The past weeks have shown how part of the American establishment is weighing the pros and cons of the Trump administration’s strategies around the world. I have a strong feeling that in the coming weeks we will see the destabilizing effects of American politics, especially towards its closest allies.
A disastrous flip of events appears to be on its way, in case Trump were to lose the November midterm elections (the House and Senate elections). If this were to happen, the Trump administration would probably exploit the Russia gate conspiracy claiming that Moscow had now acted in favour of Democrats. Trump could argue that Moscow was disappointed by the lack of progress in softening US sanctions against Russia; indeed, by Trump’s measures against Russia (expulsions, sanctions, property seizures) and its allies (China, Iran and Syria).
Trump would not hesitate to claim Russian interference in the midterms to aid the Democrats, citing intelligence reports. He would say that Russia aims to create chaos in the US by placing roadblocks in the way of attempts to “Make America Great Again” and handing the House and Senate to the Democrats. He would use the electoral defeat to blame his accusers of getting aid from Russia. In doing so, he would be accelerating the implosion of his administration in an all-out war with the establishment. The mainstream media would dismiss Trump’s accusations against the Democrats of collusion with Russia as a conspiracy theory of an unravelling presidency. All this, summed up, would lead to the Democrats having majority in both houses, easily proceeding to the impeachment of Trump.
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Italy is piggybacking on the US, operating side by side with Washington to expand its role in North Africa, especially in Libya. However, Rome will have to offer something in return to please Trump. Evidence points to the Trans Adriatic Pipeline (TAP) as the quid pro quo, the US encouraging Italy to complete it in order to put pressure on Germany’s North Stream II project and undermine Russian gas deliveries to the EU. I have the impression that the only card available for Italy to play (and which interests Trump) is an endorsement of Washington’s positions on Iran, given that Italy already shares in common with Washington differences with Paris and Berlin on many issues. In this sense, Conte’s words about US intelligence info on the JCPOA paves the way for further decisions:
“”I didn’t take a specific stand. I said we are willing to evaluate the necessity to take more rigorous stances if the (nuclear) accord is shown to be ineffective. We are waiting to have elements of intelligence, Italy would like to evaluate it with its EU partners”
As evidence of Washington’s failed strategy towards Iran, India continues to buy crude oil from Iran, increasing the amount in the last month by 52%. China is also increasing its importation from Iran. Meanwhile, Iran is working with other countries to circumvent the US dollar in order to sustain their mutual trade within a new framework of agreements. Washington is especially disappointment with New Delhi, with American officials continuing to reiterate that India’s intentions align with Washington’s. Since November, with the imposition of counter-sanctions on countries that continue to work with Iran, Washington’s bluff will become evident to everybody, much to the disappointment of the Trump administration.
In the meantime, relations between Canada and Saudi Arabia have almost completely broken down on account of human rights. Ambassadors have been expelled and there is a continuing war of words, with trade between the two countries being brought to a stop. This is the latest example of the divisions manifesting themselves within the Western elites, with Israel, Saudi Arabia and the Trump administration being in opposition to the likes of France, Germany and Canada.
What is also clear is that the issue of energy is central to Washington’s strategy. Between criticism of the German Nord Stream II and invitations to Italy to finish the Trans Adriatic Pipeline, it is clear that both the Trump administration and the policy makers of the deep state are strongly concerned about what actions allies and enemies could take to overcome the pressure brought to bear by Washington on the issues of energy, Iran, and sanctions. This shows that the US is very fearful of de-dollarization, especially coming from its allies.
Bypassing sanctions with currencies other than US dollar, or creating creative finance structures that bypass the SWIFT payment system, are the only means of maintaining relations between countries in spite of Washington’s sanctions. The US strategy is limited in the short term and certainly harmful in the long term for US Dollar financial hegemony.
That Washington’s allies are even entertaining such possibilities places US financial hegemony at great risk in the long run. This worries the American deep state a great deal, even without Trump, who in any case will not be in charge past 2024 (should he be re-elected in 2020).
One of the points of greatest tension is precisely this strategic difference between the Trump administration and the policy makers in the deep state (AKA Langley and Foggy Bottom). While the former can increase the pressure on allies (through NATO, the JCPOA, TTIP and TPP) to obtain immediate solutions and benefits, the latter must above all consider the effects in the medium and long term, which are often harmful for US interests. The imposition of sanctions on Iran, and the obligation of European allies to comply with this directive, is a prime example.
Another of Washington’s strategies revolves around the price of oil. The United States would have no problem seeing the price of crude oil skyrocket. Secretly, many in the administration hope that Iran will take the first false step by closing the Strait of Hormuz (Teheran will not make this move as things stand now); some even hope that the crisis between Canada and Saudi Arabia will have some impact on the cost of crude oil.
Even trade war and tariffs should be seen as part of Trump’s short-term strategy to demonstrate to his base that something is being done against countries that he thinks are taking advantage of the United States. In reality, Trump knows, or should know, that there is no way of stopping China’s growth, a result of globalization that has been the engine of free-market capitalism, making the western elite richer than ever before. Trump deceives his base with trade wars and tariffs, but in the long run the costs will be borne by American consumers, many of whom are Trump’s voters.
Trump thinks in the very short term, constantly aiming to present himself before his electors with a list of ticked boxes ( Peter Lavelle of Crosstalk gets trademark of this definition), confirming that he is fulfilling his electoral promises. In this way he hopes to win the midterms in November. To succeed in this endeavor, the economy must pick up to a gallop (for now this is happening thanks to a series of tax cuts and the continuous pumping of easy money from the Fed) and he must put pressure on his allies as well as aggressively confront Iran, Russia and China through sanctions, cutting energy supplies and forcing Tehran to negotiate once again the nuclear agreement.
What many analysts struggle with when trying to analyse Donald Trump is that there is no overarching strategy uniting his actions into a coherent policy. Trump acts extemporaneously, often with a very short strategic outlook and for internal political motivations.
Nevertheless, if there is something that worries the deep state, it is the long-term impact of tariffs, trade war, sanctions and impositions on allies; or, to put it most simply, de-dollarization. If there is anything that scares the Trump administration, it is remaining entangled in a destabilizing war with Iran that would lead to the early end of the Trump presidency and destroying its legacy, as Bush’s legacy was destroyed by Iraq.
In all this uncoordinated and inconsistent behaviour, there is the hope of a major rise in the price of oil that would help slow down China’s growth and transform the US shale-gas industry into an ultra-profitable business, further boosting the US economy and allowing Trump to present further evidence to his base of his ability to improve their lives.
The United States is in the terminal phase of its unipolar moment and is struggling to come to terms with the downsizing of its role in the world. Its ruling elite cannot accept the prospect of sharing power, preferring to oppose by all means possible the transition to a world order involving more powers. If this situation is already complex for any superpower enough to manage, a president has been elected who has little regard for compromise and mediation.
Ultimately, in addition to an obvious problem in defining Washington’s role in the world over the next few years, the United States finds itself with a president who is in almost open warfare with an important part of the US establishment. The deep state is still living on the hope of impeaching Trump to halt the loss of US influence, deluding themselves that things can return to how they were at the height of the unipolar moment in the 1990s.
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Author: Tyler Durden