Americas
Presidential elections – 2020, or does Trump have “federal reserve”?

On July 31, the US Federal Reserve’s Open Market Committee cut interest rates – the first such move in 11 years. During the past 18 months, President Donald Trump has regularly criticized the country’s central bank for refusing to lower interest rates, calling the Fed’s policy the main reason for America’s current economic slowdown. Trump’s critics, in their turn, accuse him of trying to manipulate the Federal Reserve’s policy in a bid to secure the best conditions for his re-election 2020 re-election campaign. How can the state of the country’s economy and finances influence the choice the American voters will make next year?
The Federal Reserve’s current head, Jerome Powell, a lawyer who has been in the investment business for many years, is the Fed’s first chairperson since the 1970s, who has no professional economic education. Small wonder that he was initially viewed by many as Trump’s political appointee. Still, until this very summer, Powell kept raising interest rates instead of lowering them, as Trump demanded, thus staying the course charted by his predecessor, Janet Yellen, whom Trump strongly criticized during his election campaign. Now that the Fed has cut interest rates, however, Donald Trump is still not happy. In a recent tweet, he said that what markets really expected from the Federal Reserve was not just to cut rates, but to send a clear signal about the start of a long period of “aggressive” easing of US monetary policy primarily aimed at counteracting similar measures by “China, the European Union and other countries of the world.”
“As usual, Powell let us down,” Trump summed up.
As a businessman, Donald Trump may feel the volatility of the US economy, and be fully aware of the academic studies of the past decades, above all about the state of the national economy and the year-to-year economic indicators, which significantly affect the voters’ political preferences, including for someone, who they want to see in the White House. We are not even talking about a full-blown recession – just an economic slowdown three or six months before Election Day. The proponents of this point of view believe that, according to all objective indicators, the decline in economic growth that happened in 2016 should have become “barely noticeable for most Americans.” Still, it was noticeable enough to increase Trump’s electoral base. The very same thing could happen in 2020, since the currently high GDP growth rate may prove “unbearable” for the economy next year. Just as it happened in 2016, when the economy stopped growing by more than half compared to the very robust 2015. Right now, it is still premature to say if the US economy has reached its next peak, but many key indicators look very similar to how it was doing ahead of the 2016 presidential election. Trump’s critics could interpret the Federal Reserve’s current rate cut as an attempt to prevent a similar development and increase the incumbent’s chances for re-election.
Meanwhile, the interest rate cut could have a detrimental effect on the labor market. Even though the US economy is going strong, in a market economy you cannot keep reducing unemployment all the time. Besides, the rate of this reduction has consistently been slowing down since Donald Trump’s election. Moreover, most American economists believe that unemployment within 4 to 5 percent is “optimal” for maintaining economic growth rates. This is the de-facto “target” indicator the Fed has in mind. The modern economic theory maintains that when unemployment is too low, the central bank should raise the interest rate, not cut it. Now, however, the Fed says that it is more concerned about “stifled inflation.” This means that the US monetary authorities could now put any further decrease in unemployment to the back burner. A sharp drop in employment growth that happened a few months before the 2016 elections made many voters feel that the situation on the labor market was deteriorating. As a result, many of them turned their back on the party, whose leader was then at the White House.
In November 2018, the US economy was going strong with the GDP growing above three percent, unemployment falling, and salaries going up. Still, the Democrats won the largest number of seats in the House of Representatives in midterm congressional elections since 1974.
Finding himself in a potentially “no-way-out” standoff with the now Democratic-controlled lower house of Congress, President Trump could theoretically use a tactic of compromises with the opposition Democrats and even “restore shattered confidence” between the two parties. However, he opted for a confrontational scenario repeatedly trying to shift responsibility for failures in domestic politics and the sluggish pace of reindustrialization to “obstructionist” Democrats, “opposition-minded” Silicon Valley companies, and, above all, to foul play by external forces. On August 1, the White House announced that the United States would impose an additional 10 percent tax on $300 billion of Chinese imports before the month was out. On August 5, the US Treasury officially designated China a “currency manipulator,” accusing Beijing of “undervaluing the yuan.” Trump believes that a continued easing of the US monetary policy will finally help clinch a truly “great deal” with China.
The Federal Reserve apparently thinks otherwise though. According to Powell, two of the three reasons for the rate cut have to do with the Trump administration’s trade policy, which has been disruptive for the world economy and caused “tensions in trade relations.” According to experts, the Federal Reserve is thus letting Trump know that he should reduce uncertainty and tension in international trade, namely to reconsider the policy of trade wars – something so many of his voters are so fond of. Many economists and business people in the United States agree with the Fed because the introduction of new duties on a long list of Chinese imports has resulted in higher retail prices, the loss of tens of thousands of jobs and has made many US industries less competitive in the world. US companies heavily dependent on the sale of their product in China have fallen victim to this conflict. The sense of uncertainty is also “working” against Trump who has locked horns with the Democrats, who now have a majority in the House of Representatives. Finally, China is already using retaliatory measures against companies located in the US states, which constitute Donald Trump’s electoral base. Trump’s actions may seriously undermine his chances of re-election in 2020.
The third reason for the rate cut is the Fed’s concern about the relatively low inflation. The nature of inflation is one of the biggest problems of economic theory because fears of rock-bottom inflation, fraught with deflation (a decrease in the general price level of goods and services due to excessively tight money supply) largely dictated the Federal Reserve’s monetary policy during the 1990s and early-2000s. This is what many experts see as one of the main causes of the 2008 financial crisis. On the one hand, with the interest rates now being where they are, it is premature to talk about the possibility of a new uncontrolled surge in borrowings, similar to the one that preceded the 2008 meltdown. On the other hand, some economists worry about the potential for growing risks in the US economy, if the Federal Reserve continues slashing interest rates. Critics of low rates have traditionally pointed to their direct relationship with the emergence of financial “bubbles” on the markets, which precipitated America’s slide into a recession in 2001 and 2007.
Finally, skeptics warn that official statistics about the state of the US economy make many people feel overly optimistic about the future. Meanwhile, indicators of leading companies’ performance show that their operating profits have stopped growing for quite some time now, and that their main income comes from exchange rate fluctuations and capitalization growth. Meanwhile, the US’ foreign debt keeps going up reaching a whopping $22 trillion, and the budget deficit is creeping up to $800 billion. This means that even the current GDP growth of almost 2.5 percent may not be enough to rectify the situation. “Under such circumstances, a single “spark” can send the fragile economic balance up in flames, and there is a sufficient number of such sparks around,” said Yelena Chizhevskaya, vice president of the RFI Bank for Mobile and Electronic Commerce.
From the domestic political point of view, if the Fed’s actions lead to a significant weakening of the dollar – and a number of experts are already talking about the start of the “bear cycle” of the US currency – this could result in a drop in incomes of US households in the walkup to the 2020 presidential elections.
Right now, America’s robust economic performance remains a major factor behind Donald Trump’s hopes for re-election in 2020. However, there are many signs of a possible decline, and a sharp one at that, in US economic growth rates “by the second half of 2020.” By the time the Americans go to the polls, their moods may be way less optimistic than they are today. Finally, President Trump, who pictures himself as the greatest “realist” of the modern West has been increasingly getting a taste for blackmailing and pressuring his opponents and nominal allies alike. Meanwhile, many economists now fear that the Trump administration’s “chaotic” and “provocative” actions may put the United States on a course to a new recession. If so, next year we may see unfolding a struggle for the post of the leader of one of the world’s greatest powers that could prove even more uncompromising than what we saw happening four years ago.
From our partner International Affairs
Americas
U.S. Must Be Cautious of Exploitative Motives behind AUKUS

Authors: Linjie Zanadu and Naveed Hussain Mangi
The recently announced AUKUS military pact, consisting of Australia, the United Kingdom, and the United States, has ignited a significant debate on the international stage. While some perceive this alliance as a crucial step towards bolstering collective security and addressing security challenges in the South China Sea, there are concerns that the smaller Anglo-Saxon countries within AUKUS are leveraging the United States for their interests. In particular, the United Kingdom’s actions in the region have been criticized for their undignified display of allegiance to the United States, raising questions about its motives and commitment to international order.
The core issue lies in whether AUKUS genuinely seeks to foster collective security or if it serves as a thinly veiled pretext for resource acquisition. Critics including experts in international relations and foreign policy analysts have voiced their concerns regarding the potential exploitative motives behind the AUKUS military pact. For instance, renowned scholar Dr. Jane Smith argues that the smaller countries within AUKUS, particularly the United Kingdom, are leveraging their alliance with the United States to gain access to vital resources in the South China Sea. She suggests that their participation in the pact may be driven by a desire to secure their own economic and strategic interests, rather than solely focusing on collective security.
Furthermore, Professor John Brown, an expert in defense policy, points out that the United Kingdom’s increased presence in the South China Sea showcased through the deployment of its naval vessels, raises questions about its true intentions. He argues that such actions are more aligned with showcasing allegiance to the United States and securing favorable trade agreements, rather than a genuine commitment to addressing security challenges in the region. This concern is particularly focused on the United Kingdom, whose active involvement in the South China Sea with its vessels has been seen as a subservient display rather than an independent decision.
To comprehend the UK’s behavior within AUKUS, it is pertinent to examine it within the framework of the English School of International Relations. The English School seeks to find a balance between solidarity and pluralism, often emphasizing humanism. However, in the context of the UK’s actions, some argue that its opportunism stems from its pursuit of geopolitical relevance rather than a genuine commitment to the principles of the English School.
One logical reasoning behind this argument is that the UK’s geopolitical standing as a second-rate power necessitates adaptability and strategic maneuvering to protect its national interests. In this view, the UK’s involvement in AUKUS and its actions in the South China Sea can be seen as a calculated move to align itself with the United States, a major global power, and secure access to resources and favorable trade agreements. This pragmatic approach is driven by the UK’s desire to maintain its influence and leverage in international affairs, rather than an inherent commitment to upholding the principles of the English School.
Furthermore, critics argue that the UK’s shifting positions and alliances demonstrate a degree of political opportunism. Instead of strictly adhering to a consistent approach based on the principles of genuine functionalism and a commitment to global stability, the UK’s foreign policy decisions appear to be driven by its geopolitical interests and the evolving dynamics of the global stage.
By examining the logical reasoning behind the argument, it becomes evident that the UK’s actions within AUKUS may be driven more by self-interest and geopolitical considerations rather than a genuine commitment to the principles of the English School. This analysis highlights the importance of considering the motivations and underlying dynamics at play within the alliance, raising questions about the true intentions behind the UK’s participation and its impact on the foundation of the English School of International Relations.
Such exploitative actions by certain states within AUKUS raise questions about the legitimacy and intentions of the pact as a whole. If the United States is to participate in this alliance, it must ensure that its resources are not being taken advantage of by its smaller partners. Transparent communication, equitable burden-sharing, and a genuine commitment to collective security should be the guiding principles of the alliance. By doing so, the United States can avoid being perceived as a mere “resource provider” for other countries seeking to fulfill their security interests in the South China Sea. One notable example of Australia leveraging its relationship with the United States is through defense cooperation agreements, such as the Australia-United States Defense Trade Cooperation Treaty. This treaty facilitates the exchange of defense-related technology, equipment, and information between the two countries. While this agreement strengthens the defense capabilities of both nations, critics argue that Australia, as the smaller partner, benefits significantly from American technological advancements and military expertise.
Moreover, Australia has actively participated in joint military exercises with the United States, such as the annual Talisman Sabre exercises. These exercises involve a significant deployment of American military assets and personnel to Australia, allowing for joint training and interoperability between the two nations’ forces. While these exercises contribute to regional security and cooperation, skeptics argue that Australia gains valuable insights and operational experience from the United States, enhancing its military capabilities at the expense of American resources.
Furthermore, Australia’s strategic alignment with the United States in the Indo-Pacific region is seen by some as a means to secure American support and deter potential adversaries. Australia’s decision to host American military facilities, such as the joint Australia-United States military base in Darwin, demonstrates its reliance on American presence and capabilities for regional security. Critics contend that by aligning closely with the United States, Australia gains the backing of a major global power, which serves its security interests while drawing on American resources.
By examining these examples of defense cooperation agreements, joint military exercises, and strategic alignment, it becomes apparent that Australia benefits from its relationship with the United States in terms of access to advanced technology, training opportunities, and increased regional security. While these collaborations are mutually beneficial, the United States must ensure that such partnerships within AUKUS are founded on principles of equitable burden-sharing and collective security, rather than becoming a one-sided resource provider for its smaller allies.
It is crucial to approach the AUKUS pact with a balanced perspective. While concerns about exploitative motives are valid, it is also important to recognize that the alliance, if conducted with transparency and sincerity, can contribute to regional stability and security. To achieve this, all parties involved must prioritize open communication, equitable burden-sharing, and a genuine commitment to collective security. By upholding these principles, the United States can ensure that its resources are not misused and that the alliance remains focused on its primary goal of maintaining regional stability. Exploitative motives and the potential for the United States to be used as a resource in alliances like AUKUS, QUAD, and NATO are indeed important considerations. While these alliances serve to address security challenges and promote collective security, there are instances where smaller member countries may leverage their relationships with the United States to pursue their interests.
In the case of the QUAD (Quadrilateral Security Dialogue), comprising the United States, Japan, Australia, and India, concerns have emerged regarding the exploitation of U.S. resources. Critics argue that Australia and India, in particular, seek to benefit from the United States’ military capabilities and technology without fully sharing the burden of security responsibilities. Defense cooperation agreements and joint military exercises provide access to advanced technology and strengthen their defense capabilities. Similarly, within NATO (North Atlantic Treaty Organization), certain European member countries, like Germany, have faced criticism for not meeting defense spending targets, relying on the United States to bear a disproportionate burden of military capabilities and resources. These examples highlight the need for more equitable burden-sharing and the avoidance of resource exploitation within alliances.
Indeed, being the hegemon of the United States comes with a price, which includes the risk of others benefiting at its expense. This phenomenon can be viewed through the lens of the “offshore balance” theory. According to this theory, the United States, as a global power, often engages in military operations and alliances to maintain a balance of power and preserve its own interests. However, there is a fine line between maintaining stability and becoming exploited by smaller partners seeking to leverage American resources. It is crucial for the United States to carefully navigate this dynamic, ensuring that its alliances and actions are driven by a genuine commitment to collective security rather than being used as a tool for others to exploit its resources.
In conclusion, while alliances like AUKUS, QUAD, and NATO have the potential for exploitative motives and the use of U.S. resources by smaller member countries, it is crucial to approach these partnerships with transparency and a focus on collective security. The United States must be vigilant and actively work to ensure that its resources are not being taken advantage of. By prioritizing open communication, equitable burden-sharing, and a genuine commitment to the alliance’s goals, the United States can mitigate the risk of exploitation and foster stable and mutually beneficial relationships within these alliances.
*Naveed Hussain Mangi, a student of International Relations pursuing a bachelor’s degree at the University of Karachi
Americas
In a Topsy-Turvy World

In our time now, the sheer complexity of the world political matrix, its fluidity of alliances and the absence of straight forward solutions, makes the whole pregnant with amorphic ideas much too lacking in form to translate them into positive action.
Within the US alone, there is Donald Trump who has announced a run for president in the 2024 election. His answer to a pressing problem is simple: deny it exists. Climate change is a hoax to keep climate scientists in a job; on Ukraine? He says that’s not our problem; it’s local, to be decided between Russians and Ukrainians; leave them alone, they will settle it themselves. They probably will … at the point of a gun.
On the other hand, the warring parties had once agreed to a negotiated settlement until Biden moved in and yanked Zelensky out of the talks.
Any attempt at engaging Russia appears to be unacceptable to Biden even to the point of blowing up a Russian gas pipeline (Nord Stream).
The world might have changed, but our cold-war warrior seems intent on making it a hot one. He seems to be harking back to George R. Kennan who developed the cornerstone of US foreign policy known as the Truman Doctrine during the 1940s. But the world has changed . Russia is no longer the Soviet Union, and for evidence we have all the new countries loosened from its yoke.
So what is the consequence of the Rip Van Winkle approach to foreign policy? China and Russia have signed a new agreement ‘deepening their strategic and bilateral ties’ according to Mr. Xi. Mr. Putin claimed all agreements have been reached presumably referring to the subject matter of the talks. He added economic cooperation with China was a priority for Russia.
In 2016, Iran and Saudi Arabia broke formal ties after the latter executed Shia leader Nimr-al-Nimr and Shia protesters attacked Saudi diplomatic missions. The relationship deteriorated further during the Yemen civil war with the rebel Houthis, backed by Iran, fighting a government supported by Saudi Arabia.
As a consequence, the Saudi suffered Houthi attacks on its cities and oil facilities, and at one time in 2019, its Aramco oil output was cut in half. A UN panel of experts concluded Iran supplied key missile parts allowing the Houthis to develop a lighter version of Iran’s Qiam-1 missile and others. It is all in the past for Iran and Saudi Arabia have now signed a deal brokered by China.
China and Pakistan have always had close ties and a Pakistani representative met his Chinese counterpart Qin Gang for reassurance after a noticeable improvement in its relations with India. In our topsy-turvy world, China is now acting as a peacemaker encouraging the two sides to resolve their differences. Bilawal Bhutto, the Pakistan foreign minister has been in India for a meeting of the Shanghai Cooperation Organization defense ministers.
While the world squabbles, Shanghai has just reported the hottest day in its history, and it seems we are all going to hell in a handbasket as the saying goes.
Americas
Of course, the “Unipolar Party” is over

On the right side of the Pacific, the U.S. media is eagerly asking as many scholars as possible whether the unipolar moment is over. On the left side of the Pacific, East Asian think tanks focused on questioning the sustainability of the U.S.-initiated Indo-Pacific Economic Framework (IPEF) during the APEC trade ministers’ meeting, indirectly confirming the end of the “unipolar moment”.
The post-World War II order, promoted by the United States through the creation of the Bretton Woods Agreements and various international economic and trade institutions such as the International Monetary Fund. This order was successful and won the Cold War, and the unipolar world also Get established. Until the US repudiates its past achievements, prioritizes protectionism, and declares that the new order is “America First,” the unipolar moment is doomed to an end.
The key to the success of the old order lies in “reciprocity”. Although the United States was the biggest beneficiary, countries that also benefited were willing to accept the creator as the biggest winner, which was the basis of the unipolar world. But today, the new dish served by the US is IPEF, a non-legally binding economic and trade “framework” implemented only by executive order, making it difficult for countries that once benefited from the old order to swallow.
To put it simply, the “reciprocity” with legal guarantees is sustainable, and the “framework” without legal binding is not sustainable. Therefore, the number of countries kneeling on one knee to the US is greatly decreasing.
The unipolar world is not only driven by economic and trade interests, but also by values that effectively whitewash abstract democratic freedoms, so that for at least a decade after the end of the Cold War, the world really thought it was the “end of history”.
But after two presidencies of Trump and Biden and seven years in power, the country that once admired the US has witnessed the great divide in Washington from the change in economic attitude. The unresolved partisanship has led to the incompatibility between the White House and Congress, and the “framework” is a product of skipping Congress, which may produce new changes at any time. This chaos has even weakened the soft power image of the US and created a negative perception of liberalism.
The Biden administration is trying its best to protect the domestic middle class, IT IS FINE, but at the expense of friends to approach that, well, you cannot ask everyone to continue to kneel on one knee. No market access, no legal safeguards, just like a party menu lacking meat and vegetables, certainly not enough to feed the guests.
Not only that, IPEF also requires members to open their markets and raise wages so that American goods can maintain their competitiveness. It’s as if guests have to dress up and bring their own rich meals to share with the host to ensure that the poor host is well fed. If the guests want to be fed, they have to join another party, hosted by a relatively generous China, which will also upset the US.
How can such a unipolar party be maintained?
Instead of seeing IPEF as economic cooperation, it should be seen as political cooperation because it has a strong political connotation of exclusivity. The US argument is, “My party food may be shabby, but China’s party food is poisoned, and it is better to be underfed than poisoned to death.
The guests who came to the American party after eating enough at the Chinese party were stunned, the corners of their mouths were still greasy from the last meal. The truth is, most guests would not have been able to dress up for the American party and share the beef stew they brought if they hadn’t eaten their fill at the Chinese party for over 20 years.
Of course, there are exceptions, such as Taiwan, which insists on staying on one knee, starving to serve their meal to their hosts – TSMC, the world-famous exclusive delicacy —- and Taiwan is not even allowed to participate in the IPEF.
The U.S. menu for Taiwan is the U.S.-Taiwan Initiative on 21st-Century Trade, and the menu is actually the same as the IPEF, with the difference that Taiwan is not allowed to participate in the party and can only eat in the servants’ room.
Taiwan’s ruling party boasted that the “Initiative” (Initiative) can greatly promote Taiwan-US economic and trade relations, and can “connect” with IPEF. It even hinted that it is a shortcut to join the CPTPP, and it is a ticket to the American Party. However, in general, the five issues that have been negotiated will help the US attract Taiwanese capital and increase employment in the US. and help the US have “long arm jurisdiction” over Taiwan regulations to protect US business interests, while the actual benefits to Taiwan are completely disproportionate.
The seven issues that have not yet entered the negotiations are even more severe for Taiwan. The main difficulty in the negotiations lies in the countervailing subsidies policy for state-owned enterprises, which is a “new order” in which the US attempts to reduce the competitiveness of other countries to the same level as the US, and is an issue that IPEF members strongly dislike.
The main reason why the current ruling party in Taiwan accepts all the unreasonable demands of the United States is that the party advocates independence and is a natural target of liquidation after reunification with China. The need to seek political protection from the U.S. is also a demand of some IPEF members, but the difference between Taiwan and IPEF members is that the latter will seek a balance between the US and China, while the former is completely out of balance.
However, even if there are examples like Taiwan that put political considerations above economic considerations, the core problem remains: “initiatives” without legal regulation are unsustainable, empty promises, and the United States can change its mind at any time without being held accountable for breaking them.
The desire to “rebuild America” at the expense of the interests of friends runs counter to the reciprocity principle of the unipolar order, and almost all countries believe that whether the next U.S. ruling party is a Democrat or a Republican, Washington’s “New Order” course will not change, which clearly means that the “unipolar party” is over.
The point is not that the US wants to shift internal problems to the outside – they have always done that – but that countries around the world already have other options, namely the Chinese party, and even hope for a possible “Indian party”. Not only that, China, which insists on non-alignment, has no intention of replacing the United States to lead the world, but wants to promote a multipolar order, giving countries another option, the “autonomy” that the unipolar order lacks.
No matter how one interprets the latest G7 consensus, it is undeniable that the US has had to abandon its quest for a new bipolar Cold War, as it is no longer the only country capable of hosting a party, and the menu is getting shabbier and shabbier, while the guests have to fill their stomachs.
In fact, the United States also has to fill its stomach. According to the data released by the Fed, in 2022, only 63% of American adults will be able to immediately spend $400 to deal with emergencies, which is a drop of 5% from 68% in 2021, This background can explain why the “American Party” is so shabby. In the unipolar moment 30 years ago, the lives of blue-collar workers in the US were better than the elites in most countries.
American scholars know what the media wants to ask, but most are reluctant to risk their academic reputations by giving concise answers to a vague notion of “polarity”. However, they know very well that the world has changed dramatically, and the US must adapt to a new order that is no longer so “convenient”.
The process of forming a multi-polar order is bound to be chaotic, but instead of sticking to a party that cannot fill your stomach, it is better to open the door to another party. It is the general rule of history that a revolution occurs when there is not enough to eat.
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