Tag Archives: China

Meanwhile Back With My Soy Beans and an Orange Blossom Who Can’t Shoot Straight

So, here’s from the Farm Report:

Soybeans are lower, breaking the support line from their three-day rally overnight. Traders will continue to scour today’s export data for clue on how foreign buyers are responding to the bargains created by Chinese tariffs. Sales are expected to rise after disappointing results last week. Vegetable oil markets in Asia were lower today, losing around a fifth of a cent per pound.  September soybean oil futures in China fell to 36.844 cents and September palm oil futures in Malaysia were at 24.473 cents.

and on soy beans in particular

If production doesn’t swell too much, November futures may try to hold the $8 level into the August report. USDA put the bottom of its average cash price for the 2018 crop at $8, a level already reached in many local markets around the country. It’s still a $2 climb back to profitability. But most growers appear to have priced a good chunk of their expected production when offered a good price this winter and spring.

Hold this thought — $8.00 per for soy bean farmers or — it’s a really bad year down on the farm. “USDA’s July 12 monthly report put a number on the lost revenue farmers face: $325 million in new crop sales. That number is based on the amount the agency lowered its price range for crop, 75 cents a bushel.” [WSR]  Soy bean prices are about $8.55, nearly a ten year low. [CNN money]

All right, it’s not that I am in the soy bean business. It’s not that I expect ANY reader of this blog to have any more connection to soy beans than the occasional purchase of soy milk.  It’s that the little beans are a metaphor, an anchor, a data point, to watch the inexplicable economic idiocy of the current administration ensconced in the Oval Office.

Those slap dash, ham-fisted, wild west, off the cuff, distributive bargaining ploy, grandiose threats and counter threats being on offer from the mis-administration in lieu of any real coordinated trade strategy and policy have real world consequences for real world people — people like Iowa soy bean farmers who can’t take the hit if soy bean prices drop below $6.00.  Did we notice all those “ifs” and assumptions in the USDA pricing report?  Like automobile manufacturers in South Carolina who don’t have to take a hit if moving export production to friendlier climes will put money back into their bottom lines.  Like household appliance manufacturers who thought tariffs were such a lovely idea when they were on Samsung and LG, but on steel and aluminum not so much.

We have a *President who can’t get to “yes.”  He couldn’t get to “yes,” on a health care bill and ended up with a bill he didn’t want.  He couldn’t get to “yes” on a DACA bill, and no one’s ended up with anything at all.  He couldn’t get to “yes” on immigration policy, and ended up with a court order to reunite families in which he, in all likelihood, cannot make yet another deadline.  He can’t get to “yes” on NAFTA terms with Mexico and Canada.  He can’t get to “yes” with Asian regional trade and commerce agreements.  He just can’t get to “yes.”

My way or the highway distributive bargaining works when I want to purchase a vehicle and there are 15 dealerships in a 50 mile radius.  As noted before, the bottom line is the “walk away” point. However, there is no other China, no other Mexico, no other Canada, no other European Union, no other United Kingdom, no other Germany, no other Japan, no other France, no other Brazil.  There is no Walking Away point because there is no other place to walk to.

The price of soy beans (or cars, refrigerators, beer cans, or washing machines) cannot be determined by simply yelling at the dealer, threatening to bludgeon him with penalties,  loudly pronouncing another salvo of letters to the editor about their poor service, and later threatening to sue for ‘false’ something or another.  We have a global economy based on supply and demand principles which Orange Blossom pretends to understand, but which he provides scant evidence thereof.

And NOW he wants to weigh in (at over 239 pounds) on what the Federal Reserve should be doing with interest rates!  [CNBC]

Will someone, anyone, please take him down to that portion of the White House where the last evidence of the fire set by British troops on August 24, 1814 remains, lock him there, quietly close whatever doors are behind him — or at least make him SHUT THE H___ UP?

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And Then Helsinki Happened

Nothing happened yesterday in Helsinki, Finland, which offered anyone any hope for a more peaceful world, a world wherein the behavior of Russia will be restrained from — shooting down civilian aircraft, from invading neighboring nations, from attacking the democratic institutions of free nations, from poisoning and killing people in the United Kingdom, from supporting other egregious regional dictators, from assassinating journalists, from fomenting disorder in western democracies and western democratic institutions both economic and military.

What does Putin want? Does he want to take back control of the Baltic nations? To make further incursions into Ukraine? To increase the influence of the faltering Russian economy?  To fly the Russian flag — physically and metaphorically over the world camouflaging the fundamental weakness Reagan recognized; Russia as a third world nation with a first world military.  Whatever Putin wants, whatever goals he wishes to achieve, he has a willing tool — a useful idiot? an unwilling accomplice? a willing foil? — in the President of the United States of America.  We can rationally assume Mr. Putin wants more than just a press conference with an obsequious President.

There will be many commenters who can provide context and additional information about the geo-political ramifications of the Debacle in Helsinki, some have already weighed in.  I’m going to retreat to my comfort zone — my soybeans if you will — and look at the debacle from that narrower perspective.

Russia’s economy isn’t even in the same ball park with the United States and China.  The US has the world’s largest GDP,  (pdf) China has the second, then it’s downhill.

GDP ranking 2017

Notice that Russia isn’t in the top five, it isn’t even in the top ten; it’s number 11 on the 2017 wold bank rankings.  If we were looking to obvious alliances to maximize economic benefits the US and China have the most to gain by cooperating.  We have the top two economies, by far and away the most powerful economic engines in the world.   Yes, we have differences — intellectual property rights issues in particular — but given the inter- connectivity of modern manufacturing, logistics, and capital, cooperation will get both countries ahead of what they could accomplish singularly.  So, what does the current mis-administration do? Assault the EU and slap trade penalties on China.  So, this is reported this morning:

President Trump is inciting a trade war, undermining NATO and painting Europe as a foe. It’s no wonder, then, that the European Union is looking elsewhere for friends.

On Tuesday in Tokyo, it signed its largest trade deal ever, a pact with Japan that will slash customs duties on products like European wine and cheese, while gradually reducing tariffs on cars. The agreement will cover a quarter of the global economy, and is the latest in a string of efforts either concluded or in the works with countries like Australia, Vietnam and even China.

Now, look back up to the ranking list.   Then, the article continues:

While the president was threatening to rip up the North American Free Trade Agreement, the European Union was putting the final touches on a free-trade pact with Canada. It took effect late last year.

Europe also reached a deal in principle with Mexico to update an existing free-trade agreement, one that should be finalized by the end of the year. Accords with Vietnam and Singapore are going through the final stages of approval.

Lovely, nothing like spurning all the girls at the dance and then wondering why one is  rapidly becoming the world’s wall flower.  So, we’re throwing in our lot with the Russian economy? Why?  The *President may call Russia a competitor, but I can call my dachshund a rottweiler too, all to the same effect. [WBUR]  And, there’s this observation to contemplate:

Two other GDP comparisons are illustrative of Russia’s economic weakness. Its GDP is barely more than that of South Korea, yet South Korea’s population is slightly more than one-third of Russia’s. In effect, the South Korean people are three times as productive as the Russians.

The GDP of the European Union (EU), which Russia is aggressively trying to undermine, is 11 times greater than Russia’s GDP even though the EU has only three-and-a-half times as many people as Russia. Like the South Koreans, the EU population is three times as productive as the Russians.

[…]

In international trade, Russia does not amount to much other than as an energy exporter and, increasingly, selling wheat to China. Ranking just 16th among the world’s exporters, in terms of dollar value, Russia’s impact on global trade is minuscule compared to China or Germany despite its substantial oil and natural gas exports.

On a per-capita basis, Russia is even more deficient as an economic competitor. In 2017, Russia’s per-capita GDP was under $11,000, less than one-fifth of U.S. per-capita GDP and on a par with Turkey and Romania.

Russia’s economic shortcomings long predate the sanctions imposed on it by the United States and other countries. Its economy is hardly a first-class performer for its citizens due to its weakness. In fact, they are not faring well.

In short, Senator John McCain was correct in observing that Russia is a gas pump masquerading as a country.  If someone can take a look at that GDP ranking list and explain to me — in rational terms — why the US would pick fights with Mexico and Canada, with the European Union, with the UK, with China, and then cuddle up to a “gas pump masquerading as a country,” please do so!

In addition to statements being constitutionally deplorable, militarily insane, and morally reprehensible, Orange Blossom added a large dollop of unadulterated economic IDIOCY.

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The Taiwan Call: There’s a message in here somewhere

trump tie scotch tape It’s amateur hour in Washington, D.C.  Not just for the Trumpster’s transition team but for the Beltway Media too?  45 years of foreign policy precedent just got reversed, and the punditocracy doesn’t seem to understand that the Orange Foolious isn’t thinking in terms of national issues. Personal ones perhaps, but national – not so much.

The Reagan administration understood; the GHW Bush administration understood; the GW Bush Administration understood – but his Republican version hasn’t grasp the finer points of international diplomacy, perhaps not even some of the more blatant ones to date.

There is really NO reason for having three different answers to the same question (Why did you take the call?) in today’s world.

Personal issues, perhaps:

“Weeks before President-elect Donald Trump’s controversial phone call with Taiwan’s president, Tsai Ing-wen, a businesswoman claiming to be associated with his conglomerate made inquiries about a major investment in building luxury hotels as part of the island’s new airport development. Weeks before President-elect Donald Trump’s controversial phone call with Taiwan’s president, Tsai Ing-wen, a businesswoman claiming to be associated with his conglomerate made inquiries about a major investment in building luxury hotels as part of the island’s new airport development.” [Guardian]

And, we note the carefully phrased disclaimer from Trumpster Aides:

“A representative for Trump Hotels said there had been no authorized visits to Taiwan on behalf of its brand for development purposes, nor are there any active conversations.”  [WSJ]

Humm, no “authorized visits” and no “active conversations.”  This is interesting verbiage because from the same WSJ article we find:

“Reached Saturday by The Wall Street Journal, Ms. Chen, who is also known as Charlyne Chen, said she’s not a Trump employee, but has worked as a promoter and salesperson of real estate properties in Las Vegas and has a letter stating that she is a “sales ambassador” for Mr. Trump’s company.

She said the meeting with Taoyuan’s mayor to discuss the Taoyuan Aerotropolis project was arranged by former Taiwan Vice President Annette Lu, whom Ms. Chen said is a friend who had hoped to bring the Trump brand to Taoyuan, where she had previously served as magistrate. She said the meeting took place in September, “way before” Mr. Trump’s election, and talks about any project are at a “very, very early stage and there has been zero details.”  [WSJ]

Thus we are now in the realm of – What’s an “authorized visit?” And, what’s an “active conversation?”   It seems there is another lady in the mix:

Anne-Marie Donoghue, who identifies herself on her Facebook page as a Trump Hotels Asia sales director, posted a photo from a visit to Taiwan this fall, saying that she was in Taipei and enjoying the trip. “Work trip but it has been so fun!!!” [WSJ]

It’s not “official” but there’s a “sales ambassador” involved?  It’s not “active” but there have been two individuals involved in “work” on behalf of the Trumpster’s brand in Taiwan?  One of which was having “so much fun!!!”

Deniability is a lovely thing but it doesn’t work when back door dealings are posted on social media and published in the business press.

First it was Argentina, now it’s Taiwan… the message is that the Orange Foolious is still “selling his brand,” and quite possibly selling out American interests.

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Meanwhile: What We Aren’t Talking About

World Map I have this miserable feeling that what is purported to be a debate including foreign policy on October 19th in Las Vegas, NV will devolve into a session about emails/Benghazi… both manufactured outrages which are GOP specialties.

Meanwhile in our very real world there are some important issues which are not being addressed, not being explained for the American public.  Here are a few —

Greece.  If we thought this issue of a European Union country in dire financial straits as over – think again.  There is currently more happy talk about the restoration of the Greek economy, but yet more bail out money is in the offing.  Another $3.1 billion loan has been authorized to the government.

“Greece’s debt stands at about 180 percent of Gross Domestic Product and the International Monetary Fund has been arguing that the primary surplus targets set by Athens’ creditors to secure the massive rescue loans will prove too tough to respect. It remains unclear whether the IMF will take part in future loans without some form of debt reduction, something the 19-nation eurogroup is reluctant to discuss, given the many billions already spent on keeping the country afloat.” [USNWR]

In other words the economic/foreign policy questions related to the Greek economic crisis and its implications hasn’t been resolved, it’s merely been postponed.  I’d like to hear candidates discuss how the US should address problems created in the Greek/Eurozone economy by the aggregation of debt and the reluctance of bond holders to reduce their interest rates or renegotiate the rates. I don’t think we’re going to hear it.

China. There will probably be some references to China in terms of US trade, and the balance of trade between the US and China – but let’s guess that there will be radio silence on the freedom movement in Hong Kong.  The democracy movement is still alive in that area, the vestiges of the Umbrella Revolution survive, but the delicate balance of interests has implications for US policy in the region.  Will the fate of the Umbrella Revolution be referenced in foreign policy debates? Probably not.

South China Sea.  Here’s a situation fraught with consequences for the region, and for US interests.  China seeks to expand its influence in the area, the position of the Philippine government remains unclear.  China has made inferences to US ‘intervention’  in the area, and has told New Zealand to ‘butt out.’ [NZHerald]  Meanwhile, Indonesia has made a show of force in the South China Sea, and Japan is joining US patrols.  Singapore has expressed concern over the safety of fishermen and coast guard patrols, even though it is not a claimant in any territorial disputes.  Explication? Again, likely not.

Democratic Republic of Congo.  The election disputes turned deadly in late September.  President Kabila’s term is supposed to end in December, but elections have been put on hold, precipitating the violence.  The Vatican has weighed in, calling for a peaceful resolution of the election issues.  The US State Department issued a revised travel warning for the country five days ago.

“The potential for civil unrest remains high in Kinshasa and other major cities. In addition armed groups, bandits, and some elements of the Congolese armed forces continue to engage in murder, kidnapping, and robbery in a number of areas of eastern DRC. Very poor transportation infrastructure throughout the country and poor security conditions make it difficult for the U.S. Embassy to provide consular services anywhere outside of Kinshasa.” [USSoS]

Is the US prepared to react to continued civil unrest in the Democratic Republic of Congo?  At what point does the US express its position, and make it clear we’d support UN initiatives to secure a peaceful transition of power?  We aren’t likely to find out during campaign season.

Turkey.  The coup attempt in Turkey created problems for US – Turkey relations.  [Fortune]  The relationship was complicated in the first place, and isn’t likely to get simplified any time soon. [WaPo]   Subtopics include our relationship with the Kurds, our relationship with the Erdogan government, our relationship with NATO.  And then there are Pentagon discussions about arming the YPG.  The situation is further complicated by talks between Russia and the Erdogan government over a pipeline.  

Russia and Eastern Europe.  Two days ago the Polish government expressed its disapproval of Russian missiles being deployed in Kaliningrad, in an area bordering Poland and Lithuania. [Reuters]  The Estonians weren’t pleased by the moving of the Iskander-M missiles either. [Guardian] The situation became more ‘touchy’ with Estonian charges of Russian incursions into Estonian air space. [EuOnline]  These aren’t issues to be minimized especially in light of Russian activities in Ukraine.

Putin is now claiming that Russian was “forced” to defend Russian speakers in eastern Ukraine, “Putin had denied sending troops into Crimea, before annexing it in 2014, and issued similar denials regarding Donbas. However, he has issued statements seemingly admitting to armed Russian presence in both regions since.”   Said Putin, stating the obvious.  The situation is rendered more tenuous as Germany is downplaying the idea of Four Way Summit on Ukraine. [Reuters]  There are talks scheduled for this Thursday and Friday, but evidently not much hope for any progress toward ending Russian incursions or the ‘separatist’ movement in eastern Ukraine.  The fighting continues.  

Without a better and fuller discussion of foreign policy issues in the political arena, Americans may have to live up to the old saw, “War is God’s way of teaching Americans geography.”

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Trump’s Economic Siren Song

Siren Song The words “Trump” and “plan” should really never be used in the same sentence. Witness the speech to the Detroit Economic Club.  Here’s what the Reuters News Service gleaned from Trump’s speech:

“Republican presidential nominee Donald Trump on Monday proposed tax breaks for working families and for corporations as he outlined economic plans in an effort to regain momentum lost during a damaging spate of controversies.

Trump said his plan would include imposing a temporary moratorium on new federal regulations and a reduction to the tax burden on working parents with childcare costs.

He proposed cutting the number of federal income tax brackets from seven to three and reducing the top rate to 33 percent from 39.6 percent. He had previously said he would drop that rate to 25 percent, an idea many tax experts said would dramatically reduce government income and balloon deficits.”

First, notice in the second line of the article quoted above that Mr. Trump “outlined economic plans,” NOT offered any specifics —  those will come later, just as every other suggestion made by the Republican nominee will come later, if at all.  If ever.

The Rich Get Richer and 88.7% Get Nothing

Secondly, those “tax breaks for working families” aren’t for all working families just some of them – even the Wall Street Journal noticed:

“It wasn’t clear how such a tax break might be structured and whether it would be available to tens of millions of families that don’t pay income taxes because they have lower incomes. Making child-care expenses fully deductible would provide much larger benefits to the wealthiest families that have larger tax bills.”

Nice.  However, we can clarify this to some extent.  The Tax Policy Center offers this information about working families, tax bills, and who needs the help the most:

“Only 11.3 percent of households in the bottom income quintile will pay federal income tax in 2015. In contrast, 59.3 percent of households in the lowest income quintile will owe payroll taxes. Combined, 60.3 percent of households in the lowest income quintile will owe federal income or payroll taxes.

In many cases, low-income households owe no income tax. That’s because, in 2015, a married couple with two children can exempt $28,600 from income using the standard deduction and personal and dependent exemptions. Generally, smaller amounts can be exempted from smaller households and larger amounts from larger households.”

The arithmetic is simple. Only a bit over 11% of households in the bottom income quintile owe federal income taxes – and these are the ones which would benefit from Trump’s “deduction.”  What the other 88.7% of the families in that quintile get from Mr. Trump’s “plan” is nothing.

Deregulation

We’ve heard this song before.  More specifically, a campaign aide told the Wall Street Journal, this means Trump wants to slash EPA regulation on carbon pollution, and halt the preservation of wetlands and waterways.  Nothing new here.  It’s the same GOP rhetoric of old, conflating all regulation with EPA and conservation rules.  This, while 1/3rd of the residents of California still lived in areas as of 2014 which did not meet Clean Air standards. [LA Times]

Reporters slid by deregulation of the financial sector (read: Wall Street Casino) However, this past May the Republican candidate called for dismantling the Consumer Finance Protection Bureau, and reversing the regulations in the Dodd Frank Act.  [Fortune]  There’s nothing new here either, just more generalized GOP talking points.

Jolly Little Trade Wars?

“At the same time, Mr. Trump has promised to aggressively use executive power to renegotiate trade agreements, to label foreign countries as currency manipulators and to apply tariffs and other penalties to trading partners.”  [WSJ]

Lovely.  First, China is our Number One import partner.  Mexico is second, and Canada third.  [Census FT]  We’ve imported $212.2 billion worth of stuff from China thus far this year; $145.2 from Mexico; and, $137 billion from Canada.  Not surprisingly these three are also our top three export partners, in order: Canada, Mexico, and China. [Census FT] Is Mr. Trump truly suggesting that we get into economic battles with our top three economic partners?  Are we really going to benefit from practicing Hoover-ian Protectionism in relation to our top three partners?

Trump said:

“At the center of my plan is trade enforcement with China. This alone could return millions of jobs into our economy.

China is responsible for nearly half of our entire trade deficit. They break the rules in every way imaginable. China engages in illegal export subsidies, prohibited currency manipulation, and rampant theft of intellectual property. (65 66) They also have no real environmental or labor protections, further undercutting American workers.”

[…] Trade has big benefits, and I am in favor of trade. But I want great trade deals for our country that create more jobs and higher wages for American workers. Isolation is not an option, only great and well- crafted trade deals are.” [Time]

Yes, Chinese manufacturing policies are heinous.  However, what Mr. Trump has on offer IS protectionism and isolation; no matter how politely it’s phrased.   Or how vaguely it’s expressed, as on Trump’s website explanation.  Missing from the Detroit address and the website mentions are the 35% tariffs Mr. Trump proposed last May. [National Review]

Further, Mr. Trump appears to be operating on the happy delusion that simply declaring China to be a currency manipulator will force them to re-negotiate our trade deals.  Not. So. Fast.  Manipulation is in the eye of the beholder.

“Reasonable people can and do disagree about how countries conduct their monetary policies: what price should the central bank fix, or at what pace should that fix evolve. But to label as manipulation the conduct of monetary policy itself betrays a fundamental confusion about the operation and goals of central banks. If Zhou Xiaochuan,governor of the People’s Bank of China, is a currency manipulator, then Janet Yellen is an interest-rate manipulator.” [WSJ]

As is becoming all too noticeable, Mr. Trump’s understanding of the monetary policies involved is essentially shallow. The Wall Street Journal continues:

“Movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages. The exchange rate that matters for trade flows is the real exchange rate, i.e., the nominal exchange rate adjusted for local-currency prices in both countries.

The real exchange rate, in turn, reflects the deep forces of comparative advantage such as technology and endowments of labor and capital. These forces drive trade regardless of monetary policy.”

Sorry, Mr. Trump, it seems as though a bit more sophisticated understanding of exchange rates is necessary – and, no, merely declaring China a “currency manipulator” isn’t likely to do much, and certainly not much in terms of wages for American workers.  It really would do Mr. Trump some good if he’d check out the article by the Dean of the Tuck School of Business at Dartmouth in the WSJ. [ Also WPO Blog, CFR, and then of course there are the Federalists]  Little wonder Republican economists are jumping ship.

Bottom Line Towards the Bottom of the Barrel

It isn’t hard to summarize Trump’s “Economic Plan,” – first, it’s not a plan.  It is an aspirational outline of economic ideas, none of which are anything new. Romney suggested declaring China a “currency manipulator” during his campaign, and the anti-regulation rhetoric goes back to the 1971 Powell Memo. It’s rather more a laundry list of Republican wishes – deregulate, repeal the Affordable Care Act, bash China, and ‘act strong.’   In this, Mr. Trump seems to be unable to differentiate between acting and posturing.  The speech was all pose in bad prose.

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Pulling Representative Heck Slowly Toward Understanding Foreign Policy

SpaghettiRepresentative Joe Heck (R-NV3) is confused about the Obama Administration’s foreign policy.  “I don’t think we have a coherent foreign policy, and that’s part of the problem,” Heck said. “We have not exercised the level of leadership around the globe as we have over the past 20 years. … The world looks toward somebody to kind of set the example. And I don’t think we’ve been setting the example that we have set previously.” [LVRJ]

First there’s a big difference between something which is incoherent and something with which there is disagreement.  The limited engagement portion of what’s lumped together as Obama Doctrine isn’t too difficult to comprehend.  Unilateral force will be used if there is a direct threat to the United States.  That wasn’t too hard, was it?

Indirect threats will be met multilaterally and not necessarily with the use of maximum force in each instance.  If force is to be used, it should be in a very precise way.  [FP] Also not all that hard to understand.  In case Representative Heck is still confused, let’s apply some examples.

ISIL: A direct threat to Americans or American interests. IS attacks threatening Americans and American interests in Iraq, especially in the vicinity of Erbil in Kurdish controlled areas presented a direct threat to Americans in the region.  Response? Air strikes.  So far so good.  IS momentum in the area has been blunted and American lives and interests protected.  Humanitarian aid and the rearming of the Peshmerga forces associated with the mission was augmented by efforts from the British, the French, and the Germans.  Multilateral, targeted, minimal force applied to secure desired results.  What’s confusing about that?  But, what of indirect threats?

Libya:  What should be done in cases of threats to global security? Once again, we find the Administration employing a multilateral approach. In 2011 an effort by the U.S., Canada, France, Italy, and Great Britain (in a coalition ultimately including 19 nations)  coordinated a campaign of air strikes, naval blockades, no-fly zones, and logistical assistance to Libyan rebels. It worked.

Syria: The civil war in Syria presents a more complicated problem for nations which perceive the situation as a threat to global security.  The Assad government has close ties to Russia, and the rebel groups range from small inexperienced moderate elements, to criminal gangs, to extremist groups, to the really extremist groups like ISIS.  Coalitions, alliances, and coterminous realignments and the creation of new coalitions, make this a very fluid situation.  Problem One was to get the stockpiles of chemical weapons out of the game.  Mission accomplished. Last month a Danish ship delivered the last 600 metric tons of chemical weapons to a U.S. ship (Cape Ray) at an Italian port, where the chemicals will be destroyed. [CNN] Multilateral. Minimal use of force (a show of force at one point) with a maximum use of diplomacy, combined with a specifically focused mission.

Calls for arming the anti-Assad rebels is a simplistic response to a complicated problem.  In December 2013 the BBC published something of a roster of Syrian rebel forces for those wishing to keep track of the players.  There’s a coalition now called the Supreme Council of the Free Syrian Army, the good news is that this is a relatively moderate group, but the bad news is that it is composed of some 30 different militias which retain their own operational independence, command structures, and agendas. In short it is a very loosely joined network of independent brigades. Then there is the Islamic Front, another coalition of about seven groups which wants to topple the Assad government and devise an Islamic state.  This is not to be confused with the Al Qaeda or jihadist groups, such as the Al Nusra Front, and the Islamic State.  But wait, we haven’t listed the independent groups such as the Ahfad al-Rasoul Brigades, Asala wa al-Tanmiya Front, or the group often associated with the Muslim Brotherhood in Syria, the Durou al-Thawra Commission.

Now, just who is it that the U.S. might want to arm?  And by the way, Syria is about 64% Sunni, about 20% of whom are Kurds, Turkomans, Circassians, and Palestinians.  The Shia represent most of the other Muslims in Syria, and are divided into three groups: Twelvers, Ismailis, and Alawis.  And then there are the recently discovered by the foreign press —  Yazidis.

Now Representative Heck might want to ask himself: Does he prefer a policy which keeps U.S. interests in mind in Syria by making maximum use of diplomatic multilateral efforts and a minimal infusion of force; or would he prefer getting the U.S. mired in another swampy situation in the Middle East?

If one’s idea of a coherent foreign policy is one of moving in with a maximum use of unilateral force — and with minimal consideration of the consequences — then the Obama Administrations doctrine isn’t going to meet with one’s approval. And, that’s the question which needs to be answered by Representative Heck — If you don’t like a mission specific use of force, applied in conjunction with a multilateral diplomatic and military effort, then what do you want?

The bellicose blustering of the Bush Administration sounded coherent, but ultimately proved to produce incoherent results.  Witness our next example: Iraq.

Iraq: A nation created in the wake of World War I, with significant religious and political internal differences, formerly governed by an intransigent and despicable (albeit secular) dictator, crumbles after Sunni populations in the north and west perceive the Shiite government in the south (Baghdad/Basra) to be ignoring or damaging their interests. Kurdish populations in the northeast see the Shiite government as inimical to their interests, and the compliment is returned by the southern Shia.

The removal of ISF military leaders who are Sunni or former Baathists by the Maliki government creates a security force (army) of questionable utility.  The question is answered as the Iraqis try to form a new government in July-August 2014, and  ISIL moves from Syria into ‘friendly’ territory around Mosul.  ISIL (IS) attracts support from local Sunni groups alienated by the Maliki government, and radicals from surrounding territories.

The fractures in the Iraqi political system, fully identified in a policy review with General Odierno in 2010, are visible today. [FP]  Our goals as set forth in 2010-2011 are to (1) encourage reconciliation, (2) help develop a professional civil service, (3) promote a healthy relationship between the parliament and the executive, and (4) to support the reintegration of refugees and displaced persons.  [FP]

Recent actions by the Obama Administration have sought to get the Yazidis to safety (a multinational effort), re-arm and supply the Peshmerga (a multinational effort), and get the Maliki government in the rear view mirror in order to restore the government and the Iraq Security Force into working order.  Is this too complex for Representative Heck to ponder?

How about we set an example of using multinational cooperation to  diminish threats to global security by applying the least force appropriate in the most multilateral format possible?  Is that too difficult to understand?

Carry a Big Bull Horn and Do What With It?

But wait, Representative Heck’s apprehensions go even further:

“Heck said a lack of follow-through on U.S. threats makes America appear weak. He didn’t cite Syria, but President Bashar al-Assad suffered no serious repercussions for using chemical weapons against his own people.

“Our adversaries need to know that if they do X, then the U.S. is going to do Y,” Heck said. “And there has not been that consistency. That’s why you see actors, not only in the Middle East, but also Russia and China, push the limits.”  [LVRJ]

Breathe.  Did Representative Heck miss the part where the Danish ship met the U.S. ship in the Italian harbor — and Assad doesn’t have his chemical weapons anymore? The serious repercussion is that Assad can’t use his chemical weapons on his own people anymore because he doesn’t have them.  He’s down to barrel bombs.

Breathe, and let the breath condense on the crystal ball Representative Heck seems to have about the intentions and actions of foreign parties. If we tell people we’ll do Y if they do X — What are X and Y?

Let’s explore some of the implications of Representative Heck’s simple formula, in the application of the administration’s doctrine: Indirect threats will be met multilaterally and not necessarily with the use of maximum force in each instance.

Putin moves against Ukraine.  There is no direct threat to the United States therefore we will address the threat multilaterally and not necessarily with maximum (military) force.  Multilateral action is messy, can be slow, doesn’t make for dramatic headlines, and certainly isn’t conducive to the bellicose bluster approach. However, in this instance it’s a far better approach.

For example, the U.S. does about $160 million in trade with Ukraine, [Cen] by contrast Germany’s trade with Ukraine is estimated at $10 billion. [Siemens pdf] If economic interests are placed in the “threat” category then Germany has far more at stake in the problems between Ukraine and Russia than we do.  So do China, Belarus, Poland, Turkey, Italy, and Hungary. [Bloomberg]

But, but, but, sputter the critics, Putin moved into Crimea and we didn’t do anything.  Come to think of it, neither did the Ukrainians — possibly remembering Crimea was attached to Ukraine in 1954 as a matter of Soviet administrative convenience, and when the Soviet Union collapsed in 1991 Crimea negotiated terms which allowed it to be an autonomous republic. [AJAM]

While the Russians (Putin) continue to threaten interference with Ukrainian sovereignty, the latest efforts have been rebuffed.  The Russians are putting out the story that the destruction of an armored column is a fantasy — the Ukrainians have another version of events, one in which they destroyed at least half of it. [HuffPo] Meanwhile, the notion of sending arms to Ukraine sounds a bit like carrying coal to Newcastle — at one point Ukraine exported arms to Russia, included in a total of $1.3 billion in arms sales each year. [Bloomberg]

Perhaps there’s not enough drama in the careful ratcheting up of economic sanctions to cool the blood of those who, like Representative Heck, are unable to comprehend the current foreign policy direction of the Obama Administration?  However, it’s not like the Russians didn’t get some warnings as the sanctions were slowly increased until they started to hurt Russians in their grocery stores. [USAT]  Yes, Mr. Putin, if you continue to threaten (X) Ukraine, the western nations will (Y) hit you in the grocery baskets.  Worse still for Mr. Putin’s plans, the Germans, who have taken their own economic interests into consideration during the maneuvering, are now taking a much stiffer stance. [NYT]

Now, what part of Indirect threats will be met multilaterally and not necessarily with the use of maximum force in each instance. isn’t clear?

China? It’s difficult to tell what Representative Heck might be talking about, other than a generalized appeal to the old Yellow Peril line of jingoism.  However, let’s give him the benefit of the doubt and assume that he knows we’re monitoring what is going on between the Philippines, Vietnam and the Chinese regarding the South China Sea. [Reuters] And, that’s what we’re doing — monitoring to see if there has been or will be a de-escalation of tempers in that region.  We will be working with Australia, the Philippines, Vietnam, and China to resolve differences — meaning we will adopt the position that Indirect threats will be met multilaterally and not necessarily with the use of maximum force in each instance.

Perhaps Representative Heck does understand that the Obama Administration will meet indirect threats with multilateral efforts and not apply the use of maximum force in each instance — then what is the substance of his criticism?  We don’t “sound” strong enough? What does that mean? We don’t “look” strong enough? What does that mean?

Representative Heck may be indulging in theater criticism — should the President’s voice have been louder? Deeper? Should the wording of policy statements have been more aggressive? Should aggressively worded policy statements be issued no matter what our friends and allies may say?  He may assert he doesn’t agree with the foreign policy direction of the Obama Administration, but surely he can’t mean he doesn’t understand it.

Never one to be considered a softy, Gen. George Patton offered this pithy bit of advice on leadership:

“You young lieutenants have to realize that your platoon is like a piece of spaghetti. You can’t push it. You’ve got to get out in front and pull it.”

President Obama seems to have received and understood that message, Representative Heck must still be working on it. Pull too hard on spaghetti and it breaks.

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Filed under Foreign Policy, Iraq, Nevada politics, Politics, Republicans

Romney’s China Bashing Hot Air Trial Balloon

The latest offering on the campaign trail from the right appears to be a surfeit of China Bashing — with another First Day item added to Governor Romney’s to-do list: Declare China a currency manipulator.  Sounds rather ‘forceful’ doesn’t it? Sounds all ‘leadershippy?”  It’s a bad idea and here’s why — from a bastion of conservative print, Barron’s:

“To declare China officially a currency manipulator risks launching the 21st century equivalent of the Smoot-Hawley protective tariff passed in 1929, one of the key factors that made the Great Depression “great” in the worst sense of the word.”

In other words, if you advocate protectionism then a declaration of China as a currency manipulator is your policy of choice.  Why? Because the Chinese, rather than allowing  surplus dollars from its exports to the U.S. to push up the value of the yuan, buys the dollars and re-invests them in the U.S.   When did Governor Romney decide that foreign investment in the U.S. was a bad idea?

Secondly, it’s not that the yuan isn’t appreciating.  In fact, the value is going up.  The Chinese currency is currently trading at 6.254500 [CET] as of October 21, 2012.  There’s a graph indicating the trend upward for American currency in the past year:

Click on the graphic for additional information.    How about a two year perspective? What would that illustrate?  There’s also a graph showing the appreciation of the Chinese currency relative to the American dollar for the last two years.

Perhaps someone in the Romney campaign would care to explain WHY, when the yuan is appreciating relative to the American dollar — and has been generally for the past two years — it’s time to declare China a nefarious currency manipulator?  This makes absolutely no sense whatsoever, unless Barron’s is correct, and the Governor wants to risk  a Smoot-Hawley Tariff protectionist brawl in foreign trade.

Yes, the Chinese have the reins on the value of their yuan, but as the second graph illustrates they’ve been allowing it to steadily appreciate relative to the value of the dollar.   When did Governor Romney decide this was an unhelpful trend?

There’s another problem with China Bashing as it is currently being practiced. They are also importers.   The following graph from FRED (Federal Reserve) shows the increase in Chinese imports — which in case we’d forgotten means American JOBS.

So, when did Governor Romney decide that facilitating policies intended to  increase our exports TO China was a bad idea?   Returning to the issue of the relative value of the two currencies, the yuan and the dollar, for a moment — the chart above doesn’t indicate that the yuan is as significantly undervalued as previously believed.

One writer at Forbes opines that the declaration of China as a currency manipulator will be on Governor Romney’s list of things to drop like a hot rock on his  Day One.   It probably wouldn’t be a bad idea to drop it immediately, and to release the hot air from this thoroughly political hot air balloon.

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Filed under 2012 election, Economy, Foreign Policy, Romney