Category Archives: Obama and US Foreign Policy

Donald Trump is snatching defeat from the jaws of victory in powder keg Asia

Donald Trump is off to a surprisingly good start. While his enemies in the Democratic party and the American press (which is largely the same thing) froth at the mouth, enraged that their world view has been found wanting, the President-elect has assembled a thoroughly solid cabinet up to now.

While there are some (to coin a phrase) deplorable picks–such as alt-right guru Steve Bannon as political adviser and the monomaniacal General Michael Flynn (everything is about ISIS and radical Islam) as National Security Adviser—on the whole this is a cabinet Mitt Romney, or for that matter President Eisenhower, could have chosen.

Easily the best choice so far has been General James ‘Mad Dog’ Mattis to be Secretary of Defence. Despite his colourful nickname and near-legendary status as a fighting Marine, Mattis is blessedly more George Marshall than George Patton. Thoughtful, well-read and well-travelled, Mattis—a man with Marcus Aurelius by his bedside, which counts for a lot—has already convinced the emotional President-elect that there are better ways to get information from prisoners than waterboarding. Mattis could well be, following in Marshall’s footsteps, the next great Secretary of Defence.

All this good news has led to Trump’s favourability numbers soaring. Last week’s Bloomberg poll gave him a favourable rating of 50%, stratospherically up from a mere 33% in August of this year. The President-elect is enjoying an Indian Summer in a country that has made it clear it is hungry for a new direction.

Saying this, the iceberg of governing looms ahead, when Trump’s many inconsistencies and unpredictability will prove more a hindrance than the help they have been in making him the ultimate elusive moving target in American politics. Nowhere is this truer than in Asia, where the President-elect is in the muddle-headed process of snatching defeat from the jaws of victory.

During the Obama years, America’s geostrategic position in East Asia has gone from strength to strength. While China under Xi Jinping has counter-productively bullied the region by its throwing its weight around in the East China and South China Seas, America has been the ultimate beneficiary. At present, US ties to old allies Japan, South Korea, and Australia have rarely been closer while links to new and pivotal allies such as India, Vietnam, and other Asean states have never been better.

Capping all this off is the Trans-Pacific Partnership (TPP), the jewel in the crown of the Obama administration’s Asia pivot. TPP is a free trade deal which is about far more than free trade; in essence it economically locked in this burgeoning alliance, nurturing America’s ties—both strategic and economic–with the fastest growing region in the world. By planning to withdraw from TPP, Trump, in his protectionist know-nothingism, has undone eight years painstaking work in a matter of weeks.

The consequences are sure to be dire. Not missing a beat, the very effective Chinese have made the rounds of the region, noting that America, following its abrogation of the TPP deal, is not to be trusted. Instead, Beijing has sensibly enough offered its own trade deal as an alternative, pointedly excluding the US much as TPP side-lined China. Erratic Philippine President Rodrigo Duterte, in his pivot to Beijing, may amount to the canary in the coal mine, the first of many putative American allies now set to desert Trump’s unpredictable and irrational America.

It is in this context that Trump’s phone call to Taiwanese President Tsai Ing-Wen must be viewed. There is nothing wrong with shaking up the status quo with China in theory; for it is true that Beijing has yet to fully open its market to American goods in a reciprocal fashion. There is also nothing wrong making it clear to China that old shibboleths (such as pretending long-time American ally Taiwan does not exist) are up for debate.

Indeed, this is not necessarily a bad opening negotiating position with Beijing in general. But Trump’s bold new posture becomes folly as it has been done unilaterally without consulting America’s allies in the region, nervous about American inconstancy in the first place.

This is because, as much as Trump might wish the multipolar world away, it exists as a fact. In mindlessly abrogating TPP, Trump has cost America the sure-fire support of the Asian allies who are absolutely essential to have on board if a harder line with China is to be successfully pursued. In throwing in Obama’s winning hand in East Asia, Trump has been neglectful of alliances which are the only chance for the US to strategically prevail in the long term.

Published in City AM London, December 13, 2016.

Saudi Arabia has surrendered control of the global oil market to US shale

 

“Ending wars is very simple if you surrender.”

–P.J. O’Rourke

The new OPEC deal to cut oil output—its first since 2008—amounts to nothing less than Saudi Arabia’s surrender to the power of American shale.

It has come about due to Riyadh’s belated, horrified understanding that it has utterly lost control over the energy market, running through its capital reserves in the process. Rather than young, feckless Deputy Crown Prince Mohammed bin Salman using Saudi Arabia’s John D. Rockefeller strategy to permanently drive US shale out of the energy market, the exact opposite result has occurred. Unwittingly, the Saudis have made the Americans the new global energy swing producer, the permanent ceiling for the global price of oil.

This, in its way, is as momentous a shift in global power as the stunning recent Brexit and Donald Trump votes. Whereas Brexit showed Europe to be in absolute decline, while the election of Trump brings to an abrupt end 70 years of the US as the global ordering power, the Saudi’s meek surrender brings to a close the long age of the OPEC domination of the world’s energy market. 2016 truly has seen the death of one world order, along with the uncertain birth of another.

The details of the new OPEC pact make it clear that even this belated effort to quell the self-imposed bleeding brought on by Saudi attempts to drive US shale out of the energy market—by, in Rockefeller style, over-producing to drive down prices and eradicate their competitors—is problematic at best.

OPEC as a whole agreed to cut 1.2 million barrels per day (bpd) from production from the beginning of the new year, with the Saudis themselves bearing the brunt of the cuts with a personal reduction agreed to at just under 500,000 bpd. But as OPEC now accounts for less than half of all energy output in the world, it is a very weakened cartel, now dependent on the kindness of strangers to survive.

Externally, this means Russia. The new global energy reality has been forthrightly addressed in the accord, as the interim deal is contingent on securing a further 600,000 bpd in cuts from non-OPEC members, with Russia expected to contribute a 300,000 bpd to this total.

Unsurprisingly, the Kremlin is less than enthused, as Russian oil minister Alexander Novak blandly said that at best his country would only cut its production gradually, due to ‘technical problems’. OPEC isn’t much of a cartel if it is utterly dependent on major (and generally unwilling) outside players such as Russia to make its internal agreements work.

While the Saudis are hoping to persuade the Russians to go along with their fragile deal, to reach even this stage meant Riyadh wholly giving way to their hated enemy within the cartel, Iran.

Just recovering from years of sanctions due to its nuclear programme, all this past year as the Saudis have frantically tried to reach an OPEC-wide deal to cut its ruinous losses, Iran has held firm that it has no intention of hurting its just unbound economy to take one for the team. In the end, the Saudis had to meekly acquiesce, allowing Iran to continue to ramp up production, helping their sworn enemy in a way that must have put the House of Saud’s teeth on edge.

So even after surrendering to Iran, and assuming the Russians can be generally corralled to accept cuts of their own, there is a final problem with the Saudi inspired OPEC accord. The cuts are estimated to leave global oil production at 32.5m bpd, a historically high rate of supply unlikely to lead to much of a rise in the price of energy at all.

Even should prices sustainably drift upwards, all this will do is make American shale—far more price sensitive and far more capable of being quickly brought on line than the fixed rigs of the OPEC member countries—turn the spigots back on, with its production rising and the price consequently falling.

The Saudis, having utterly lost the plot, are now—as the problems inherent in this deal make all too clear—trapped in a world where they no longer control the global energy scene. It seems even the surrender terms the OPEC deal represents will not be accepted by Riyadh’s competitors. And they have no one to blame for this state of affairs but themselves.

Along with Europe as a great power, and America as the world’s ordering power, the myth of Saudi energy dominance is the third great dinosaur to be felled by the asteroid that is 2016.

Published in City AM London, December 5, 2016.

What the Trump Revolution Means for the Rest of the World

 

“The revolution is not an apple that falls when it is ripe. You have to make it fall”

–Che Guevara

Introduction: How Trump Won

Boy, did Donald Trump make the apple of revolution fall from the tree. Despite the fact that his populist insurgency was universally discounted, the brash New York business mogul pulled off the most stunning political surprise in modern American political history, besting tired, corrupt Hillary Clinton for the presidency. The most galling point in all this for political risk analysts is that Trump hid a winning strategy in plain sight, without anyone taking him (or it) seriously. At the very least, this analytical humiliation should force all of us in the elite to think again about whether the world truly works as we think it does.

After endless internal campaign chaos, Trump settled at last on the highly capable Kellyanne Conway as his campaign manager, who provided needed ballast to the storms perpetually raging around her candidate. Conway had a simple—and in the end brilliant—strategy for victory. The future was not (at least not yet) the preserve of the shiny new Obama coalition—based on the country’s changing demographics—of the young, the urban, the well-educated, and growing minority groups, such as Hispanics and African-Americans.

Instead, at least for this election cycle, the future was the past; white, high-school educated men, the heroes of Bruce Springsteen’s music, would provide Trump with the winning edge, all polling data to the contrary. These were the voters from another time, and in terms of the East Coast Establishment assessing them, almost from another world. Yet their fears are not imaginary, even if in their search for victims, Springsteen Democrats have sometimes found the wrong culprits.

It is a too-often neglected fact that over the past two decades, half of all Americans—the most powerful country in the world—have become poorer. These Springsteen Democrats (for this group can be traced back to the earlier southern Democratic populism of George Wallace) are entirely right to fear that the world has passed them by and that the elites in both parties no longer give their plight overmuch thought. Trump’s ingenious campaign slogan, ‘Make America great again,’ was especially created for his Springsteen Democrat loyalists, catering to their sense of loss and betrayal. It was a masterful political stroke.

Trump shared several of the basic tenets of the Springsteen Democrats, seeing the uncontrollable ravages of globalisation as a primary culprit in both the decline of America (and the consequent rise of China and other Emerging Markets) in general and the Springsteen Democrats in particular (with globalisation’s emphasis on educational attainments). Flouting long-held Republican Party orthodoxy, Trump’s unfriendly takeover of the party with his Springsteen Democrat followers turned the traditional party of free trade into a protectionist one with bewildering speed.

East Coast finance, often the sponsors for Democratic Party candidates as is exemplified by Hillary Clinton beyond all—the very bankers who ran the world economy into a ditch, escaping from their greed and stupidity scot free—were the practitioners of globalisation, the unseen and unfriendly forces dooming the Springsteen Democrats to a declining lifestyle and position in American society. Again turning Republican shibboleths on their head, the party of business morphed into the party of the white working class in the blink of an eye, with its attendant (and not entirely unfounded) suspicion of the American business elite.

The third force to blame for the Springsteen Democrats’ diminution in social status in American society was the rapidly changing demographics of America itself, particularly the rise of Hispanics as the fastest growing and largest minority group in American life. In terms of rates of assimilation, Hispanics are generally joining American society at more or less the same speed as the Irish-Americans, German-Americans, and Italian-Americans who came before them.

The one very important exception to this is in terms of educational progress, as Hispanics have learned English (for whatever reason) at a slower rate than most of the other immigrant communities who have come to America. This has made Hispanics seem ‘different’ to Springsteen Americans in a way other groups, such as the recent rise of Asian-Americans, have not. Pressed from above in the American class system by globalisation and the bankers (and their political lackeys) defending it, and from below by Hispanics challenging the Springsteen Democrats for their jobs, it is unsurprising that Trump’s anti-immigrant tone fell on such fertile soil.

Most of the commentariat found Trump’s focus on the forgotten Springsteen Democrats highly amusing, as there was simply no analytical data to support such a bold throw of the political dice. But Conway convinced Trump that this demographic ought to be the basis of his populist campaign strategy for three reasons. First, given his specific pitch to them—and everyone agrees that Trump sounds like no other Republican presidential candidate ever created—Trump could connect with the Springsteen Democrats, many of whom had grown so demoralised by the ravages of globalisation (and the lack of anyone defending their interests) that many simply didn’t bother to vote.

But Conway saw that here was a core group ripe for Trump to woo—and win—in overwhelming enough numbers that it would swing the election. In the end, national exit polls show that Trump swamped Clinton among non-college whites by an astonishing 39%, an even larger margin than Ronald Reagan managed against Walter Mondale in 1984.

Secondly, the Springsteen Democrats—echoing Trump’s gleeful political incorrectness—hate the mainstream media which they (again at least partially correctly) see as hopelessly, dogmatically left-wing and elitist. As such, if a polling company calls up a Springsteen Democrat, the likely response is the phone is slammed down. Conway brilliantly deduced Springsteen Democrats were being significantly under-counted.

A third reason to focus on the Springsteen Democrats as the key to victory was that not all these voters wanted it to get around that they were going to vote for a presidential candidate scarred by accusations of racism and bigotry, even if they were drawn to his protectionist and anti-immigration message. Conway and her team fervently believed that these ‘shy voters’ would nevertheless emerge in sufficient numbers to sway the election.

This world-class strategy worked perfectly to the shock of the rest of the world, as Trump upended the heavily favoured Hillary Clinton to stunningly claim the presidency. Sure enough, these uncounted white male voters actually existed, and in large enough numbers in the upper Midwest (Pennsylvania, Ohio, Michigan, and Wisconsin) to shatter decades of Democratic dominance there and claim the presidency for Trump.

The last projected Real Clear Politics poll of polls judged that Clinton would receive 46.8% of the overall vote, while Trump managed only 43.6%. In reality, Clinton’s numbers were even better than this as she ended up with around 47.7% of the overall vote. However, Trump’s totals were a highly surprising 47.5%, a decisive four points higher than had been posited. This winning margin entirely justified the missing voter strategy, and proved Conway’s inspired hypothesis entirely correct. As Speaker of the House, Paul Ryan (no friend of Trump’s) put it, ‘He heard a voice out in this country that no one else heard.’

Don’t expect Trump to forget that the Springsteen Democrats won him the presidency. More than any other check on his power, the nature of Trump’s populist campaign—run without the usual political commitments having to be made to the Republican Party, big donors, or any specific interest groups—means that the full-throated continuing enthusiasm of the Springsteen Democrats is what he will be worrying about as he sets about governing. As such, trade and immigration policies—which in both cases mark a giant change from the settled elite world view of both parties—will be conducted on a radically different course. Trump won’t forget the Springsteen Democrats, as they did not forget him on November 8th.

Trump’s Jacksonian Foreign Policy

Nor are Trump’s overall foreign policy views the mystery the highly-discredited commentariat make them out to be. He largely hews to what Walter Russell Mead calls the Jacksonian nationalist strain of American foreign policy thinking, long a minority (if important) view in both parties.

Espousing a form of realism, the Jacksonians believe that the US should pursue a very limited but overriding view of the American national interest, seeing that every foreign policy strategy furthers American interests to the exclusion of other competing imperatives. For example, during the campaign Trump questioned whether global warming was objectively true, wondering aloud if this was merely a Chinese plot to economically castrate the United States.

What Trump is getting at is that he is not in favour—given the perilous economic condition of his Springsteen Democrat base—of shelling out significant American funds to pay the lion’s share of a global problem, if it is indeed a problem at all. The idea that America is somehow impelled to ‘lead’ on this issue as the global ordering power strikes Jacksonians dangerous claptrap of the highest order, just another example of global elites caring about esoteric issues (global warming, pandemics, nuclear proliferation), all the while ignoring the economic plight of workers everywhere.

As such, Jacksonians are deeply distrustful of alliances, fearing the US too often allows itself to be shackled to the wishes of others, who may have quite different interests from those of America. Here Trump (rightly) notes that Europeans failure to ever meet their defence commitments in NATO is scandalous, and that Americans should not continue to be taken advantage of, footing the bill so Europeans can retire earlier while Springsteen Americans suffer at home. While Jacksonians are not against NATO or any other alliance per se, they are only for such commitments in transactional terms, if America ‘gets a good deal’ out of them.

The idea of sharing values with Europeans (which the clueless Chancellor Merkel brought up in her statement congratulating Trump on his victory) would strike a Jacksonian as the height of hypocrisy, a way to either change the subject away from obviously deficient Europe defence spending or (even worse) to use such platitudes to ensnare America in an alliance to do other’s bidding.

In either case, Chancellor Merkel had better learn fast about Jacksonian thinking for her tired old rhetorical song and dance—perfectly, blandly acceptable for the old American foreign policy elite—is simply not going to work anymore. Jacksonians are not isolationists; they will do things in the world that they believe suit them and their interests. To ask them to do anything beyond that—as America regularly has as the global ordering power for the past 70 years—is not going to happen anymore. At its essence this is what Trump means when he talks about ‘America First,’ a laser-like focus on American national interests to the exclusion of all else.

Jacksonians favour using force, but only when it is clear that a winning strategy is at hand, and never in the interests of esoteric goals, such as ‘upholding the international community,’ ‘humanitarian intervention,’ or to ‘nation-build’ others. Any nation building that occurs ought to be for the Springsteen Democrats, rather than (rightly in my views) wasting literally trillions of desperately-needed dollars in swamps like Iraq around the world. Again, with his focus entirely on American nationalism, Trump—weirdly echoing the very different Barack Obama—wants nation building to begin at home.

However, should America decide that the use of force is in its interests, Jacksonians are for prosecuting the war, regardless of what others—including international institutions like the UN or the smug and hopeless EU—might say. As Jacksonians believe so fervently in American nationalism, they readily accept that other countries might wish to use force, and are not over-worried by that reality, as long as American interests are not threatened.

Hence, Trump’s blithe unconcern for whatever President Putin gets up to in either eastern Ukraine or Crimea. America has no primary interests in either place so Jacksonians like Trump—to the horror of the international rules-loving Wilsonian elite—simply don’t care. To put it mildly, this Jacksonian tilt will force the rest of the world to think about America again, in a way few have bothered to do over the past several generations, as its precepts, world view and policy prescriptions are so entirely novel to European eyes.

Trump’s likely foreign policy

So in reality there is far less conjecture about Trump’s likely foreign policy trajectory than many in the media would have you believe. First, the new president will be resolutely anti-free trade, dooming the two large trade deals pending, TTIP for Europe and the TPP for the Pacific Rim. As Europeans had all but given up on TTIP anyway—with the Germans in particular having not bothered to try to sway their increasingly protectionist population—that is no real loss. However, the demise of TPP in Asia amounts to a strategic tragedy for the US, greatly improving China’s position in vital Asia.

The jewel in the crown of the Obama foreign policy, TPP was far from just a trade deal; instead, it cemented American geostrategic dominance in Asia in the new multipolar era by economically more closely linking America to its Asian partners (and pointedly excluding Beijing) all the while setting the new trading rules that would be followed for the region as a whole. Years in the making and painstakingly negotiated, TPP was finally laboriously agreed to and was awaiting congressional approval.

With the advent of Trump, this brilliant initiative will never see the light of day. Even worse, the Chinese are sure to make the rounds of America’s Asian allies, pointing out to Japan, the Philippines, and the South Koreans that American politics is now so toxic that its broader strategic word is no longer good. This is nothing less than a geostrategic disaster of the first order.

Ties with Russia are bound to improve as the Jacksonian Trump shares President Putin’s nationalist, spheres of influence view of foreign policy. America has no significant interests in Crimea or Ukraine so this is going to be removed as a major source of friction. Likewise, America has no real interests in whoever runs Syria, so the Kremlin’s blood-letting there is also not a major impediment to US-Russian relations. Given this, there is a good chance that Trump, Putin, and Assad will decide to work more closely together in eradicating ISIS from Syria specifically but also try to combat global terrorism more generally as well. For the Eastern Europeans such a stance will be shocking, after years of dealing with neocons and Wilsonians, but focusing on better ties with Great Power Russia makes a lot of sense from the Jacksonian point of view.

Third, American alliances in both Europe and Asia are in for a period of real change, where long-neglected strategic choices will have to be finally made. There will be increased Jacksonian pressure in both regions for local powers to pull their military weight, to do more and not leave the US to foot the strategic bill.

Here the strategic alternatives for America’s allies will be stark and forced upon them quickly. There will either be an acceptance of the need to do more to retain the American alliance, a new accommodation by American allies in both Europe and Asia with local regional powers Russia and China, the withering on the vine of these longstanding ties with Washington (death by neglect), or an open, angry transatlantic crisis decades in the making over burden-sharing. Whatever the future holds, the era of drift for America’s post-1945 alliance system is well and truly at an end.

For the biggest and most important takeaway of Donald Trump’s improbable Jacksonian triumph is the world will now structurally move to a full multipolar system, without having the benefit of an ordering power to mitigate crises and keep the global show on the road. Due to his professed Jacksonian bent and strict focus on American nationalism, Trump’s revolution means the US is exiting its long-held role as the world’s ordering power, the leader of the global international order constructed after 1945. For better or worse, countries will be largely on their own again. The West as a concept is dead and buried; the post-World War II era is finally over.

As a codicil of this fundamental geostrategic change, the US alliance system is likely to come to an end as we know it, replaced by a more transactional world where countries work together only when it obviously suits them to do so. The idea of sharing values or fighting wars to bolster the international community will soon seem a quaint anachronism of another age, as the Wilsonian global elite passes into history, destroyed by its very otherworldliness, which forget that nations and nationalism remain the basis of action in the international order.

While some of this is to be welcomed by realists everywhere, and much of the rest is manageable, the economic illiteracy at the heart of the Trump phenomenon is easily the greatest cause for concern. For the world economy remains globalised, whether Trump and the Springsteen Democrats (or many Europeans for that matter) like it or not. Threatening China with massive tariffs is like throwing gasoline onto an open fire, reviving the prospects for the Global Depression that was just barely avoided following on from the Lehman crisis. Living in a more nationalistic, interests based world is just fine for realists, as it actually corresponds to reality as we find it. Living in such a world in the midst of a self-induced Global Depression would be ruinous.

But his unlikely fellow revolutionary Che Guevara I think would grudgingly acknowledge that Donald Trump has shaken the apple tree. For good and bad, the world that we have known is about to recede from view. It is time for political risk analysts to be the mariners of these new, unfamiliar seas, expertly charting a course to success in these perilous times. That is the challenge for all of us as there is no going back from this revolution.

Published in Limes, December 2016