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Trump’s First Quarter

Trump’s First Quarter

No. 3, Jan.-Feb. 2017 » Bridging News

Donald Trump’s history as a real-estate tycoon and a TV star relied on and enhanced certain qualities which were on display during the presidential campaign, where he managed to confound his opponents and energize the people, thereby obtaining their votes.

The main message of Trump’s campaign was and still is “America First” which, initially, was interpreted by onlookers as being a revival of the Monroe Doctrine and of the sentiments expressed in Washington’s farewell address, but then it morphed into a general reassessment of US foreign policy and trade: Russia, China, NATO, Germany, Japan, South Korea, NAFTA, TPP, the Mexican Wall.

After taking the oath as the 45th President, Trump started to build up his foreign policy team:

  • Gen. Michael Flynn, former Defense Intelligence Agency director, was nominated as National Security Advisor;
  • James Mattis, former United States Marines Corps general and US Central Command, was nominated as Secretary of Defense;
  • Rex Tillerson, former engineer and CEO of Exxon, was nominated as Secretary of State.

Also, he reshaped the National Security Council by adding Steve Bannon, the new Chief Strategist and Ideologue-in-Chief of his campaign and transition team, plus the CIA director, Mike Pompeo, and eliminated the Director of the National Intelligence Council and the Chairman of the Joint Chiefs from the permanent configuration, relegating them to occasional appearances, serving at the pleasure of the President. This first measure, alongside the first partial immigration ban attempt, were seen as game-changers in established US policy. Eventually, because of a misinformation scandal that touched on the image of an embattled White House, Michael Flynn was forced to resign and was replaced by an active general, H.R. McMaster, also known as “The Intellectual Soldier” due to his PhD thesis about the Vietnam War.

An analysis of Trump’s first 100 days cannot highlight any significant achievement in terms of governance. The 100-day milestone is arbitrary, dating back to a speech by Franklin Delano Roosevelt during the Great Depression, and is ill-fitting with the checks and balances of the US establishment. At the same time, Trump’s first hundred days was also spent fighting off aspersions on his character and lingering suspicions of interference in the elections from Russia, various other countries and also US agencies, like the FBI probe into Hillary Clinton’s private email server. Powerful domestic opposition, like activist judges, also hindered his agenda. With regards to foreign affairs, however, where Presidential power is constrained the least, we can see a transformation and a continuous adjustment of Trump’s campaign promises, especially since it would seem that the President is still thinking and acting in the short-term. 

Japan and South Korea 

  • November 16: President-Elect Trump receives PM Shinzo Abe at his Manhattan suite, becoming the first foreign official to come in contact with the newly elected President: the reasons for the meeting were Trump’s messages during the campaign about TPP and Japanese security guarantees, including a possible permission for the nuclearization of Japan and South Korea in order to deter China in the matters of South China Sea;
  • At the moment of handing over power, Obama left Trump a note which, according to media outlets, contained a message: the biggest problem in foreign affairs is North Korea and its nuclear development program;
  • Secretary Mattis performs an official visit in the Asia-Pacific region, stopping in Tokyo and Seoul in order to reassure allies of US commitment to their security concerns, becoming the 1st dignitary of the newly installed Administration to travel abroad on a tour;
  • February 10: Trump greets PM Shinzo Abe at Mar-a-Lago aka “The Southern White House”, where they talk about bilateral trade and security, becoming the first leader to be received and feted in a private environment;
  • March 15: Secretary Tillerson visits to Tokyo & Seoul to publicly reassure them of US military support with regards to the threatening posture of North Korea;
  • April 2: President Trump stated during an interview when asked about North Korea’s defiance: “If China is not going to solve North Korea, we will. That is all I am telling you”;
  • April 16-18: VP Mike Pence traveled to Seoul and Tokyo where he gave public reassurances and stated that “Strategic patience is over” regarding North Korea’s defiance concerning the development of missiles with nuclear payload capability, while a US Navy battlegroup is being deployed, carrying the SEAL team which neutralized Osama Bin Laden as a stronger deterrence;
  • April 28: The President stated that South Korea, due to its significant trade imbalance with the US in its favor, should pay 1 billion dollars for the THAAD missile system being deployed in the country, which caused a diplomatic storm in the bilateral relationship. The mounting discord was headed off National Security Advisor McMaster during his call with the South Korean counterpart: “What I told our South Korean counterpart is, until any renegotiation, that the deals in place, we’ll adhere to our word”. 

China 

  • During the presidential campaign, Trump stated that China stole American jobs and threatened to end “those bad deals” and bring back prosperity to American labor and to annul any trade agreement which is disadvantageous (and unfair) to the US economy. This has been interpreted as establishing a policy of protectionism for US industry, which was followed up by symbolic executive orders targeting imports of steel and alloys from China. However, as a Goldman Sachs report noted:

[…] the President seems to have explicitly reversed his previously stated view that economic considerations should not be subordinate to geopolitical or strategic considerations in foreign policy. For example, in its recent report to Congress on the Administration’s key principles on trade policy, the Office of the US Trade Representative, part of the White House, said that it “reject[s] the notion that the United States should, for putative geopolitical advantage, turn a blind eye to unfair trade practices.” However, President Trump appears to be making an exception for China for the moment, stating “we have tremendous trade deficits with everybody, but the big one is with China...and I told them, ‘You want to make a great deal?’ Solve the problem in North Korea. That’s worth having deficits. And that’s worth having not as good a trade deal as I would normally be able to make.”

  • Also, Trump stated that China is a currency manipulator;
  • Trump knowingly engaged in a telephone conversation with Taiwan’s President which caused China’s response of serious concern for the “One China” policy, which has been followed by the US since the 1980s; eventually, Trump backtracked on his statement that the policy is subject to negotiation and said that he will abide by this main plank of Sino-American relations;
  • During this period, President Xi went to the World Economic Forum in Davos where he made the case for sustained globalization, emphasizing China’s major international project: The Belt and Road Initiative, previously launched as the New Silk Road;
  • After the swearing in ceremony, one of Trump’s first official acts is to withdraw the US from the Trans Pacific Partnership, which is interpreted as leaving the way clear for China to promote free trade deals to establish a trade bloc that would give the advantage to its economy and increase its influence;
  • Secretary Tillerson performs an official visit to Beijing, where he is received by President Xi in order to affirm US policy principles towards China, such as non-conflict, non-confrontation, mutual respect and win-win cooperation; also, he delivers Trump’s invitation for a bilateral meeting;
  • Trump receives Xi at Mar-a-Lago for a weekend of golf and policy discussion, especially about trade and mutual concern about North Korea’s current development;
  • During this meeting, they aligned their positions in order to pressure Kin Jong-un to cut back on his country’s long running efforts to establish a long-range missile program (with ICBM as an eventual target). China’s efforts are hampered by the decimation of its assets within the North Korean regime, especially since the purging of the inner circle of power through executions, including the assassination of Kim Jong-un’s half-brother; therefore, China blocks its purchase of coal and, according to uncertain reports, deploys 150,000 soldiers to Yalu River frontier; 

Americas 

  • During the presidential campaign, a central message was Trump’s pledge to build a wall at the US-Mexico border (first mandated by the 2006 Secure Fence Act) and even to be paid by the Southern nation, which caused great animosity;
  • Trump traveled to meet with the Mexican President but they did not reach any understanding on this issue, especially given the precarious situation in Mexico;
  • President Trump receives Canadian PM, Justin Trudeau, at the White House where they discuss bilateral policy on trade, considering that 75% of Canada’s exports are heading south, while only 18% of USA’s exports go North;
  • Trump threatens Mexico and Canada with his withdrawal from NAFTA unless new terms of the trade partnership are negotiated which reduces perceived US disadvantages; 

Europe and the United Kingdom 

  • During the presidential campaign, Trump predicts Brexit and said that he will make a better trade agreement with the UK, in contrast to President Obama, who warned Brexiteers that the US’ main partner would find itself in “the back of the bus” when it comes to trade, should it exit the EU;
  • In EU states, Donald Trump has been perceived as the embodiment of populism, especially since Nigel Farage, UKIP’s chairman and MEP, went to the US to publicly support the Republican nominee on his presidential campaign trail. The latent anti-Americanism in the EU came to the fore with surprising strength that also highlighted anxieties about the growing strength of European parties outside the mainstream;
  • After winning the election, President-elect Trump receives Nigel Farage at Trump Tower in Manhattan and hints that the UK’s government should assign the UKIP leader as their Ambassador to Washington, which could have unpredictable results for the special relationship between the two countries;
  • After being sworn-in, President Trump receives Prime Minister Theresa May in the White House, which is the first official visit of a foreign dignitary to the US since the new Administration took office; on this occasion, Trump backs May’s pledge to follow through with Brexit and pledges US commitment to the special relationship between the two countries; 

Germany 

  • During the campaign, especially when talking about US trade agreements, Trump stated that the American – German trade deficit is a huge issue for US economy, growing to 270,05 billion dollars in 2016, second only to China;
  • In this time of electoral uncertainty, Chancellor Merkel tried to establish a connection with Trump’s team in order to perform a dialogue on trade and security, but she did not support Trump’s bold statements which were interpreted as condoning deficiencies on human rights and democracy, which may lead to a tense future relationship. Trump, despite having proclaimed his admiration for Merkel, criticized her handling of the refugee crisis in Europe;
  • After the election, president Obama had a final phone call with Chancellor Merkel, which was, in the severe anti-Trump climate, presented widely as a handing over of the mantle of Leader of the Free World;
  • On January 28, Trump talked over the phone with Merkel about NATO, Russia and Middle East situations;
  • Everybody expected the meeting between Trump and Merkel to live up to its portrayal as a clash between two titans, but on March 17, during the Chancellor’s visit to the White House, they announced the beginning of a fruitful bilateral relationship;
  • After the Chancellor left US, Trump stated that Germany has to pay security bills and has to raise its military spending to 2% of GDP, which created a storm in Germany’s politics, especially since it is an electoral year: the SDP’s candidate, Martin Schulz, said he will not support this measure, while Merkel stands to her commitment to raise it from 1.2% to 2%; also, this brought back some historical memories about Bundeswehr power and NATO’s initial mission: “to keep the Russians out, the Americans in, and the Germans down”, although one would have assumed that it would not be the Germans keeping themselves down. At the same time as Trump’s victory in the US, however, Germany was launching its new White Paper on security (the first in ten years), which lays out a more pragmatic approach to military and security issues. 

NATO 

  • During the campaign, Trump stated multiple times that the US is no longer going to provide security to its allies if they are not going to contribute to their own security: Japan, S Korea, NATO countries and so on;
  • With regards to NATO, Trump stated that this organization’s mission is over :”NATO is obsolete”; an attitude which was later echoed by reformists within the organization challenging it to fix various problems. He then reverse his position, presumably after an attitude shift with regards to funding in European NATO countries;
  • Secretary Mattis is travelling to Europe in order to attend NATO’s Defense Ministers meeting where he stated that every ally has to raise their military spending to 2%. He also stated, during the Munich Security Conference in February 2017, that “American security is permanently tied to the security of Europe";
  • VP Mike Pence also stated the continuity of USA’s commitments to its allies worldwide;
  • VP Mike Pence was received by Donald Tusk, President of the European Council, where he reassured him of Trump’s support for the European Union as a project for peace and democracy;
  • NATO’s Secretary General, Jens Stoltenberg, announced his intention to hold an Extraordinary Summit on May 25th, which was perceived as a worthwhile initiative in order to meet the new American Administration;
  • After the US Navy launched 59 Tomahawks as a response to the chemical attack in Syria, Stoltenberg was received by President Trump at the White House, where both leaders announced their continuity to support and protect their values and Trump stated that “NATO is no longer obsolete”. 

Russia 

  • During the campaign, Trump portrayed himself as a deal maker, leveraging his businessman credentials to an audience that lionizes CEOs, and he praised Vladimir Putin as a good leader and a future partner, which caused great distress among NATO Allies;
  • After the election, the President and the President-Elect were briefed by the intelligence community that Russia was allegedly behind the multiple hacking operations against the DNC, plus the trolling operations in the online community, which may have provided the necessary edge for Trump’s close victory;
  • Trump denied this evidence, which created a lack of confidence between the President and intelligence community, especially with Flynn’s resignation and Attorney General Jeff Sessions’ recusal from the Russia inquiry, along with that of Congressman Devine Nunes, who sits on the Congressional Intelligence Committee; at the moment, the FBI is still pursuing its inquiry, while the Intelligence Committee is engaged in its own debate;
  • During the period of transition in the US, Putin stated that he expects Trump’s envoy to participate in the Astana talks in order to establish a ceasefire in Syria;
  • After being sworn in, Trump talked first to Merkel and then spoke by phone to Vladimir Putin, where they discussed issues regarding terrorism and cooperation in taking down the Islamic State in Syria. Eventually, a tentative calendar for a first meeting will emerge between the two leaders;
  • Everybody expected an attempt at rapprochement with Russia, but, after the US Navy hit the Syrian air force base in response to the chemical attack, a new modus vivendi had to be established between Moscow and Washington;
  • Secretary Tillerson has performed an official visit to Russia, in which he discussed for four hours with Foreign Minister Lavrov and two hours with President Putin, but no public reengagement of the prior sort was established: the US-Russia relationship will not improve on account of its actions in Ukraine and Syria, but a close dialogue must be kept between two world power with the greatest nuclear arsenals;
  • During the last phone call between Trump and Putin, the discussion revolved around ending the Syrian civil war and a possible face-to-face meeting during the G20 summit in Hamburg, Germany in July. 

The Middle East 

  • During the campaign, especially after winning the Republican nomination, Trump has stated multiple times that he wants to move the US Embassy to Jerusalem (previously recognized by Congress as capital decades before, but having never moved the embassy for political reasons), to destroy the Islamic State with the might of the US military and to dismantle the JCPOA (the Iran deal);
  • After winning the election, President-Elect Trump received Prime Minister Netanyahu, who was a supporter of his presidential bid and is a close person to one of Trump’s earliest important financial supporters, casino tycoon Sheldon Adelson, who initially backed senator Ted Cruz during the primaries;
  • In order to signal that he would eventually keep his promise, Trump nominated David Friedman as his future US Ambassador to Israel, a hardliner and supporter of Netanyahu’s policy with regards to settlement expansion into West Bank;
  • After the inauguration, Trump received Netanyahu at the White House and during the press conference he requested a temporary halt to new housing development in the West Bank in order to bring both parties to the table: “One-state, two-state, doesn’t matter”;
  • Trump announced that his Jewish Orthodox son-in-law, Jared Kushner, will become his envoy on matters pertaining to the Middle East: Palestine, ISIS, Iraq, and he backtracked on his original statement of moving the US Embassy to Jerusalem, especially after he met with Abdullah II, King of Jordan, at the White House. He supposedly realized that a fragile status quo is hardly maintained in Jerusalem, plus the fact that the US-Jordanian relationship, especially in matters of security aid, is very important in the region alongside Israel and Saudi Arabia;
  • Trump had a telephone conversation with King Salman of Saudi Arabia in order to discuss the ongoing fight against the Islamic State and the current development in Yemen, plus the safe zones in Syria, to which the Saudi King gave his full support;
  • Trump receives President Al-Sisi at the White House and pledges US support in Egypt’s fight against the Islamic State’s forces in Sinai Peninsula;
  • Jared Kushner visited Iraq, being invited by General Dunford, Chairman of The Joint Chiefs, and meets with Iraq’s leaders in order to back them up during the ongoing major operation taking place in Mosul;
  • Trump receives Prince Mohammed, Deputy-Crown Prince and Minister of Defense of Saudi Arabia, at the White House in order to assess the Middle Eastern tensions, especially the current state of affairs between Saudi Arabia and Iran;
  • Secretary Mattis goes on a tour of Saudi Arabia, Israel, Egypt and Djibouti, in which he led discussions about defeating ISIS and ending the ongoing civil war in Yemen;
  • During a Reuters interview, President Trump stated his dilemma: “Frankly, Saudi Arabia has not treated us fairly, because we are losing a tremendous amount of money in defending Saudi Arabia”. His declaration question o relationship that is over 70 years old and possibly the second only to the UK in strategic value, given Saudi Arabia’s role in matters of international trade (especially oil), security and geostrategic positioning; 

Conclusion 

We have seen a businessman working to become President while struggling with political adversaries and the inertia of an established and interdependent global system to keep his campaign promises, especially on trade issues which are behind the hollowing out of the US middle class labor force. In matters of internal public affairs, Trump achieved little of note, aside from the very important nomination of a Supreme Court Justice, whose decisions will steer the country for decades to come. At the cost of most of his internal agenda, such as the wall with Mexico, Trump managed to avert a looming budget crisis and government shutdown by getting a deal conceding his entire platform, but buying time until October to pursue other priorities. The repeal of Obamacare is an incomplete success, given the faults of the American Health Care Act that replaces it and the fact that the Senate will be rewriting the bill in the next period. Trump’s protectionism is not yet apparent in policy, but the specter of it has induced companies to change their investment plans. The greatest apparent success of Trump is not due to him, as the rise of the Dow Jones and other indices can be attributed to irrational exuberance and the effects of prior policies affecting asset prices, like Fed policies.

Returning to foreign affairs, we have seen three major shifts:

  1. Trump succeeded to get Xi Jinping to sit down and discuss containing North Korea. Trump’s tactic seems to be to incentivize China to resolve the issue itself, rather than lose face through a US intervention and the uncertainties which would result;
  2. Trump will continue the US commitments to Western security, by maintaining the implicit subsidies and by supporting NATO, while showing himself open to discussion with leaders like Chancellor Merkel;
  3. Trump will maintain a dialogue with Putin, especially to avoid the complications stemming from close proximity in the Middle East, but he will not perform any grand negotiation with him that would reshuffle the current international status quo.

At the moment, Trump surrounds himself with two major assets in matters of security, military and foreign policy: Gen. James Mattis and Gen. H.R. McMaster, both of them very able to conduct, perform and maintain the direction followed by previous Administrations.

 
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OEconomica No. 1, 2016