Trade Wars, Romantic Dinners, the Balkans, Pandas — and the Week in Review
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The Global U.S. Trade War. The Office of the U.S. Trade Representative said the US was considering additional tariffs on up to an additional $3.1 billion of European products. The US is also reportedly considering re-imposing tariffs on U.S. imports of Canadian aluminum effective July 1. U.S. senior trade adviser Pete Navarro said the U.S-China trade deal is dead…President Trump tweeted afterward that it is not. The U.S. Ambassador to Brazil said that the US is ready to help Brazil finance its acquisition of 5G technology by sources the US deems “appropriate” – i.e., made anywhere but China.
What does it mean: Well, first and foremost, it means those of us who love Italian olive oil, French cheeses, old world wines, and delicious olives, better get set to pay a heck of a lot more for those goods at the grocery store…if we can even still get them at all once the dust settles. But in all seriousness, this is extremely serious. The U.S.-China Trade War is based on a legitimate strategic concept (even if it is one that we don’t agree with). To put it succinctly: China is a revisionist power challenging U.S. interests that has also benefited disproportionately from free commerce in part because its state-led capitalist system allows its companies to exist without fear of failure because the Chinese government will always be there to backstop them.
The measures the US is taking now – in the midst of a global pandemic and a massive economic crisis, no less – are not about any kind of sober-minded reading of China’s strategic intentions, or anyone else’s for that matter. The US is putting “America First” by declaring a trade war on the entire world. And to what end? The US already got its revised NAFTA agreement with Canada. And it is not clear exactly what the US is going to consider a successful conclusion of negotiations with the European Union beyond a reduction of the U.S. trade deficit with the EU. Meanwhile, the US is trying to convince Brazil that, while the US nickels and dimes its closest allies, it is going to foot the bill for Brazil’s 5G roll-out.
What all of this adds up to is the U.S. emerging as the biggest source of uncertainty, volatility, and unpredictability in the world – and with no end in sight.
Macron and Rutte’s romantic dinner. French President Emmanuel Macron and Dutch Prime Minister Mark Rutte shared a three-hour dinner and a post-dinner walk; France said that the two sides made significant progress, while the Dutch have not officially commented. Meanwhile, the European Central Bank is set to give the German government a proportionality assessment on the Public Sector Purchase Programme, the EU program to purchase government bonds of EU member states on secondary markets.
What it means: A good week for the European Union. Just look at this picture of Macron and Rutte, they seem like they are having a wonderful time (and we confess to being a bit jealous of the mere idea of sitting down in a nice restaurant with an old friend to discuss the state of the world). And yet, the problems all still remain. Macron needs Rutte to help integrate the Frugal Four into the European Union’s recovery plan, and more broadly, into supporting a more unified and coherent European sovereignty and identity. One dinner, however friendly, is not going to accomplish that. As for Germany: it is good that the ECB is going to nip the German Federal Constitutional Court’s (FCC) concerns in the bud, but that does not change the fact that the FCC set a dangerous precedent when it became the first national court to overrule a European Court of Justice ruling in the EU’s history.
To see what is at stake, look no further than the results of this poll done by the European Council on Foreign Relations. The simple upshot is that while Rutte and Macron dither, and while European lawyers and courts make their rulings, increasing numbers of Europeans are of a mind that the EU has been irrelevant in responding to COVID-19 and not lived up to its responsibilities. (To cite one brief example: 63 percent of Italians said the EU had not lived up to its responsibilities and 40 percent said the EU was irrelevant.) The silver lining? That almost every European country said the crisis had demonstrated there was a greater need for European cooperation – 77 percent of Italians agree on that! This is an immense opportunity for the EU – and it is not likely to get another one.
Making sense of the Balkans. Last week, the US announced it was inviting officials from Serbia and Kosovo to the White House so it can mediate negotiations between them. The day before
Kosovo’s Prime Minister was supposed to leave, he was forced to cancel his trip because Kosovo’s President, Hashim Thaci, was indicted for war crimes and crimes against humanity for his behavior while serving as a commander of the Kosovo Liberation Army in the late 1990s.
What it means: Last week we made a tongue-in-cheek joke that this was not going to go well. After all, the Trump Administration’s track record in peace talks, whether in regard to North and South Korea, Ethiopia and Egypt, or Israel and Palestine, is not particularly good. We had no way of knowing that this diplomatic initiative would collapse this fast, though. Did the US really have no earthly clue that this might happen? Perhaps, after all, the US did ignore years of previous EU mediation on the Kosovo-Serbia problem when it invited the leaders of both sides of the White House to a tête-à-tête.
Even so: The Balkans is an unstable region sitting on the powder keg that is Serbia-Kosovo relations. Turkey, the EU, Russia, the US – all have interests in this part of the world, and even without these powers, the unsettled scores and historical animosities that defined the Balkan Wars in the 1990s, as well as the frustration at the amount of time is taking for these countries to join European institutions like NATO and the European Union, is always simmering beneath the surface. It is not clear if the meeting is postponed or simply canceled, but make no mistake, the US was playing with fire here, and if a canceled meeting is the worst that comes of it, that’s a good thing.
The India-China border spat remains unresolved despite talks between top-level commanders and statements from the respective governments endorsing de-escalation.
Chinese President Xi Jingpin congratulated the Netherlands on the birth of a giant panda cub in a Dutch zoo, describing the cub as “a beautiful fruit of China-Dutch friendship,” which just goes to show that maybe what the world really needs is more pandas.
That U.S.-Poland photo op in the White House might not have gone as well as the media said it did.
North Korean media reported that Kim Jong-un canceled military actions against South Korea; North Korea’s intentions remain completely esoteric to the outside world.
There is now a locust plague in South America; thanks 2020. Reports suggest that its impact should be mild, but even so, we’d keep a close eye on this.
Singapore spurned Huawei and said it was going to have Ericsson and Nokia built its 5G networks.
Libya’s Government of National Accord, along with Somalia, Qatar, and Tunisia, expressed reservations about an Arab League declaration endorsing Egypt’s “Cairo Declaration” aimed to create Egyptian-approved peace in Libya.
Canada officially charged the two Canadian citizens it has been holding for over a year with espionage.
Egypt published the letter it sent to the U.N. Security Council denouncing Ethiopia’s unwillingness to negotiate with it on the Grand Ethiopian Renaissance Dam.