Midweek Reader: The Folly of Trump’s Tariffs

With stocks plummeting this week upon an announcement of retaliatory tariffs by China in response to a recent spate of steel and aluminum tariffs from the Trump administration, it seems a midweek reader on the situation is appropriate.

  • At the Washington Post, Rick Noack explains how Trump is going into unprecedented territory since the WTO was founded, and why existing trade norms probably can’t stem a trade war. A slice:

    But while China has used the WTO to accuse the United States of unfairly imposing trade restrictions over the last months, Trump does not appear interested in being dragged into the dispute settlement process. In fact, Trump appears to be deliberately undermining the legitimacy of that process by saying that his tariffs plan was based on “national security” concerns. WTO rules mandate that a member state can claim exceptions from its trade obligations if the member’s national security is at stake.

    That reasoning has long been a no-go among WTO member states, because they understand  that triggering trade disputes under a “national security” framework could eventually render the WTO meaningless.

  • Last month at the Chicago TribuneSteve Chapman had a good op-ed showing why Trump’s justification of steel and aluminum tariffs on national security grounds is bogus:

    But putting tariffs on all imports to prevent dependence on China or Russia is like throwing away your library card to avoid bad books. It would make more sense to focus on the guilty countries rather than deploy a sprayer that also soaks the innocent.

    The national security risk is minuscule, though. Imports make up only one-third of the steel we use, and the Pentagon requires less than 3 percent of our domestic output. No enemy has us over a barrel, because we buy steel from 110 different countries.

    Most of what we import comes from allies and friends, including Canada, South Korea and Mexico, which would have no reason to cut us off in a crisis. If China stopped shipping to us, friendlier countries would leap to grab the business.

  • Also at the Washington Post last month, historian Marc-William Palen gives numerous historical examples of how nobody wins in trade wars and how they can threaten our national security by arousing populist resentment of the US abroad. A slice:

    The trade wars that followed the Republican passage of the protectionist Smoot-Hawley Tariff Act of 1930, which raised duties on hundreds of imports, similarly contain illustrative lessons for today. Canada responded with tariff increases of its own, for example, as did Europe.

    In a widely cited study from 1934, political economist Joseph M. Jones Jr. explored Europe’s retaliation. His study provided a warning about the trade wars that can arise when a single nation’s tariff policy “threatens with ruin” specialized industries in other countries, arousing “bitterness” throughout their populations.

  • At Cato’s At LibertyDaniel Ikeson explains how Trump’s tariffs establish a dangerous international precedent that will threaten US interests elsewhere:

    By signing these tariffs into law, President Trump has substantially lowered the bar for discretionary protectionism, inviting governments around the world to erect trade barriers on behalf of favored industries.  Ongoing efforts to dissuade China from continuing to force U.S. technology companies to share source code and trade secrets as the cost of entering the Chinese market will likely end in failure, as Beijing will be unabashed about defending its Cybersecurity Law and National Security Law as measures necessary to protect national security.  That would be especially incendiary, given that the Trump administration is pursuing resolution of these issues through another statute—Section 301 of the Trade act of 1974—which could also lead the president to impose tariffs on China unilaterally.

  • The Independent Institute’s Robert Higgs reminds us that citing trade deficits is misleading:

    In reality, individuals, firms and other organizations, and governments trade with other such entities, some of which are located in the same country and others of which are located in other countries. The location of the trading partners has no economic significance whatsoever. Trading entities enter into exchanges voluntarily, each one in each transaction anticipating a gain from the trade. Hence, in expectational terms, every such trade entails a gain from trade, or in other words an addition to the trader’s wealth.

  • At American Greatness, Henry Olsen tries to give a communitarian justification of protectionism:

    So-called populist movements around the world are gaining strength because their voters no longer feel like valued members of their nations. They do not believe their worth should decline because the owners of capital say so, nor do they think their life dreams or values should be denigrated simply because the most educated have different visions.

    Populists like Trump address this spiritual yearning and fulfill the deepest need every human has, to be valued and to belong to a group that values you. In this, and perhaps in this need alone, all men are truly created equal. Tariffs are simply an economic means to fulfill this spiritual need. Tariff opponents can only win if they first recognize this need and promise a more effective way to fulfill it.

  • At Bleeding Heart Libertarians, Jason Brennan explains why communitarianism cannot justify protectionist policies:

    Second, if tariffs don’t actually succeed in helping these workers, then the symbolic argument falls flat. Imagine an artist said, “I’m so concerned about the plight of people living in tenements, I’m going to do a performance art project where I burn down all their homes and leave them on the street. Sure, that will make them even worse off, but my heart is in the right place, and I thereby express my concern for them.” This artist would be…a contemptible asshole.

  • Finally, given its relevance at the moment, it’s worth revisiting Paul Krugman’s classic essay “Ricardo’s Difficult Idea” which remains the best account of why non-economist intellectuals have a hard understanding free trade:

    (i) At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists; so, in a culture that always prizes the avant-garde, attacking that icon is seen as a way to seem daring and unconventional.

    (ii) At a deeper level, comparative advantage is a harder concept than it seems, because like any scientific concept it is actually part of a dense web of linked ideas. A trained economist looks at the simple Ricardian model and sees a story that can be told in a few minutes; but in fact to tell that story so quickly one must presume that one’s audience understands a number of other stories involving how competitive markets work, what determines wages, how the balance of payments adds up, and so on.

Can Elizabeth Warren help turn the populist tide?

During her recent visit to China, a Democratic Senator from Massachusetts, Elizabeth Warren (perceived by many as a potential Presidential Candidate of the Democratic Party in 2020), came down heavily on US President Donald Trump’s approach towards foreign policy, arguing that it lacks substance, is unpredictable, and does not pay much attention to liberal values and human rights, which according to her has been the cornerstone of US foreign policy for a long time.

Trump’s unpredictability

Commenting on Trump’s unpredictable approach towards Asia, Warren stated:

This has been a chaotic foreign policy in the region, and that makes it hard to keep the allies that we need to accomplish our objectives closely stitched-in.

Critical of US approach towards China

Warren met with senior Chinese officials including Liu He, vice-premier for economic policy, Yang Jiechi, a top diplomat, and the minister of defense, Wei Fenghe, and discussed a number of important issues including trade and the North Korea issue.

Warren criticised China for being relatively closed, and stated that the US needed to have a more realistic approach towards Beijing. She also spoke of the need for the US to remain committed to raising Human Rights issues, and not skirt the issue, while dealing with China.

Said the Democratic Senator: Continue reading

Nightcap

  1. John Bolton is back, and so are his bad ideas Emma Ashford, the Skeptics
  2. Some more thoughts on libertarian foreign policy Matt Fay, Niskanen
  3. Congress should reclaim its war powers Ilya Somin, Volokh Conspiracy
  4. John Bolton isn’t crazy. The world is. David French, National Review

Trump’s personal game might work in China

In spite of all the economic and strategic differences between the US and China, personal relationships play an important role in bilateral relations between Washington DC and Beijing.

Trump’s Ambassador to China 

One of the first appointments made by US President Donald Trump was that of Terry Branstad as US Ambassador to China. The key reason was Branstad’s personal rapport with Chinese President Xi Jinping. This began in 1985, when Branstad was Governor of Iowa, while Xi Jinping an official from Hebei was visiting Iowa. In 2011, Branstad visited Beijing, and met with Xi at the Great Hall of the People. In February 2012, when he was vice-president, Xi stopped in Muscatine, Iowa, where he met not just with Branstad but with big industrialists and farmers from the states.

The US President, commenting on the reason for appointing Branstad, stated:

Governor Branstad’s decades of experience in public service and long- time relationship with President Xi Jinping and other Chinese leaders make him the ideal choice to serve as America’s ambassador to China.

During US President’s China visit in November 2017, Branstad, who shares a good rapport with Trump, did the groundwork for the visit. While in recent weeks tensions between both countries have escalated, with Trump imposing tariffs on Chinese goods worth $60 billion, the American president was delighted with the welcome he had received during his trip and had even told the Chinese President: “My feeling towards you is incredibly warm.”

It would be pertinent to point out that Trump’s decision to appoint Branstad as Ambassador to China (December 2016) came as a relief to the Chinese, given the fact that the US President took Taiwanese President Tsai-Ing Wen’s phone call, much to the chagrin of Beijing (since this went against established US policy).

If one were to look beyond the role of personal relationships in the very complex but important Beijing-Washington relationship, China lays a lot of emphasis on experience (educational, professional) in the US. If one were to examine the credentials of some of the top officials in Xi Jinping’s administration, US education as well as experience in dealing with economic issues pertaining to the US, has played a key role in some of the Chinese President’s appointments.

For instance, Liu He, whom Xi Jinping has appointed as a Vice Premier for overseeing the economy and financial sector, is US educated. Liu, who speaks fluent English, obtained a master’s degree in public administration from the Kennedy School of Government (Harvard University) in 1995. Apart from his in-depth understanding of the Chinese economy, Liu has also been involved in important discussions with US leaders.

Another significant appointment by Xi Jinping is that of Yi Gang, who has been named as Governor of the People’s Bank of China (PBOC). Yi obtained a business degree from the Hamline University in St. Paul, Minnesota, and a Ph.D. in economics at the University of Illinois, before moving to Indiana University at Indianapolis as a professor in 1986. He taught later at the Peking University in Beijing, before moving to the PBOC in 1997.

While economic and strategic issues are too complex to be driven by personal relationships or chemistry (though Trump seems to be a keen believer in personal chemistry given the emphasis he lays on individual ties) alone, an in-depth  understanding of the culture, politics, and economics of one’s interloctutors is especially handy. Given the current tensions between both countries over tariffs, this dynamic may prove to be especially useful.

India’s near-abroad: Iran’s regional moves

Close attention was paid by sections of India’s strategic community (and understandably so) to the statement of Iranian Minister of Foreign Affairs, Dr Javad Zarif, during his visit to Pakistan, in which he extended an invitation to Pakistan to join the ambitious Chabahar Project (about 70 kilometres from China’s ambitious Gwadar Project).

Zarif, while delivering a lecture at the Institute of Strategic Studies Islamabad (ISSI), stated:

We offered to participate in the China-Pakistan Economic Corridor (CPEC). We have also offered Pakistan and China to participate in Chahbahar

He further went on to state that Iran’s ties with India were not in any way targeted at Pakistan, just as Islamabad’s ties with Riyadh were not against Iran.

Surprise in India

This invitation surprised many in India, given the fact that it has provided financial assistance for Phase 1 of the project and will operate two berths. During Iranian President Hassan Rouhani’s visit in February 2018, one of the tangible outcomes was the lease contract signed by IPGL (Indian Port Global Limited) and Iran’s Port and Maritime Organization, for operating Phase 1 (Shahid Beheshti Port) over an 18-month period. The joint statement also made a clear reference to India’s unwavering commitment to the Chabahar-Zahedan Rail Line, which will enable transportation of goods all the way up to the Afghan border. The Indian side also stated that it would like to see Chabahar as part of the INSTC (International North South Transport Corridor). The INSTC will help in connecting India to Russia and Europe, via Iran.

Chabahar as India’s answer to Gwadar

Many in India have looked at Chabahar as India’s answer to the Gwadar Project, and of course its gateway to Afghanistan and Central Asia. The project is especially important to New Delhi because it enables India to bypass Pakistan, which has flatly refused to give India access to Afghanistan and Central Asia. In 2016, during Indian Prime Minister Narenda Modi’s visit to Iran, India, Iran, and Afghanistan had signed a three nation transport and transit corridor pact to enhance connecitivity. While leaders of all three countries spoke about the relevance of this agreement in the context of connectivity, the Iranian President had made it clear that it was not targeted at anyone. Said Rouhani:

[This pact is] not against any other country […] it is beneficial to the entire region.

India also sent a consignment of wheat (15,000 tonnes) to Afghanistan through the Chabahar Port in 2017. The shipment was dispatched from Kandla (Gujarat, India) and reached Chabahar in Iran. From Chabahar it was transported by road to Nimroz Province in Afghanistan.

India’s response

Replying to Zarif’s statements in a press briefing, India’s Spokesman Raveesh Kumar stated that:

[It is the] prerogative of the government of the Islamic Republic of Iran to choose its partners for the development of infrastructure facilities there.

Kumar also explained the strategic relevance of the project given its geo-political importance.

India-Iran ties beyond the Chabahar Port

Ever since the signing of the nuclear agreement in 2015 between Iran and the P5+1 countries, business linkages – and not just the Chabahar Project – between Iran and India have gotten a fillip. In 2017, India’s oil imports from Iran went up to 4.37 million barrel per day, even though there was a dip between April-December 2017 due to tensions between both countries on the Farzand B gas field. (Iran was supposed to award the gas field to India, but there have been differences on terms and conditions.) During Rouhani’s visit, both countries decided to address the obstacles related to banking and taxation, in order to bring about closer economic linkages.

Iran has thus emerged as an important strategic and trade partner for India.

What may have surprised sections of Indian government, along with its strategic thinkers, would be the Iranian invitation given to Pakistan, in spite of bilateral tensions between the two. In May 2017, for example, the Iranian Army Chief, Major General Mohammad Bagheri, had threatened to strike terror camps in Baluchistan (Pakistan) after the killing of ten Iranian guards by Jaish-Al-Adl in the Sistan-Baluchestan province. Said Baqeri:

[…] unless Pakistan control[s] the borders, arrest[s] the terrorist[s] and shut[s] down their bases […] we will hit their safe havens and cells wherever they are.

Since then tensions between the United States and Iran have also risen, and the latter has a close relationship with China. This has reshaped the Pakistan-Iran dynamic.

New Delhi’s real challenge

The real challenge for India in the near future is the hawkish stand of US President Donald Trump’s most recent appointee: Michael Pompeo (who was earlier head of the CIA, a main American intelligence agency). Trump is also likely to replace his current National Security Advisor, HR Mcmaster, and one possible replacement is John Bolton (former US Ambassador to the United Nations), a known hawk on Iran.

Pompeo would go along with Trump, and have no qualms in scrapping the Iran Nuclear Deal in May 2018, the next date when the issue comes up for consideration.

Pompeo’s predecessor, Rex Tillerson, had differed with Trump on this issue on more than one occasion. During the election campaign, Trump had criticized the Nuclear Agreement. He had dubbed the agreement a ‘disaster’ and ‘the worst deal ever negotiated’. In an address to a Pro-Israel Lobby group, AIPAC, the US President had gone to the extent of stating that dismantling the deal would be his first priority.

Tillerson, no dove on Iran by any stretch of imagination, had categorically stated that dismantling the deal was not in US interests, though the US President disagreed. Commenting on their disagreements about Iran, Trump had stated:

When you look at the Iran deal, I think it’s terrible […] it was okay. I wanted to either break it or do something, and he felt a little bit differently. So we were not really thinking the same.

Tillerson was closely working with European countries to rework the deal, and address some of the Trump administration’s concerns.

The Chair of the Senate Foreign Relations Committee, Bob Corker, has also predicted that Trump will walk out of the Deal: “The Iran deal will be another issue that’s coming up in May, and right now it doesn’t feel like it’s going to be extended.”

More aggressive Saudi Arabia

Saudi Arabia is likely to become more aggressive after the exit of Tillerson. In fact, on the eve of Saudi Crown Prince Mohammed Bin Salman’s arrival in the US, the Saudi Foreign Minister, Adel al-Jubeir, criticized the Iran Nuclear deal. Said the Saudi Foreign Minister:

Our view of the nuclear deal is that it’s a flawed agreement.

During the Saudi Prince’s visit, Trump too did not miss out on an opportunity to lambast the Iran nuclear agreement. While commenting on the future of the deal, the US President stated:

The Iran deal is coming up soon and you will see what will happen […] Iran hasn’t been treating that part of the world, or the world appropriately.

According to the Arab News it was also decided that the United Arab Emirates, Saudi Arabia, and the US would set up a trilateral security forum which would look not just at issues pertaining to Middle East and Iran, but also South Asia.

Conclusion

India would be advised to be cautious, and while some sections the Right have been ecstatic with Trump’s stance vis-à-vis Pakistan (not to mention China), New Delhi needs to be prepared for some turbulence as a consequence of the recent changes within the Trump Administration. New Delhi needs to articulate its strategic and economic interests in Iran, not just to the US, but also to Saudi Arabia. In the past, the US has not objected to Iran’s close ties with India, but it remains to be seen whether or not Trump and his team will exhibit flexibility and pragmatism vis-à-vis Iran.

New Delhi has a myriad of foreign policy challenges, and Trump’s rigidity towards Iran is likely to be a major one in the near future.

Quad: The way ahead and the key challenges

The Quadrilateral Security Dialogue (QSD) consisting of India, Australia, Japan, and the US has been pitching in favor of a ‘Free and Fair Indo-Pacific’ ever since the first meeting between representatives of member states in November 2017.

Shinzo Abe, the current Prime Minister of Japan, actually proposed this arrangement about a decade ago. Diplomatic engagement began, and joint military exercises were even held, but a change in guard in Australia, as well as Chinese complaints to member states, resulted in the end of the arrangement. Given the increasing focus on the ‘Indo-Pacific’ region and the strengthening of strategic ties between all four countries, reticence was finally shed and representatives of the four countries met in November 2017, on the eve of the East Asia Summit in Manila. The main aim of the alliance, thus in other ways, has been to check China’s assertiveness, especially in the South China Sea, and democracy has been one of the key binding factors between the Quad. The U.S. State Department, after the meeting in November 2017, issued a statement that the United States is “committed to deepening cooperation, which rests on a foundation of shared democratic values and principles.”

More recently, the joint statement issued after the meeting between Trump and Australian Prime Minister Malcolm Turnbull in February 2018, reiterated the point about a Free and Open Indo-Pacific. Said the joint statement between both countries: Continue reading

Underrated & overrated libertarian thinkers

Here is my take on Tyler Cowen’s views on libertarian thinkers who are either overrated or underrated in shaping the libertarian tradition. Please be aware that I think libertarianism and classical liberalism are two different strands of liberal thought, as argued in more detail in an earlier post here at NOL and in my latest book. Please also note that my judgement will be particularly informed by their views on international relations.

Overrated:

  1. Hans-Hermann Hoppe – completely esoteric ideas about international relations, especially his erroneous and ill-thought idea about private defence through private insurance companies.
  2. Deepak Lal – no complaints about his general work, but his praise for empires was deeply disturbing, even though he meant well. Liberalism and globalization do not need empires, no matter how civilized – in the Oakeshottian meaning – they are meant to be.
  3. Ron Paul – I admire Ron Paul in many ways, but his ideas for ‘a foreign Policy of freedom’ are not much better than Hoppe’s. ‘peace, commerce, and honest friendship’: nice Jeffersonian goals, bad underlying analysis, not least about human nature.

Underrated:

  1. Friedrich Hayek – a far more sophisticated thinker on international relations than he is ever given credit for.
  2. Adam Smith – nowadays erroneously equated with ‘trade leads to peace’ fairly tales. Yet any reader of the complete two volumes of the Wealth of Nations recognizes that the book is also a lot about war and foreign policy, as are his Lectures on Jurisprudence and even a bit in The Theory of Moral Sentiments. Together these make for a full and sophisticated position on international affairs.
  3. David Hume – basically the same as Smith.
  4. Robert Jackson – ok, I am taking liberties here. I do not think Jackson would consider himself a classical liberal or libertarian. But his writings on international relations are important and often have a classical liberal leaning, especially The Global Covenant.

Nightcap

  1. The new age of great power politics John Bew, New Statesman
  2. Before We Cure Others of Their False Beliefs, We Must First Cure Our Own Christopher Preble, Cato Unbound
  3. Libertarians (FDP) ruin coalition talks in Germany Christian Hacke, Deutsche Welle
  4. The Rich You Will Always Have With You Brandon Turner, Law & Liberty

Nightcap

  1. Scenes from a Police Detention Irfan Khawaja, Policy of Truth
  2. The Weight of Words Jacob T Levy, Niskanen
  3. Trump’s Making the Liberal World Order Stronger Christopher Preble, National Interest
  4. Brexiters’ blind spot Chris Dillow, Stumbling and Mumbling

In foreign affairs, don’t ignore “soft power”

Israeli Prime Minister Benjamin Netanyahu, during his 6 day visit to India (January 14-19, 2018), made some interesting points. While arguing in favor of the advantages of hard power over soft power, Netanyahu stated:

I like soft power, but hard power is usually better. You need F-35s (fighter jets), cyber, a lot of intelligence… Where does the power for hard power come from? It comes from economic power.

Interestingly, India in recent years, under current Prime Minister Narendra Modi, has been focusing on promoting its Soft Power through a number of ways such as popularizing Yoga (The United Nations declared June 21st as International Yoga Day), Ayurveda, reaching out to its Diaspora, and rekindling Buddhist linkages with neighbours in South Asia as well as South East Asian and East Asian countries including China.

Modi has reiterated the relevance of “soft power” on more than one occasion. Even in the context of India-Israel relations, soft power has played a key role. There have been efforts toward renovating historical sites of Jews in India, and there has been an outreach towards Jews of Indian origin now settled in Israel. There have been efforts to strengthen educational linkages between both countries. During the visit of Israeli President Reuven Rivlin in November 2016, MOU’s were signed between the Hafia University of Israel and the Welingkar Institute of Management (WeSchool), and IDC Herzliya, Israel with the SP Jain School of High Technology. The joint statement issued during Netanyahu’s visit to India also made references to the importance of people-to-people linkages, the opening of an Indian cultural centre in Israel in 2018, and an MOU in film co-production.

The point made by Netanyahu has been made by a number of realists. Joseph Nye, who first put forward the concept of “soft power” as being the ability to influence outcomes without the use of force, later on argued in favour of the right blend of “hard power” and “soft power,” dubbing it as “smart power”. Along with Richard Armitage, Nye even set up a Commission on Smart Power. The concept was of course popularized by Former Secretary of State Hillary Clinton, who at the confirmation hearing before the Senate Foreign Relations Committee in 2009, stated:

We must use what has been called smart power, the full range of tools at our disposal—diplomatic, economic, military, political, legal, and cultural—picking the right tool, or combination of tools, for each situation. With smart power, diplomacy will be the vanguard of our foreign policy.

While there is absolutely no doubt that economic and hard power does give an impetus to soft power, it is also a bit of a stretch to totally dismiss “soft power.” Many would argue for instance that apart from geopolitical factors, soft power did give an edge to the US over the USSR, and later on over China, for a very long time. In recent years, China has been trying to focus on “soft power,” so much so that in the past decade, a large number of Confucius Institutes have come up in different parts of the world (over 500 in around 140 countries) including roughly 100 in the US. Apart from this, China has been trying to attract foreign students, and also tourists from across the world. Even its ambitious connectivity project, One Belt One Road, which has clear economic motives, is being packaged as part of its “soft power.”

In conclusion, “soft power” cannot be a determining factor, but it does play a significant role in strengthening bilateral relations, as well as building a positive image for countries. While we live in an age where being transactional is confused with being a pragmatist/realist. US President Trump too has been dismissive of “soft power,” and by his insular approach towards immigration, and indifference towards democratic values he has given up on two of the essential components of American Soft Power. Dismissing “soft power” because it does not help in achieving any tangible outcomes is one of the shortcomings of such transactionalism, and is an excessively simplistic view of a very complex debate.

India needs to work harder, both in its own backyard and in its near-abroad

While there is absolutely no doubt that Donald Trump has on more than one occasion sent harsh warnings to Islamabad – calling upon Pakistan to give up its support for terrorist groups or face the consequences – Trump’s predecessors had begun to reduce aid to Pakistan. During the Obama years, for example, American aid to Pakistan dropped from over 2 Billion USD in 2014, to a little over 1.1 Billion USD in 2016.

In his latest tweet, Trump minced no words, saying that Pakistan had fooled the US all these years, and that US will not take this lying down:

The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!

Trump tweeted early morning on New Year’s Day.

Earlier in the year, during his August speech pertaining to Afghanistan, Trump had categorically stated that it no longer could be business as usual, and that Pakistan needed to stop extending support to the Haqqani network and other groups. Said the US President:

We have been paying Pakistan billions and billions of dollars, at the same time they are housing the same terrorists that we are fighting. But that will have to change. And that will change immediately.

A number of senior officials in the Trump Administration, such as the Secretary of State Rex Tillerson, Defence Secretary Mattis, and Vice President Mike Pence have hinted that harsh steps for Islamabad are a real possibility, some of which include not just withdrawal of aid to Pakistan, but also the removal of Pakistan’s non-NATO ally status.

During his recent visit to Afghanistan, Pence stated that President had put Pakistan on notice. Said Pence: “President Trump has put Pakistan on notice. As the President said, so I say now: Pakistan has much to gain from partnering with the United States, and Pakistan has much to lose by continuing to harbor criminals and terrorists.”

In an oped written for the New York TimesTillerson stated:

Pakistan must contribute by combating terrorist groups on its own soil. We are prepared to partner with Pakistan to defeat terror organisations seeking safe havens, but Pakistan must demonstrate its desire to partner with us.

China – which has strategic and economic interests in Pakistan, with the primary one being the China-Pakistan Economic Corridor (CPEC) – has stood by Pakistan. While reacting to Trump’s August 2017 address, State Councillor Yang Jiechi said:

“We should attach importance to Pakistan’s important role in Afghanistan and respect Pakistan’s sovereignty and legitimate security concerns.”

India’s reactions

New Delhi has understandably been closely observing these events. Trump’s warnings to Pakistan are viewed as positive news for India, and the Trump Administration has also pleased New Delhi by speaking against violent groups that are targeting India. The US, for example, has lent support to India’s demand for declaring Jaish-E-Muhammed (JEM) Chief, Masood Azhar, a designated terrorist by the UN (this move has of course been stalled by China).

Realists in New Delhi will however be keeping an eye on the following issues.

First, sections of the political class in Pakistan, as well as old hands in the American administration will not allow things between Islamabad and Washington to go downhill. A number of Pakistani politicians, such as Sherry Rehman, have already stated that while Pakistan should have its own independent policy, and it should not be submissive, it need not be excessively aggressive. While such politicians may not publicly say so, the fact is that there is a large swath of the Pakistani population which may not be very comfortable with the US, but is even more uncomfortable with the increasing Chinese presence in Pakistan as a consequence of CPEC.

In the US too, there are sections in the State Department which follow the approach of engaging with moderate forces in Pakistan given the country’s strategic importance. There is a section of the US establishment which does not want Pakistan to totally drift away from Washington’s orbit, mostly because China is beginning to take a larger role in the whole of South Asia, including Afghanistan. One of the declarations of the first Foreign Minister-level trilateral dialogue between China, Pakistan, and Afghanistan was the extension of (CPEC) into Afghanistan.

Said the Chinese Foreign Minister:

So China and Pakistan are willing to look at with Afghanistan, on the basis of win-win, mutually beneficial principles, using an appropriate means to extend CPEC to Afghanistan.

Both New Delhi and Washington will closely watch this development.

Apart from Beijing, Pakistan will rely on Saudi Arabia to soften Washington’s approach vis-à-vis Pakistan. The Sharif brothers, both Nawaz and Shahbaz, have strong connections in Saudi Arabia and while there were speculations that the Saudis were trying to broker a deal between the Pakistani military and the Sharifs, there is also a view that there’s an understanding between the Pakistani army and the Sharifs, and that the latter would use their links in the Saudi establishment to soften the Trump Administration, which has strong ties with Riyadh.

In conclusion, there is an increasing awareness with regard to the nexus between the Pakistani army and terror groups targeting India. Yet New Delhi should be more realistic in its calculations, and it needs to not just bank on Washington. Instead, India should also leverage its economic ties with Riyadh and Beijing to put more pressure on Pakistan. While there is no doubt that strategic convergence with Washington has increased phenomenally, Trump’s harsh words against Pakistan are not just driven by any conviction, but also by simple transactionalism. This very transactionalism has also created space for China to become more pro-active in South East Asia and South Asia. New Delhi thus needs to be pragmatic, deft, and leverage its economic rise more effectively.

Ayn Rand and International Politics

In a previous post I promised to write about Ayn Rand and her views on international politics, based on a recently published article.

I find Ayn Rand a fascinating figure in libertarian history, for a number of reasons. Her life style and ways she went about it in her life are so far distanced from me, that made me curious. Some of her philosophical ideas are great, others do not appeal to me at all. I plainly admire her for making the moral case for capitalism and individualism, which stands out in the economist-dominated libertarian tradition.

I am on the one hand annoyed by the way she fostered such cult-like circle of followers, in her own day and after her death in 1982, that led to dogmatism and intellectual isolationism, which goes against all basic academic standards I think are crucial.

On the other hand, I think the people at the Ayn Rand Institute do a great job preserving her legacy and attempting to widen her appeal. Overall, I am convinced that no matter what your take on this fascinating figure or her work is, Rand deserves to be studied in academia, because she remains influential to this day, especially in the US, and left a serious collection of writings that warrant intellectual analysis, even by people who do not consider themselves Randian.

Against this background I made a comparison between mainstream liberal theories of International Relations (IR) and the ideas on world affairs of Ayn Rand. The brief summary of the first is as follows:

  • World peace is attainable, in the belief that humans are rational enough to overcome war and conflict.
  • The nation is seen as a problematic actor in world affairs. Its room for maneuvering needs to be curtailed, including the importance of the balance of power between states, and the alleged influence of ‘war mongering’ diplomats and the so-called military-industrial complex.
  • Peace oriented foreign policies can be fostered by domestic institutional arrangements, most notably democracy (democratic peace theory).
  • In the international realm, there is an important role for intergovernmental and non-governmental organizations, regimes and international law (liberal institutionalism), which aim to overcome or neutralize the effects of the logic of power politics.
  • International trade is also expected to foster peace, often in combination with the alleged pacifying influence of interest groups and public opinion of foreign policy decision-making.
  • A recent addition is the broad support for humanitarian intervention.

To keep this blog at readable length I will not go into the details of Rand’s writings, but limit myself to her main views on these ideas, which should be seen in the context of her fierce opposition to the Soviet Union and its allies in the Cold War, and her concern for America losing its super power position through internal causes, not least the loss of the individual liberty-enhancing spirit among the American people.

  • In contrast to classical liberals from Smith to Hayek, Rand did indeed think that world peace would be attainable, but only in an Objectivist world. Among rational men living according the Objectivist principles there would be a harmony of rational interests. Yet in the current world there was also abundant irrational behaviour, bad morality, and other grounds for dispute.
  • The main causes of war were not material issues, domestic interests, institutional arrangements, or the structure of the international system. Rather, war was rooted in human nature. It went back to the tribal era, when brute force was the prime rule of conduct. The (socialist) dictatorships were contemporary examples in her mind, with their lack of respect for the rights of their own citizens, and those of foreigners alike. ‘Statism needs war, a free country does not’.
  • Rand was inconsistent in her valuation of the power of public opinion. She noted that most people often do not want war. Yet the origins of war still lay with those civilians, also in non-democratic regimes, because they failed to reject the doctrine that it was right and justified to achieve goals by physical force. If people put up with a dictatorship like the Soviet Union, or decided not to flee, they were co-responsible for the deeds, and deserved the same fate as their government.
  • Rand recognized that individuals live in groups or communities, but she regarded respect for tribal roots, ethnicity, and regional languages as uncivil and, above all, irrational and a limit on individual liberty. Ethnicity was also an important cause of war. Nationalism was perhaps less abstract than Marxism, but it was at least as vicious in stirring emotions such as hatred, fear, and suspicion. Therefore rational people would altogether disregard their roots as guides in (political) life.
  • Rand had two positions on the issues of sovereignty and intervention, depending on the moral character of the nation in question. Sovereignty was a right that had to be earned, but could also be forfeited. If a nation fully respected the principle of individual rights, it’s right to sovereignty was morally secured and should be respected by other nations. However, if a state violated the rights of its citizens it would lose its sovereign rights. ‘A nation ruled by brute force is not a nation, but a horde, whether led by Atilla, Genghis Khan, Hitler, Khrushchev, or Castro.’
  • Dictatorships were outlaws and could therefore be invaded as a matter of choice for the free nations, although there was no duty to do so. The right to self-determination and sovereignty only existed for free nations, and for societies seeking to establish freedom.
  • Yet this way, anarchy loomed. Rand divided the world into three groups of countries. First, countries complying to the Objectivist principles, with full sovereign rights. Second, countries on their way to freedom, often referred to as ‘mixed economies’, or half-way houses between freedom and dictatorship. Third, countries not worth existing, such as dictatorships and tyrannies. Unfortunately, the world lacked fully free countries. The mixed economies did not have unlimited right of intervention, they could only interfere when another country seriously breached Objectivist principles, for example by establishing one party rule, enacting censorship laws, executing people for political offences without trial, or nationalizing or expropriating private property.
  • Rand acknowledged the perpetual influence of power in world politics. The character of international politics was, and always had been among states, a balance of power game.
  • The US army was under domestic, non-patriotic attack for its virtues, for being a competent and strong force. It was unwise to cut the defence budget, while -in another contrast to liberal IR thought- ‘the military-industrial complex’ was ‘a myth or worse’.
  • Statism at the international level, in the form of ‘a planetary community’ and other cosmopolitan ideas had to be rejected. The collaboration of semi-free countries with communist dictatorships in the UN was evil and stood in contrast to reason, ethics, and civilization. The UN provided the Russian camp with prestige and moral sanction, suggesting that ‘the difference between human rights and mass slaughter is just a matter of opinion’.
  • Another point of contention with the social liberals was development cooperation. Foreign aid was nothing but ‘altruism extended to the international realm’.
  • While, in contrast to social liberals, she lacked faith in international law as such, Rand did regard international treaties as firm obligations.
  • Also, Rand saw peaceful effects of laissez-faire capitalism, because it was based on the recognition of self-interest by free individuals and the non-initiation of force. Capitalism fostered a society of traders. Therefore the essence of Objectivist foreign policy had to be free trade.

To briefly sum up: Rand’s writing show that not all liberals are peace-seeking cosmopolitans, attempting to minimise the role of the nation, the balance of power, the military, and warfare in international relations. She rejected most forms of international governmental organization and other expressions of liberal institutionalism. Often her ideas lack sufficient (legal) detail, while they are also centred on America, and hence limited to the perspective of an influential super power with large military capacity. Yet her writings show that fostering liberty in international relations can be done in several ways, and that different liberals have different ideas about the route towards that goal.

India-US relations and engaging with Trump

Ivanka Trump jointly inaugurated the GES Summit in Hyderabad (November 28-29) along with Prime Minister Narendra Modi, and she lauded the latter for his phenomenal rise. Modi had invited Ivanka during his US visit in June 2017. The US President’s daughter and Adviser was quick to accept the invite, and tweeted:

Thank you, Prime Minister Modi, for inviting me to lead the U.S. delegation to the Global Entrepreneurship Summit in India this fall.

During her address, Ivanka also highlighted India’s economic achievements in recent years, while also praising the country’s democratic credentials.

Said Trump:

‘You are celebrating it as the world’s largest democracy, and one of the fastest growing economies on earth…Through your own enterprise, entrepreneurship, and hard work, the people of India have lifted more than 130 million citizens out of poverty – a remarkable improvement, and one I know will continue to grow under the leadership of Prime Minister Modi.’

Why India reached out to Ivanka

By reaching out to Ivanka Trump, India has done the right thing, given the fact that all countries – including China, Saudi Arabia, Japan, and South Korea – have realized the importance of business interests, as well as personalized diplomacy with Trump.

Every country has to recognize its own interests, and the Trump Administration has been quite vocal on a number of issues including its tough stance on terrorism emanating from Pakistan, as well as a larger role for India in the Indo-Pacific. The US President, during his recent visit to Asia used the expression Indo-Pacific on more than one occasion (as opposed to the earlier expression Asia Pacific), while US Secretary of State Rex Tillerson has also spoken for a greater role for India in Asia Pacific. China took strong exception to the usage of ‘Indo-Pacific’ as opposed to Asia Pacific.

It is important however to bear a few points

First of all, while those who support Trump praise him for being a realist, at times what is dubbed as his transactionalism is a bit too simplistic. The US President is also not just unpredictable, but fickle. While some unpredictability is good, there are limits to this. Trump’s approach towards China, as well as other serious issues is a strong reiteration of his fickleness. While during his election campaign he used harsh language for Beijing, said Trump during an election rally in 2016:

‘We can’t continue to allow China to rape our country, and that’s what we’re doing.’

The warm reception he received in China was enough for Trump, to not only praise the Chinese, but even criticize previous US governments. While he lambasted Pakistan in a speech in August, a few weeks later he was all praise for the Pakistan army, after it helped in rescuing an American-Canadian couple who had been kidnapped by the Haqqani terrorist network. While rigidity is not good in diplomacy, and election campaigns do not translate into policy actions, it is important to understand the broad thrust of the US foreign policy.

It is not just policy issues, but even his relations with key members of his cabinet which are important to watch. The latest instance being of Rex Tillerson, the aforementioned Secretary of State who has tried to adopt a more realistic stance on issues like Iran. If Tillerson is changed as is being speculated, other countries who have built a strong rapport with him and sought to understand his orientation will need to now start from scratch.

Second, Trump is more inward looking than earlier Presidents, and that is advantageous for China in the strategic sphere, especially in the context of Asia.

While the Chinese will humor him through sweeteners such as FDI commitment, and this will help in influencing not just Trump, but even some of his key advisers like Jared Kushner, ultimately Beijing will have the last laugh in the strategic sphere, especially in the Indo-Pacific region. A number of countries in ASEAN have already subtly expressed their reservations with regard to Trump’s isolationist approach towards not only Asia but the rest of the world.

Third, unlike his predecessors, including Obama, Trump has no strong convictions with regard to democracy. While it is true that every country should see its own interests, a lot of countries have been more comfortable with the US because of the emphasis it places on democracy and civil liberties. During his recent visit to Myanmar for instance, Tillerson did refer to the Rohingya Issue, and the need for the NLD government to ensure the well being of the Rohingya committee.

Democracy and plural values drive the bilateral relationship between many countries , and in the context of India and the US, these should not be kept out. If Trump is totally indifferent to the nature of regimes, there is not much to distinguish the US from China, and American indifference towards issues such as democracy and civil liberties will only reduce an important component of its Soft Power.

What India needs to do

It is thus important for India to use innovative ways for reaching out to Trump, but also have a clear stand on key foreign policy issues. The Quad alliance (US, Japan, Australia and India), for instance, is important with Japan and Australia taking a clear stance against Chinese expansionist tendencies. While the US is part of this alliance, it is tough to predict whether the Trump Administration will really play a pro-active role, especially if Beijing objects to the alliance.

Similarly, India is doing the correct thing by maintaining an independent stance on Iran given its own strategic and economic interests. The Chabahar Port Project, which India is funding, is India’s gateway to Central Asia and Afghanistan, and by going ahead with the project even with the souring of ties between Washington and Tehran it has sent a clear message that it will not blindly tow Washington’s line.

In conclusion, while New Delhi has to see to its own interests, and explore synergies with the Trump Administration, there are likely to be some significant challenges given Trump’s simplistic approach towards complex issues, and the lack of any sort of consistency.

Lunchtime Links

  1. violence among foragers [pdf]
  2. building legal order in ancient Athens [pdf]
  3. why Congo persists [pdf]
  4. toward an old new paradigm in American international relations [pdf]

Lunchtime Links

  1. Globalization and Political Structure [pdf] | what’s a monopolis?
  2. Protestantism and the Rise of Industrial Capitalism in Nineteenth Century Europe [pdf] | who was James Cooley Fletcher?
  3. Primed against primacy: the restraint constituency and US foreign policy | polystate, book 2
  4. Nation-building, nationalism, and wars [pdf] | against libertarian populism