Sanctions and Kleptocrats

5/22: President Donald Trump said the U.S. is reconsidering penalties against Chinese telecommunications maker ZTE Corp. as a favor to the country's president Xi Jinping, prompting members of Congress to warn him against softening the punishment.

"The president asked me to look into that and I am doing it," Trump told reporters at the White House.

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6/20: President Trump urged Republican lawmakers not to scuttle his administration’s efforts to help the Chinese telecom firm ZTE, warning them that his reprieve for the company was part of a broader geopolitical negotiating strategy.

Mr. Trump and Republican lawmakers met at the White House to discuss the fate of the company, which had been banned by the Commerce Department from buying American products this year as punishment for violating American sanctions. The administration has since lifted that ban at Mr. Trump’s request and over the objections of lawmakers, who voted Monday to reinstate the penalties on ZTE.

Even though his own Commerce Department had identified ZTE's sanctions violations as serious, deliberate and serial, Mr. Trump ordered the Department to water down the penalties, which would have put ZTE out of business, after President Xi Jinping of China personally lobbied him to reconsider.

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Well.  How 'bout them apples.

And here I'd been wondering how the U.S. got Russia and China to use their Security Council seats not to veto but to affirm tough sanctions against Iran and North Korea; thinking that the Obama and then Trump Administration's diplomats deserved congratulations.

I'll bet Putin and Xi feel they deserved more than that.  And now that Trump has redefined (sc. abolished) the whole concept of government ethics, how can it be long before they start getting it? Lunch at Scarpetta, ambassadorial table-talk nobody else can quite overhear (without electronic assistance): "Really quite necessary, I am sorry to say. But mon cher, are you quite sure the provisions on aluminum are strict enough? Pass the butter, please."

Larry Kudlow Leaves Little Patent Pumps All Slobbery

Another perfect non sequitur

Kudlow called the document all seven participants had approved before Trump left Quebec “a good communiqué.”  Then he says it was Trump’s duty to take back his approval of this good communiqué because when Trump was “barely on the plane” Canadian P.M. Trudeau held a press conference and in response to one of the questions affirmed that Canada would be proceeding with the imposition of retaliatory tariffs as a counter-action to the U.S. tariffs on Canadian goods which Kudlow’s beloved leader has now put into effect.

Kudlow acknowledged that Trudeau wasn’t saying anything he hadn’t said before.  But he said this time was different because Trudeau said it after U.S. approval of “a successful G-7 communiqué which President Trump and the others all worked in good faith to put a statement together.”

One wonders whether the other heads of government knew that if Trump worked with them “in good faith to put a statement together,” they could never again say anything displeasing to Trump.  Perhaps if they’d known this was part of the deal they would have walked away.

Kudlow didn’t say in what way Trudeau’s remarks were inconsistent with the text of the joint statement, or how anything said at the P.M.’s press conference made the good communiqué any less good.

“No! No –” Well, Yes, But the Other Guy Started It

Reminded by his interlocutor that Trump reneged on the good G7 communiqué, Kudlow exclaimed “No!”  Evidently sensing that such blank denial might prove a difficult line to maintain, he quickly resorted to offering an explanation.  “Then Trudeau decided to attack the President.  That’s the key point.” And as everybody knows, “if you attack [Trump] he’s going to fight back.”

But if Trudeau was only saying the same things he had said before the G7 meeting, and then it wasn’t so threatening an “attack” on Trump that it kept him from coming to Quebec and working with the other leaders to put together the good communiqué approved by all, why would Trudeau’s saying the same things again be so frightening and dangerous an “attack” as to compel the President to withdraw his approval of the statement?

Trudeau denounced the tariffs Trump unilaterally imposed as illegal, implying that Trump’s use of the “national defense” exception to America’s trade agreements is (at least as applied to Canadian steel and aluminum) a sham.  But he said nothing at all about Donald J. Trump.  Apparently, Kudlow sees any criticism of Trump’s policies as an attack on Trump, and thinks it’s not only desirable but noble and Presidential of Trump to “fight back.”

But even if we take it for granted that the personal feelings and proclivities of Donald J. Trump are what matter here, next to which the friendships of great nations and the prosperity and welfare of tens and hundreds of millions of ordinary humans count as nothing, why didn’t our fearless leader turn Air Force One around, go back to Quebec, seek Justin Trudeau out and punch him on the nose?  Or slap the weak Canadian’s face with one of his tiny gloves?

Why, even assuming Trump had been “attacked” by Trudeau and might properly have sought to “fight back” against him, should such fighting back take the shape of renouncing the good communiqué Trump worked so hard with all the other leaders (five-sixths of whom were not Trudeau) to put together?  Why wasn’t publicly calling our neighbor’s elected leader “weak and dishonest” enough of a personal counterattack?

And even if “weak and dishonest” wasn’t nearly enough, maybe instead of withdrawing consent to the good communiqué which was the product of so much hard, collaborative effort (weren’t we supposed to picture sweat pouring from Donald’s furrowed brow – long, long after midnight?) the five non-sinning national leaders would have preferred that Trump just heap some more of his intelligent insults on the Frenchified little panty-waist.  Stuck-up, stunted know-it-all. Low-energy, crooked, goofy, crazy, lyin’ Justin.  Assuming he could find good insults that aren’t reserved for use on fellow Republicans, Trump might have fought back and enjoyed himself, while letting previously settled international agreements alone.  Guess Kudlow didn’t think of that.

On to Singapore!

As far as I know, Kim Jong Un has only identified the U.S. cities he would hit with his atom-tipped ICBMs.  He hasn’t threatened Canada.  Neither has Canada pledged that if necessary it will use its nuclear weapons in defense of South Korea and Japan in order to keep those states from renouncing the NNPT and developing bombs of their own.  (For one thing, Canada hasn’t got nuclear weapons.)  But Kudlow says Trudeau “should have known better” than to irritate Trump while he was flying off to shake hands with the North Korean dictator.  Trump’s got to “stand strong” in Singapore, so he’s “not going to allow the people to suddenly take pot shots at him.”  What’s “sudden” about Trudeau saying the same things he’s said before, things in no way inconsistent with the now-dishonored (by Trump) communiqué, Kudlow doesn’t explain, but apparently it’s got something to do with Trump’s travel plans.

I’m not sure if Kudlow means it’s OK for Trump to “take it all back” as long as he does so before he lands in Washington – a sort of aeronautical king’s-x.  (Maybe if he kept his little fingers crossed, too?)  But we are only too likely to hope he does, and Trump does, after the Singapore summit ends.  The wily and blood-stained tyrant will probably show the world why the Greeks considered sycophancy an Oriental art.  Likely he will outdo even Lickspittle Larry, and so leave deal-maker Trump stripped down to his gold teeth.

Our next lesson will be that the Fearless Leader, naked or not, remains fully clad in the eyes of his “base” until and unless Fox News tells them otherwise.  (And why should it make that ratings-shattering mistake?)  Woe to those who then look to Republican Senators for salvation!

Europe's U.D.I.?

Unless the mullahs ride to the rescue of Donald Trump, the implications of the Administration’s decision to renounce the Iran Nuclear pact will soon confront European leaders with a stark choice: to accept humiliation or to defy the United States.  Britain, France and Germany have already indicated their willingness to remain bound by the pact.  Russia and China don’t need to give any such indication, since there is no reason to suspect they have ever had any inclination to withdraw.

If the mullahs allow Rouhani to try keeping the pact alive as between Iran and the five aforementioned powers, then the European leaders can either announce their willingness to cooperate with him or declare their inability to resist American dictation by ordering their nationals to observe all of America’s restrictions on dealings with Iran.

The former course would be practical in only one way, and that would be through the implementation of an “all for one and one for all/reciprocal sanctions” policy by Britain, France, Germany, Russia and China.  If (1.) an American secondary sanction against a national of one country is treated as a sanction against all nationals of all five countries (and any customs union that one or more of the five can persuade to collaborate – e.g., the E.U.); and (2.) the five respond to any such sanction with an immediate, reciprocal sanction against all U.S. nationals, then even the current Administration would presumably think long and hard before trying to impose sanctions on a non-U.S. national for dealing with Iran.

If the remaining five announced the policies described above, and meant it, then for the U.S. to try to force a foreign company to observe U.S. restrictions on dealings with Iran could quickly lead to the isolation of the United States and the division of the world economy between the U.S. and its collaborators (for instance, Canada and Mexico would probably have to side with the U.S., against their better judgments -- Japan being the great wildcard here) and the rest of the world.  This “World War III of Trade” would be disastrous for the world economy and even if it led to a negotiated peace (between the two sides just identified) that peace, even under the most optimistic (from the U.S.’ perspective) assumptions, would almost certainly include the displacement of the dollar as the international currency of account. (Lucky for us, though, China probably doesn't want to wage this war -- yet.)

That, in turn, would likely make it impractical for the U.S. to keep running its budget in deficit.  This might lead to the downfall of the One Percent here, or the submergence of the 99, but either way a period of still sharper division and still more fulsome rancor within the American polity would be inevitable.  (This prognostication could safely be made without regard to the Iran deal, withdrawal from the same and any international political-economic ramifications thereof, but the division of the world economy into U.S. and non-U.S. hemispheres and the consequent displacement of the dollar would “shrink the pie” and thus increase the intensity of this contest by at least an order of magnitude.)

Now, the great pact of the Four plus One (the nuclear-power signatories, apart from the U.S., plus Germany) to mutually resist U.S. coercion in the matter of Iran sanctions which I have described is not likely to come about.  It would be Europe’s declaration of independence from the U.S., but the Europeans are likely to recognize the coronation of Putin that it would imply.  But what if Putin, recognizing his great chance, offers convincing promises of good behavior?

“Europe” has no leaders (because it doesn’t exist and thanks to Brexit never will), and British, French and German businessmen will have no problem truckling under to the political dictation of the United States, especially since few have any burning interest in Iranian opportunities.  The individual governments are likely to announce ineffectual policies of seeking to “muddle through” any secondary sanctions difficulties.  The Chinese will have the sense not to try to bring about the Great Bifurcation of the world economy without solid European cooperation, and it’s not clear that they would want to bring it about now, anyway.  Putin will recognize that Russian action without the cooperation of the rest of the Four plus One would merely demonstrate Russia’s economic insignificance.  That would leave each of the five to deal with its humiliation as best it may.

Recognizing that (formally) unilateral U.S. sanctions are therefore likely to be highly effective, the mullahs most likely will not give Rouhani the chance to try to keep the pact, sans U.S., alive.  In fact, Rouhani could be lucky if they give him a chance to leave the country.  But if Rouhani should be allowed to pursue “the deal without the U.S.” and there should be signs of a flurry of diplomatic activity among the Four plus One – then watch out. The World War III of Trade could be about to be declared.  The smart money would “go to cash” – but what kind of cash?  Dollars, euros, yen or yuan?  Without knowing the winner, gold might be the safest bet.

When it comes to leaving itself a graceful way to back down, the Trump Administration is about as skillful as the Iranian theocracy. (On the other hand, Trump’s “base” will not know or believe that he has backed down unless Fox News tells them so. Once again the world’s fate may be in the hands of Rupert and sons.)  But the British and Europeans are good at backing down.  So look for the Iranian nuclear project to resume, and let’s see what Bolton does.