process of globalization. Our task is not to stop or slow them down, but to correct global megatrends so that the flywheel of time does not grind ordinary people to the ground or simply throw nation-states to the sidelines of history.

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Deliberate efforts were made to give a tough time to President Joe Biden

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Image credit: Todd Jacobucci/ flickr

President Trump-Administration is over-engaged in creating mess for in-coming President Joe Biden. The recent deliberate efforts are made to give a tough time are:  naming Cuba a state sponsor of terrorism, designating Yemen’s Houthi rebels as a foreign terrorist organization, Terming Iran as a new home to al-Qaida, and lifting restrictions on contacts between American officials and representatives from Taiwan.

The consequence may turn into dire situations, like a return to cold war era tension. Efforts were made to resume Cuba-US relations to normal for decades and were expected to sustain a peaceful co-existence. Any setback to relations with Cuba may destabilize the whole region. Pompeo’s redesignation of Cuba as a sponsor of state terror will possibly have the least material impact, but it signifies a personal loss to Biden and a momentous political win for Trumpism. In doing so, Trump is hitting the final nail in the coffin of Barack Obama’s efforts to normalize relations with Cuba.

Yemen issue was a creation of Arab spring sponsored by the CIA, and after realizing the wrongdoings, the US was trying to cool down the tension between Saudi Arabia and Yemen, but with the recent move to name Yemen’s Houthi rebels as a foreign terrorist organization, may open new hostilities and bloodshed. It has been designated by UNICEF as the “largest humanitarian crisis in the world, with more than 24 million people — some 80 percent of the population — in need of humanitarian assistance, including more than 12 million children.” Such statements may halt humanitarian assistance and may result in a big disaster.

The history of rivalries with Iran goes back to 1953 when the UK and the US jointly overthrew the legitimate government of Prime Minister Mossadeq. But the real tension heightened in 2018 When President Trump withdrew from JCPOA. But the recent allegation that Iran as a new home of al-Qaida may take a new turn and give a tough time to Joe Biden–Administration. Although there is no evidence, however, Secretary of State Pompeo made such an allegation out of his personal grudge against Iran. It can complicate the situation further deteriorate and even may engulf the whole middle-east.

Lifting constraints on contacts between American officials and representatives from Taiwan, is open violation of “One-China Policy.” Since Washington established formal diplomatic relations with Beijing in 1979, it has resisted having official diplomatic associations with Taipei in order to avoid a confrontation with the PR China, which still comprehends the island — home to around 24 million people — as part of China. Chinese are very sensitive to the Taiwan issue and struggling for peaceful unification. However, China posses the capabilities to take over by force, yet, have not done so far. Secretary of State Mr. Pompeo’s statement may be aiming to instigate China and forcing toward military re-unification. It might leave a challenging concern for Joe Biden-Administration.

Raffaello Pantucci, a senior fellow at Singapore’s S. Rajaratnam School of International Studies, said, “The Trump administration is locking in place a series of conflicts that change the starting point for Biden walking into the office on the world stage.”

Even Mr. Pompeo had a plan to travel to Europe to create further hurdles for in-coming administration, but fortunately, some of the European countries refused to entertain him, and desperately he has to cancel his trip at the eleventh hours.

It is just like a losing army, which destroys all ammunition, weapons, bridges, infrastructures, etc., before surrendering. Although President Trump’s days in office are numbered, his administration is over-engaged in destruction and creating hurdles for the next administration. He is deliberately creating hurdles and difficulties for President-Elect Joe Biden.

President Joe Biden has many challenges to face like Pandemic, unrest in the society, a falling economy, losing reputation, etc. Some of them might be natural, but few are specially created!

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