Big Weekend: Quebec, Singapore, Qingdao

 

Quebec: the G7

The G7 and the Singapore meetings both have their roots in the 20th century. The G-7 is an organization designed to promote dialog among the largest economies of the “free world” – as defined by the Cold War — namely, France, Italy, United Kingdom and Spain from Europe, Japan from Asia, and The US and Canada from North America. Russia was also included in this group until it was expelled as an expression of protest against its forced annexation of Crimea in 2014.

As everyone knows, the American President, Donald J. Trump, is following his demand that NATO partners pay their fair share of the cost of their defense, with a demand that these trading partners lower their tariffs on American imports to the same level as American tariffs on their exports to the USA. In fact, on Sunday. Mr. Trump suggested that all G7 countries should eliminate ALL tariffs.

These folks object strongly to losing their gravy train, but their dependence on the USA as the largest market in the world for trade as well as defense suggests that they will reluctantly negotiate this equalization of tariffs as they have defense costs – which is moving in the right direction, if slowly.

Our trading “partners” were amazed and indignant that President Trump would even suggest that they forfeit their trade advantage. In effect, they dared him to actually try it. After all, the American establishment was equally shocked and began a chorus of whining about trade wars, in spite of the fact that the USA has been in a trade war for fifty years – and losing. Surely, thought the our “partners”, the American establishment would prevail, and let them keep their cozy tariffs.

For example, Canada’s Prime Minister Justin Trudeau  gave an impassioned indictment of the Trump initiative in his commencement address at New York University on May 16, 2018 as well as in a press conference Sunday (after the Trump team had left for Singapore). Of course, he didn’t mention that Canada charges a 270% tariff on American dairy products – the worst example of Canada’s program of protective tariffs. He scoffed at the rationale of national security used by the Trump administration for increased tariffs on steel and aluminum, although that rationale has nothing to do with Canada. It addresses our lack of steel and aluminum manufacturing industries in the USA, which would be critical if we were in a war.

So, much to the distress of the targets as well as the American naysayers, President Trump actually started the new tariffs. Lesson: believe that he means what he says. (However, Mr. Trump could certainly stand to moderate his language! He carries a big stick, but he doesn’t speak softly.) Now the “partners” are mounting retaliatory tariffs. Next step: Trump asks them if they want to escalate this competition or together work out a satisfactory solution – knowing that he has the upper hand.

We’ll see what happens.

Singapore: Meeting of US President and Supreme Leader of North Korea

The Singapore meeting is also aimed at completing unfinished business from the last century, namely, the divided Korean peninsula. The most basic issue is the recently verified capability of the North Korea to deliver a nuclear payload to the United States mainland. While the Koreans don’t seem to have the warheads yet, there is no question that an ICBM, has been demonstrated as nearly ready for manufacturing. This development was a wake-up call to the United States. It attracted laser-like focus of the President, who undertook a personal campaign to solve the “Korean problem”.

The sequence was typical Trump: first, very tough talk, followed by sanctions with cooperation from Chinese President Xi, who is key to the Korean problem (more on this later) then — when Kim Jong Un, North Korea’s dictator, was sufficiently spooked — softened rhetoric, connections established, meeting planned, meeting cancelled by Trump then re-scheduled, now taking place on Tuesday. The stakes are high in terms of removing a clear and present danger to America.    We will see whether the President’s “art of the deal” wins.

Qingdao, China: Shanghai Cooperation Organization

Finally, another meeting. This meeting showcases, not finishing 20th century business, but the future of the 21st Century. The Shanghai Cooperation Organization (SCO) is meeting in  Qingdao, China. The SCO is one of China’s premier attempts to organize a world without  the presence of the United States of America. It was started in 2001 with a membership consisting of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Its charter is to promote “full cooperation” between its members. From this modest beginning, the SCO has grown exponentially. In 2017, its greatest achievement was realized when India accepted membership, combining the two most populous nations on earth in a joint endeavor.

The flavor of the SCO can be seen in this description from XINHUANET, a Chinese website:

 

China sees the SCO as a platform to build a new type of international relations, one that features mutual respect, fairness, justice and win-win cooperation. It is in sharp contrast to the Cold War mentality of confrontation and dominance.

 

The current membership has different levels of participation, but SCO now includes Pakistan, Turkey (apparently ditching the European Union for SCO), Iran, Egypt, Israel, Vietnam, Indonesia, and virtually all of South Asia.

 

Along with its new reserve fund through BRICS (BrazilRussia, India, China and South Africa as full members plus interested recruits Afghanistan, Argentina, Lebanon, Indonesia, Mexico and Turkey), the outline of China’s brave new world is emerging. China is working hard to isolate the Western powers, especially the United States. Thus, the relationship between the presidents of the two countries is very interesting. Their recent trade of favors is an example. Trump could not have come so far with North Korea without Xi’s help. Likewise, Xi could not have saved ZTE, China’s huge high-tech company, without a reciprocal favor from Trump. Yet it is clear that China is the USA’s most powerful rival for world dominance.

 

An example of Chinese intentions is China’s role in the IMF. The key to America’s international dominance is the US dollar as the world’s reserve currency – at much greater risk now due to the huge national debt of the US, which is secured by nothing but the US promise to repay.  .

 

The immensely important threat to the US dollar is Christine Lagarde’s International Monetary Fund (IMF) which is promoting its Special Drawing Rights (SDR) to replace the US dollar as the world’s reserve currency. This strategy became viable when the Obama administration withdrew its veto and China’s status in the IMF was upgraded to equality with the United States This is the most dangerous and immediate threat of them all, because the crash of the dollar could initiate a catastrophic inflation in the USA.

 

Quite a weekend!

 

© Richfield Press, Ltd. 2018 (All rights reserved)


Leave a Reply