Category Archives: Emerging Markets

Donald Trump’s Syria strike killed America First and a Putin rapprochement

“Events are in the saddle and they ride mankind.” –Ralph Waldo Emerson

“I would love to have never been in the Middle East.” –Donald Trump

Foreign policy is rarely what it seems to be. It is the rare leader (a Nixon or a Putin) who comes to office as a chess player, with a fully formulated foreign policy strategy, allowing the tactical details of life to be filled in as they go, all the while never deviating from their overall plan.

Far more common is for a foreign policy to evolve from the bottom up, as the accumulation of responses to a series of unplanned crises that must be dealt with. While in hindsight patterns and themes emerge, they mostly do so after the fact, with the crises themselves leading to grand theory and not the other way around.

What we saw this past week confirms that Donald Trump’s foreign policy is evolving in this garden variety manner. Enraged that the blood-soaked Assad regime used chemical weapons on its own people in Idlib, killing 83 including women and children, Trump responded by unleashing Tomahawk missiles on the Shayrat air base near Homs where the hideous chemical attack was launched. Suddenly, American foreign policy didn’t seem so isolationist after all.

Ironically, the consequences of the shocking air strike—entirely out of character with Trump’s America First vow to avoid the cesspool of the Middle East—will be very limited regarding what is actually going on in Syria. The Pentagon confirmed the strike was a one off, meaning that it does nothing to actually alter the strategic reality on the ground in Syria. Assad, Russia and Iran will continue to win the war in a limited sense, even as the wretched country itself dissolves into a series of feuding fiefdoms.

But the airstrike does have huge strategic ramifications for Trump’s ever-more forlorn pivot to Russia. By directly striking Russia’s client Assad for the first time, the Trump White House has driven a stake through the heart of any chance at a real rapprochement with the Kremlin. With military activism back on the agenda as a foreign policy option, and with the proposed pivot to Russia stillborn after the Trump airstrikes, it is not too much to say that the first iteration of Trump’s America First foreign policy has ceased to exist. Real world events in Syria killed it.

So what is likely to take its place? Earlier in the week, a much less reported on event took place in Washington that in the long run will have an even greater impact on the overall direction of the Trump foreign policy than the dramatic Syrian missile strikes. Steve Bannon, the ideological guru behind Trump’s America First foreign policy, was ousted from the US National Security Council at the behest of the increasingly powerful NSC Adviser General H.R. McMaster.

Not only was Bannon shown the door, but McMaster and Defence Secretary James Mattis’s allies—Chairman of the Joint Chiefs of Staff Joseph Dunford and Director of National Intelligence Dan Coats–were added to the Council, in what amounts to the victory of the grown-ups.

This is hugely important for two reasons. With so few foreign policy appointees making it through the confirmation ordeal on Capitol Hill, the National Security Council is presently the only foreign policy game in town, being fully staffed, as confirmation is not necessary for its senior members. And in McMaster it has a forceful and able head.

If the NSC is dominant bureaucratically, with Bannon being ousted the thrust of Trump’s foreign policy is strikingly establishment and realist. Mattis, McMaster and even weak Secretary of State Rex Tillerson could have fitted comfortably in the administration of the first George Bush, or even that of Ronald Reagan.

They are realist, internationalist, national interest-driven establishment Republicans, and for at least the moment they are in the ascendancy in crafting the new administration’s foreign policy. This is shockingly good news for those of us who have for a while now woken up in a cold sweat, worrying Bannon might have a say in global matters of war and peace.

Of course, the problem with Donald Trump not being a chess player in foreign policy is that, as welcome as this shift is, he may prove to be a human weather vane, and dramatically alter course once again as the wind of events shifts. But for now amid the all the turmoil in the world, the thought of Republican realists actually running the most powerful country in the world is the best news we have had in quite a while.

Published in City AM London, April 10, 2017

Unilever and the confused priorities of the Davos elite

If Angela Merkel epitomises the overrated in terms of international statesmanship, her equal in corporate terms must be Paul Polman of Unilever. As is true with the German Chancellor, it us unfathomable to me that the leader of a major corporation with a record this hapless should be lionised. For the larger point is that both are symbols of a world that has forgotten that, in healthy societies, recognition must coincide with a record of real accomplishment.

In Polman’s case, his peculiar talent is to perfectly talk the talk of Davos Man, the globe elite who–despite foreign policy disasters in Iraq and economically running the world into a ditch post-Lehman—somehow still thinks they are the repository of global governance wisdom. Since taking over Unilever in 2009, Polman specifically has talked sonorously about water conservation and the dangers of global warming, decreasing the Anglo-Dutch company’s carbon footprint, using more sustainable materials in making the Dove soap and Lipton tea that are two of Unilever’s core brands, and promoting global health.

All of these are worthy causes, and if I were looking for the new head of Oxfam I might well consider Polman for the job. The problem is that a fixation on these societal goods does not necessarily dovetail with a passionate commitment for maximising shareholder value that is the ultimate moral duty of any company chief.

In line with the general philosophical confusion of much of the Wilsonian centre-left, Polman ignores the fact that, in the real world, trade-offs amongst positive goals are merely a fact of life. When asked how much time he spends on specific Unilever business compared with cajoling politicians around the world to sign onto the Davos wish list, Polman tellingly has replied, ‘To me it is the same. I don’t separate that.’

But of course it is not the same. By refusing to prioritise between maximising shareholder value and saving the world, Polman is likely to do neither. For a man who loves everything loves nothing and helps nothing. Life is about priorities, about making choices, not ducking them.

Of course, setting the bar so morally high also leaves you open to endless charges of hypocrisy. In Unilever’s case its global reach has, under Polman’s watch, led it to reaching a settlement over allegations of mercury poisoning in India, while being accused of monopoly practices in South Africa, being slow to halt sexual harassment on its tea plantation in Kenya, and poor labour practices in Vietnam. While Unilever has moved to correct the abuses, in practical terms the company can never be as saintly as Polman’s rhetoric.

But it is Polman’s business record that is perhaps the greatest cause of concern, flowing as it does from his confused all-things-to-all-men Davos philosophy. Banishing reporting of quarterly returns (I would too if my record were as poor as his), Polman urges the world to take the long view. Let us take him at his word.

In the 12 months to 15 February 2017, just before Kraft Heinz announced a $143 billion takeover bid, Unilever’s share price rose some 10 percent. The wider FTSE 100, however, soared by some 28%. In the fourth quarter of 2016, Unilever’s sales missed expectations globally, while falling 2.3 percent in Europe, with many forecasters expecting even worse times ahead in 2017. Defending these poor recent results, Polman blamed both the ‘shock’ of Brexit, wherein the pound fell by 20% against both the euro and the dollar. He also pointed to Prime Minister Modi’s ‘surprise’ anti-corruption campaign, where the Indian government withdrew 500 and 1000 rupee notes, which undercut Unilever’s business there.

But, as regular readers of this column well know, neither of these events should have been surprising (as they have not been to me), and the possibility of both should at a minimum have been planned for. Instead of doing this, the lure of attending another development conference with the great and the good seems to have been to much of a temptation for Polman. For he has certainly taken his eye off the analytical ball.

There only so many hours in the day. And where you put your time in life, there also shall be your treasure. Polman–mindlessly lauded by the city elite—has made it unambiguously clear where his priorities lie. He has straightforwardly said, ‘I am really more interested in development.’ There is nothing at all wrong with this. But it is not overmuch to point out that a company as important as Unilever (with 168,000 employees in 2016) deserves a full time chief executive.

In the wake of the crash caused by many of his Davos colleagues, Polman has earnestly called for ‘a better form of capitalism.’ My gentle suggestion is that Unilever deserves a better form of capitalist.

Published in City AM, March 20, 2017

America would gain nothing from cosying up to Putin’s declining Russia

It has been three years since Russia’s stunning annexation of Crimea. It is the worst kept secret in Washington that the new administration of Donald Trump would like to turn the page on the US-Russian hostility that followed, in a transactional effort to remake US foreign policy.

At the heart of Trump’s Jacksonian nationalism is his transactional view of the world, a state of mind that is confounding allies and enemies alike. Unsentimental in the extreme, the President is singularly unimpressed by alliances in both Europe and Asia (held in almost sacred awe by the discredited America foreign policy establishment) that he senses may be past their sell-by dates if they don’t deliver in terms of immediate American interests.

In the same vein, the Trump White House has not let a long history of US-Russian bad blood get in the way of his desire to pursue closer ties with Vladimir Putin’s Russia, if doing so—and despite Putin’s well-deserved reputation for thuggery—serves American goals. And oddly enough–for all that readers of this column know I am no friend of the current President–I have absolutely no problem with his more transactional approach to foreign policy, as it amounts to a breath of fresh air, rightly questioning intellectual sacred cows that ought really to have been thought through again following the debacle of the Iraq war.

The problem with President Trump’s outreach to Russia is not that he is attempting to work with a far from savoury (alright let’s admit it, Putin is my favourite Bond villain) partner to further American interests; it’s that he will receive almost nothing for his bold efforts. And getting a good deal– which is largely the basis of Trump’s popularity and narrative—is, after all, the point of the whole exercise.

But what does America get from such a shift in its foreign policy? ISIS is already on its last legs, with Mosul in Iraq—by far the largest city the caliphate controls—set to fall later this year. Its capital (Raqqa in Syria) will surely be next. The key strategic point remains what it has always been: in both Iraq and Syria disaffected Sunnis must be included in the governing process, or there will surely be another—and perhaps even more hideous—vampire-like rising of radical Sunni Islam, following on from Al-Qaeda in Iraq and ISIS. And absolutely none of this is affected in any material way by whether Trump and Putin reach an understanding or not.

Nor is there an obvious economic reward flowing on from a rapprochement with the Kremlin, as there would be say, if Trump and Xi Jinping (another strongman nationalist) reached a broad accord. Russia is an aging, corrupt gas station with nuclear weapons, with its economy wholly precariously tethered to the spot price of oil and natural gas. Russia’s economy is merely the size of Texas. The country is a great power in decline, not one on the rise. There is simply no economic pot of gold at the end of the rainbow for Trump here, either.

As for Russia and the US more broadly sharing intelligence and in some sort of coordinated way working together to combat global terrorism, that will happen in any event, if it suits the eminently rational Putin’s interests, and will not happen if it does not. Reaching a Grand Bargain has nothing to do with what amounts to a rational second order decision the Kremlin will make, based on an evaluation of its own interests.

So, closer ties with Putin does not dramatically change the facts on the ground over ISIS in Syria, facilitate a new economic renaissance for the US (as such a deal with China or, better, India, would do), or cement a joint front in the global war against terror. In other words, at the end of Trump’s transactional approach to Russia, there’s nothing there. In hard-headed realist terms, there simply is no deal available that makes calling NATO into question, or abandoning with the embattled (but getting better) Ukrainian government of President Poroshenko, worth it.

For on its own self-interested terms, this dreamed-of alliance simply makes no sense, in terms of America’s basic interests. A declining Russia simply does not offer the US anything remotely strategically attractive enough to ignore Russian adventurism in Crimea and eastern Ukraine. By all means, let’s move away from the gormless era when American neoconservatives and liberal hawks fought wars that had almost nothing to do with direct American interests. But any cursory glance at those interests means that this putative deal is merely intellectual fool’s gold.

Published in City AM London, February 27, 2017