The View from Europe: The future cost of Trump’s ‘America First’ policy – By David Jessop

The View from Europe: The future cost of Trump’s ‘America First’ policy

David Jessop

May 11, 2018 – By David Jessop

At first sight, last week’s decision by the US president to abrogate the hard-won 2015 UN Security Council deal on nuclear weapons with Iran may seem to have little bearing on the Caribbean.

What it does, however, is take US exceptionalism to a new level. It ignores the interests of the co-signatories to the agreement, including Russia and China and close allies in the EU, all of which continue to believe that the agreement represents a viable way of curbing Iran’s nuclear intent. More broadly, it demonstrates to every other state that Washington has abandoned multilateralism and in the singular pursuit of its own objectives will in future ignore previously valued allies.      

Speaking about this in Brussels, the president of the European Commission, Jean-Claude Juncker, observed that the US decision suggests that the US is turning its back on multilateral relations, “no longer wants to cooperate with other parts of the world” and is doing so “with a ferocity that can only surprise us”.

In moving against Iran, the US administration has made clear that its policy will be applied in ways that will not only cause US companies to cease doing business there, but through the enforcement of secondary sanctions it will try to halt almost all third country trade with Teheran. Although the full details have yet to emerge, new US regulations will mean for example that EU companies from Airbus to Total engaged in any Iran-related commercial activity will potentially be subject to prosecution in the US courts, as will any bank facilitating related trade or investment decisions.

For Caribbean states other than Cuba, Iran is of little consequence as a trading partner. However, Washington’s ‘America First’ unilateralism may resurface next in an hemispheric context after Venezuela’s May 20 presidential elections if, as widely expected, President Maduro is re-elected.

Discussions in Lima at the time of the Summit of the Americas and comments made subsequently by Mike Pence, the US vice president, about the need for Latin American and Caribbean nations to do “more, much more” to impose sanctions on Venezuela, suggest that this is now the administration’s direction of travel.

If that happens, the economic and social consequences for the Caribbean could be severe, particularly if as some in Washington suggest, the US decides to place an embargo on Venezuelan oil exports, which account for 95% of the country’s foreign-currency earnings.

In February, the US Council on Foreign Relations spelt out the implications of what this could mean for the region. In its report ‘A Venezuelan Refugee Crisis’, it noted: “The United States should consider not only the potential damage and disruption caused to Venezuela’s neighbours by a refugee crisis but also the implications of the crisis for US interests.

The economic, national security, and health costs imposed on the United States by a potential disruption in Venezuelan oil production, an increase in drug trafficking, or an epidemic, respectively, would be substantial. The United States can do little to prevent Venezuela’s further downward spiral. However, it can and should take measures to mitigate the political, economic, and humanitarian consequences of a potential mass emigration.”

For the geographically proximate Caribbean, the practical consequences of a unilateral change in US policy with such an outcome would be catastrophic. There are already three million Venezuelans who have felt they have no option other than to become economic refugees in Colombia, Brazil, Trinidad, Guyana and the Dutch-speaking Caribbean, and there is little capacity to support more.

This is not to defend what is now happening in Venezuela. Although Caracas blames external forces, the private sector and the divided opposition, this long ago ceased to be a plausible excuse for the continuing mismanagement of Venezuela’s potentially vast oil wealth, the mistaken policies that have led to hyperinflation, the decisions that have resulted in hunger, corruption and violence, or the poverty and disease that now afflicts parts of the country.

Notwithstanding, President Maduro makes clear that his position is ideological, and that his government will not negotiate away its revolutionary principles with any nation. Rather, once re-elected he “will call for a great national dialogue for peace”, but how he intends reviving the country’s collapsing economy or rapidly restoring stability, remains a mystery.

What this suggests is that, short of supporting a military-led coup, the US will continue to pressure the Caribbean to engage in transactional politics over new sanctions on Venezuela or suffer the consequences of whatever it decides its post May 20 response will be.

Washington is now seeking a US-made world based on unilateral foreign and economic policies that through tariffs, sanctions and dispensations seek to place it in a position of global economic supremacy.

Other nations, including those in the Caribbean, of course think differently and value multilateralism, seeing it as a way of maintaining their independence of thought and action.

Changing US policy suggests that a new global political climate is developing that will cause all economic and trade relationships to be subject to question and challenge, eventually destabilising existing political and military alliances.

Despite Washington’s sometimes unwarranted past actions, it has always seemed reasonable to believe that US multilateralism would continue, and that its broadly liberal values, willingness to listen and debate would lead those at the highest levels in Washington to find and deliver rational and consensus-based solutions. It is what bestowed great power status and more recently enabled it to share peace globally through balance and proportionality.

The US decision on Iran marks a watershed in international relations. It will require even relatively powerless nations in divided regions like the Caribbean to determine how best to respond to the increasingly divergent positions of the US, China, the EU27, the UK, and Russia as well as to the region’s hemispheric neighbours.

David Jessop is a consultant to the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at http://www.caribbean-council.org

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Comments

  • Rosaliene Bacchus  On May 12, 2018 at 2:15 pm

    Excellent analysis by David Jessop. The Caribbean region could very well, in the near future, face similar challenges with Venezuela as America’s European allies with Iran. Guyana’s oil bonanza – in the hands of Exxon-Mobil – would be a game-changer in the region.

  • Clyde Duncan  On May 12, 2018 at 9:03 pm

    Christoph Scheuermann – DER SPIEGEL: So why did Trump decide to pull out of the Iran Treaty, despite the advice of his intelligence agencies?

    Former CIA Director Michael Hayden: Because he doesn’t make decisions based upon objective reality. He has this kind of a priori, assumed narrative of the way the world works, and he has almost a natural self-confidence in it. Almost all American presidents have said:

    “On balance, the more free trade there is, the better it is for America. On balance, immigration is a net positive for the United States of America. On balance, America is strengthened by having mature, strong allies.”

    And we now have a president who is opposed to free trade, who views immigrants as a threat and who views allies as a burden.

    And that’s turning the America of the last 75 years on its head. The single most powerful predictor of where the president comes down on any given issue is where Barack Obama was. He does the exact opposite of what Obama did.

    You’ve got the Affordable Care Act, the Paris Climate Accord, the Trans-Pacific Partnership, Syria, and now the Iran deal.

    DER SPIEGEL: What do you think are the broader ramifications of the U.S.A. abandoning the deal?

    Hayden: The first line of confrontation is not with the Iranians, but with our European friends. They have a legitimate right to get an answer to the questions,

    “Do our views matter? Do the Americans take our views into consideration?”

    In addition to whatever it may or may not do in the Persian Gulf, it will alienate our best friends in the world, and we’ll end up with a trans-Atlantic argument.

    DER SPIEGEL: Trump often criticizes the U.S. intelligence community. He feels he is under surveillance. Do the agencies have as much power as they used to?

    Hayden: The president views relationships through the lens of loyalty to him. This is troubling because our ethos inside government is the rule of law. Not loyalty to the man but loyalty to the constitution.

    What, then, do the fact-bearers do when the president’s willingness to accept your facts is governed more by your relationship to him than it is by the evidentiary stack you have behind the facts?

    You have to keep trying regardless. You keep addressing the issue.

  • Clyde Duncan  On May 13, 2018 at 1:45 pm

    Navigating the Headwinds: Europe Has Few Good Options on Iran

    Europe spent months trying to convince U.S.A. President Donald Trump not to abandon the Iran nuclear agreement. Now that he has, the Europeans are left with a handful of options, but none of them are good.

    Matthias Gebauer | der Spiegel International

    When Donald Trump appeared before the White House press corps on Tuesday morning local time, diplomats in Berlin had already long given up hope. They may not have received many details from Washington in the past few days about the impending decision. Yet Trump’s decision to turn his back on the Iran deal was already certain. The only surprise was his extremely aggressive tone.

    The European rescue missions, the last-minute trips by French President Emmanuel Macron and Chancellor Angela Merkel, the warnings and appeals, were to no avail. For weeks EU emissaries had tried to negotiate in Washington, offering new supplementary agreements to the Iran deal designed to placate Trump. But nothing worked.

    Despite the frustration, the only thing left to the Europeans was to look ahead.

    And on Tuesday, in anticipation of Trump’s announcement, Berlin, Paris and London spent the day crafting a joint statement. Their hope is to keep the deal with Iran alive even with the exit of the United States of America – but now as a deal between the other UN Security Council powers of Great Britain, France, China and Russia in addition to the European Union.

    The statement is combative: “Our governments remain committed to ensuring the agreement is upheld, and will work with all the remaining parties to the deal to ensure this remains the case.” The United States is directly urged not to take any measures in opposition to the countries that want to retain the deal.

    The positions couldn’t be further apart. Trump announced that the U.S.A. would immediately impose tougher sanctions. The so-called E3, made up of Great Britain, France and Germany, reassured Tehran of “the continuing economic benefits to the Iranian people” if the country kept to the agreement and allowed international observation to continue.

    Further Into Chaos

    The Europeans’ plan is driven by fear of escalation in the Middle East:

    Iran could immediately ramp up its nuclear program if the deal collapsed, leading to the nightmare scenario of a military intervention by Israel. The Middle East would then certainly descend even further into chaos.

    Europe’s emergency solution is based on the idea of appeasing Iran, at least for a while, in order to prevent it from doing anything ill-advised. Europe, of course, can’t prevent the U.S.A. from ramping up economic sanctions against Iran, but Germany, France and Great Britain don’t have to follow Trump’s line.

    Brussels hopes that Europe’s refusal to reactivate sanctions against Iran will be seen in Tehran as a signal of goodwill. If European companies continue to trade with Tehran, the economic consequences of the U.S.A. exit from the deal would then be less harsh than some fear.

    Some diplomats are considering further steps. There is talk of offering financial protections to EU companies doing business in Iran to protect them from U.S.A. sanctions. Last week, some EU states discussed this in Rome, though large multinationals with subsidiaries in the United States of America are hardly going to be lured by such reassurances.

    No one can promise that these emergency measures will work.

    Economic experts are certain that the re-imposition of U.S.A. sanctions will mean a radical reversal of Iran’s modest recovery.

    Large deals, such as the modernization of the country’s dilapidated aircraft fleet, will likely collapse. Smaller deals can’t make up for such losses.

    Severe Headwinds

    Furthermore, Trump has made it clear that he won’t allow U.S.A. partners to do their own thing when it comes to Iran. Shortly after the White House speech, the new U.S.A. ambassador to Germany, Richard Grenell, tweeted: “German companies doing business in Iran should wind down operations immediately.”

    It’s difficult to say how long the EU has. Hardliners in Iran have long been critical of President Hassan Rouhani for signing the deal with the U.S.A. and now that pressure will only grow.

    Now that Iran has to deal with a new sanctions regime, and now that Rouhani looks like the deal’s loser, the headwinds are likely to become severe.

    Rouhani is doing his best to project calm. “We now have a deal with five states instead of six,” he said following Trump’s speech.

    He would now speak with the Europeans, he said. He made it clear, however, that Iran could revive its nuclear enrichment program if putsch comes to shove.

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