Thread by @ambassadorbrief

Weekly Geopolitical Brief

Three stories:

G7: @ColinKahl foreshadowed Trump hates it as (i) its substantiveness exposes his shallowness(ii) there are no parades (iii) it’s multilateral & he can’t play with others & (iv) he has to engage with democratic leaders & he likes despots

And that’s how it’s played so far: per @ishaantharoor “divisions between Trump and his counterparts…flared in private”. Predictable fault lines have included: climate change, trade wars, Iran, and the possible readmission of Russia to the group.

WaPo further reported that leaders were “disappointed during a whiplash [2nd] day of mixed signals”. And some European officials said that they are “beginning to fear that nearly any substantive coordinated work with the US might be impossible in the Trump era.”

Trade war: Trump announced that he will raise tariffs on $250b of Chinese exports from 25% to 30% on Oct 1 & tariffs on the remaining $300b from 10% to 15% - though about half of that $300b has been delayed until Dec. 15 to avoid hurting Christmas shoppers.

Further, Trump via Twitter, “hereby ordered” US companies to “immediately start looking for an alternative to China”. @LizaGoitein explained that Trump can’t do this via Tweet. “But unfortunately, he seems to have discovered” an Act that lets him coerce US firms.

She continued: The International Emergency Economic Powers Act, is “one of the President’s most potent legal weapons—with enormous untapped potential for abuse”. It allows him to declare a “national emergency” – the existence of which “rests on the President’s say-so”.

She continued, “once he declares the emergency, POTUS can take sweeping economic action against persons or entities that he designates. The law expressly allows him to block any financial transactions between US persons/entities and designated persons/entities”.

Japan-South Korea spat: in the latest escalation, the two US allies have nixed an intelligence sharing agreement. @MiraRappHooper explained that the pair “have a long history of troubled relations born of colonialism & wartime atrocities…& these tensions resurface periodically”.

She continued: proximate causes this time included: (i) a re-ignition of wartime tensions (ii) trade disputes (iii) a fundamental mis-match between a left-leaning [South Korean] government & right-leaning Japanese one & (iv) obvious American disengagement.

Costs of the spat include weaker defence & less co-ordinated deterrence. It’s “a win for Kim Jong Un, the CCP, & anyone else who wants weaker US alliances”. And, it “was completely foreseeable & totally avoidable”. Fortunately, it may be reversable under a competent US admin.

Three thought-provoking articles:

.@thomaswright08 argued that it was one thing for Trump to float the cockamamie idea of buying Greenland. But was quite another to use leverage & impose costs on Denmark in pursuit of that goal— & make no mistake, cancelling his presidential visit did just that.

Wright continued, this act marks the defection of Trump to the autocrats: “this is the kind of thing the Russians and the Chinese do. It is territorial revisionism—the use of national power to acquire territory against the desire of its sovereign government and its people”.

.@DeanBaker13 argued that the media get the US-China trade deficit narrative wrong. “For some reason the media always accept the Trumpian narrative that the large trade deficits the US runs with China…were the result of [China] outsmarting our negotiators”.

But this “is not a story of China tricking our stupid negotiators,it is a story of smart negotiators who served the people they worked for well”. Large US corporations which benefited from offshoring jobs to China & increased profits had “little reason to be unhappy”.

He continued: “it would be great if trade reporters could get a bit more serious and give some thought to winners and losers from trade policy and not pretend that everyone in the US is in the same boat”. Instead, we just get this “jingoistic rally around the flag against China”.

.@Nouriel argued that there are three negative supply shocks that could trigger a recession by 2020: (i) the US-China trade & currency war (ii) the US-China tech cold war; and (iii) an oil shock from conflict with Iran.

He continued: “all three of these potential shocks would have a stagflationary effect, increasing the price of imported consumer goods, intermediate inputs, technological components and energy, while reducing output by disrupting global supply chains”.

Three events to watch in the near-future:

Italy: Per Stratfor, after the collapse of the Five Star Movement (M5S) / League coalition, and the resignation of PM Conte, there are three options going forward: (i) M5S form a new coalition with the Democratic Party – as both have an incentive to avoid an election.

(ii) An early general election: here, the League would likely do well, then reach out to like minded parties and form a right-wing coalition; & (iii) reconciliation between M5S and the League: this is the least likely – due to deep animosity and mistrust.

Trump goes to Poland: @melhoop10 and @DaliborRohac explained that the visit takes place at a “fraught moment”: “Poland is headed into a polarizing parliamentary election. Battles over contentious cultural issues are underway, including LGBTQ rights [&] abortion”.

They continued, “any misstep Trump makes – such as inserting himself into the country’s bitter cultural wars…will turn the partnership between the US and Poland into a partisan issue and do irreparable damage once the government in Warsaw changes”.

Kashmir: @rajeshvenugopal reported that it’s in total shutdown: "valley remains in total paralysis; no shops, no internet, no schools, no phones. Nothing is open...large parts…totally empty…Complete nonsense to suggest life is normal or that Kashmiris accept any of it”.

He continued, there’s also a “saturated military presence. [It’s] the most claustrophobic security force presence [he’s] ever seen in a large urban area. It's absolutely maddeningly oppressive. Soldiers, paramilitaries and police are literally everywhere”.

Soumya Shankar reported “the question is how long Kashmiri anger can be contained”. As long as there are constraints, there will be no protests. It’s like a bottle of soda shaken with the cap tightened. Once the constraints are loosened, there “could be an eruption”.

Thanks as always to everyone who has been liking, retweeting and spreading the word. We are continually humbled by the following we are gathering amongst the world’s leading diplomats, journalists, and thinkers.

Have a great week!

The Ambassador’s Brief Editors