US President Donald Trump managed yet again to cause upset among allies at the recent G7 meeting this time by not backing the pledge to fight protectionism. His wish to plough on with his America first agenda and introduce trade tariffs, threaten a trade war not only with China but European allies and its own neighbour Canada too. Trump supporters may celebrate their champion’s steadfastness on doing what he said he’d do on being elected however it’s more unnerving for the rest of the world.
Posts from the ‘USA’ Category
A feature of C.21st international development has been Chinese financed or built infrastructure around the world. These are in countries considered by China as strategic trading partners for its exports or to secure its raw materials such as iron ore or oil supplies.
This has been both impressive and concerning especially to governments and institutions in the developed world with their own trade and aid agendas. It can be viewed as impressive as it improves the recipient’s economy and physical communications (although the financial and political costs are debatable). Concerning as long term Chinese political motivations remain unclear or contrary to the established post-1945 world order with the US in the prime role and the EU thereafter.
With reference to political scientist Edward Luttwak’s, (1990),” Logic of Conflict, Grammar of Commerce,” essay or even a Thucydides’ trap on the notion of rising powers against ruling powers give concerns to governments, like the US or UK. Also the phrase that business is war comes to mind with tit-for-tat sanctions or intellectual property right violations.
In the C.17th-19th arose the British, French or Dutch colonial expansions followed by C.20th rise of the still mighty USA who all built up global trading networks. These were founded, used or backed with military assets and hardware forming territories like Hong Kong and colonial Vietnam or the US base in Guam.
Now the C.21st the Chinese are seemingly producing a Qing dynasty reversal of fortune with their communist inspired managed capitalism. They are developing their trading links and building assets, commercial or military, in politically sensitive areas such as Baluchistan in Pakistan as part of the China-Pakistan Economic Corridor or in the reclaimed reefs and islets in the South China Sea.
The Belt and Road Initiative is backed by President Xi Jinpang. He has just had the political obstacles removed requiring him to step down as President of Peoples’ Republic of China after his term was set to expire. His plan is to create a new Silk Road with a bold and pervasive initiative to spend a fortune building the developing world’s infrastructure- of ports, roads, railways, and pipelines with all the accompanying bridges and tunnels. In effect these deals are multi-faceted trade negotiations and financial contracts combined with regional or local politically awkward construction projects.
Critics worry about overbearing political influence or expensive financial arrangements causing repayment problems with participating countries. Non- payment of loans in the past were reason enough for invasion as Egypt found out in the late C.19th.
So is the fear of a New World Order justified by the West or S.E Asian countries allied with the US?
In a post-Brexit world with an unpredictable US President for the next few years the UK may well need to alleviate those dissipating certainties and co-operate diplomatically with a Chinese inspired new Silk Road. Aren’t new trade initiatives something the UK wants for its post-Brexit global stature?
Diplomatic stances over human rights and trade negotiations should be bread and butter for the Foreign Office. Thus defending and engaging the Chinese with our values and methods to reach political and trade agreement will help to rectify the effects of lost economic growth and prosperity expected from Brexit.
China wishes to link itself up to central Asia, Europe and Africa by land and sea. Overland “belt” spurs and maritime “roads” will also connect in to S.E Asia and the Indian Ocean. Already in Europe 16 EU and non-EU countries are involved in infrastructure projects using Chinese finance. This boosts Chinese regional influence although with trade-offs in economic benefits European and Asian countries should be vigilant with the details of their investments.
The financial exposure of the Chinese institutions along with repayment terms is perhaps where most of the long term commercial risks lie. Whether they become militarised is a C.21st political debate with recent post-World War Two history suggesting military solutions are less favourable to economic ones.
This initiative will have long term ramifications for many countries and will cause China as many headaches and difficulties that the US faced from 1945 with its Marshall Plan. China is already stepping in to any void left by a nationalist isolationist US which is lamentable. Global growth through trade deals and infrastructure investment is an opportunity for US participation and should not be viewed as a Thucydides’ trap an old view from a past world.
The US will hopefully reconsider its TPP involvement and remain fully engaged in the Pacific region. China with an aging population and huge debt issues needs a stable economic environment and that requires a working relationship with the US.
The UK especially needs to sharpen it negotiating skills and engage in trade initiatives as if its future as a free trading nation is to span both West and most certainly East without fearing the rising of the Sun. A global infrastructure initiative even a Chinese influenced one is something to work on and not against in an ever interdependent world.
Luttwak, E.N (1990), From Geopolitics to Geo-Economics: Logic of Conflict, Grammar of Commerce, The National Interest No. 20 (Summer 1990), pp. 17-23, Published by: Center for the National Interest website accessed: 6th March 2018:https://www.jstor.org/stable/pdf/42894676.pdf
Arab Princes in A 5 Star Jail and Trump’s Daft Declaration: It’s Getting Even Hotter in The Middle East.
Events in the Middle East since November 2017 have taken some dramatic steps even for this politically volatile region.
Wars in Syria and Iraq grind on against now a much reduced ISIS threat however the Syrian Defence Force/Kurdish (YPG led and US supported) coalition are now vying for land and political control in regained territories. Libya’s civil strife continues with little notice given by the rest of the world until something dramatic happens.
North Korea resembles something between news footage from the Cold War days and “hyper-normalised” life imitating art or comedy like that portrayed by the hilarious 2005 Team America World Police which is well worth a watch if you enjoy biting satire (You Tube, 2017). Read more
This is the message I give to Davos man or woman for the 2017 January meeting of the World Economic Forum in Switzerland, unless you want to go skiing of course. Picking a theme like inequality or climate change is all well and good. Read more
I’m looking forward to seeing the back of 2016.
However it’s not particularly as an investor that I’ll be glad to see the start of 2017 but as a voter. I have voted 5 times since 2014 in elections for EU, UK and Scottish parliaments, 1 Scottish referendum and in June 2016 the Brexit referendum. It has been the latter that has seemed to matter the most and it has caused all the political upset although markets have been benign about the result so far except with currency markets against Sterling. Unfortunately that does matter as prices are rising and inflation will creep back in to the UK RPI figures as 2017 progresses.
Brexit and the Philippines’ President Duterte “Harry” Show the US Has Problems With Key Allies Doing the Unexpected.
Before the UK’s referendum on leaving the EU in June 2016 plenty of world politicians advised the British to remain most prominently was the current US President Barack Obama warning the UK would be, “at the back of the queue,” in any future trade negotiations with the US if it choose to leave.
Republican Presidential Nominee apparent for the 2016 election (unless the Republicans can depose him at their convention) Billionaire property tycoon Donald Trump as part of his electioneering bravado has promised to construct a wall along the Mexican border to stop illegal immigrants from entering the US.
US Republican nominee frontrunner Donald Trump appears at the moment to be the billionaire who has both the magic and the pong touch. He appeals to a section of disaffected voters across America, yet causes dismay and bemusement elsewhere. However, with his comments on whether women should be punished for abortion or not he has, bluntly put, handed Democratic front runner Senator Hilary Clinton a big club to beat him with.