The loss of our “soft power”

I just felt that the transcript of Fareed Zakaria’s My Take  fit so well within the last blog on the Saudi attack.   Fareed looks at all the crises:  North Korea Disarmament talks, China Trade war,  Israel – Palestine conflict,  Afghanistan disengagement and talks with the Taliban,  and concludes Trump has failed badly,  because he isn’t a good negotiator.

But he held out some hope for a US-Iran deal, something which would allow the Iran nuclear deal from unraveling.  Fareed’s piece was likely concluded just prior to the drone attack on Saudi Arabia.   The US now threatens to bomb Iran, in part because that’s what the Saudi’s would like.   Now,  none of these conflicts are new, except the hostilities between the US and Iran.  This occurred because Trump and the Republican party waged war against the Iranian nuclear deal.  The China trade wars are new, but the problem of China’s unfair trade practice are not new.

So, bottom line, Trump hasn’t really resolved any of the international conflicts he inherited from Obama, and has added Iran nuclearization to the heap of threats.   I would add climate change as sixth major threat, which Donald Trump has taken a giant step backwards by pulling out of the Paris Climate Accord.   The next president will arrive in 2020 with his or her plate full.

Diplomacy is the art of the compromise.   It is our strength.   It is why the US pushed for international organizations, like the UN, World Trade Organization, World Health Organization, the International Atomic Energy Commission which is still doing the inspections in Iran, and many others.   It is soft power, and it looks like we are losing it.

Stay tuned,

Dave

Links:

 Trump’s foreign policy is in shambles (Fareed Zakaria)

Soft Power

 

Saudi attack – Part 2

There’s a lot of news and commentary out there.  The big one is how long until the Saudi’s production is restored.  Of course, the damages are still being assessed.  Saudi Arabia will draw from emergency supplies, so for the immediate future, there will be no disruption in tanker liftings. Some production will be restored in days, but it appears to be weeks or months before all the oil production is back.  Oil prices are usually quoted in terms of Brent or West Texas Intermediate (WTI) on the futures market.  As I write this at 6:30 am on Monday, I see WTI at $59.53/bbl up 8.53% when trading began on Sunday.    This is down from $61.14/bbl as of Sunday night.  I’ve included the website oilprice.com in the links for those who like this stuff.   Looking at the chart on WTI, they hit a bottom on Dec 25, 2018 at $42.53/bbl then peaked on April 22, 2019 at $65.55/bbl.   So, this “incredible spike”  is unusual because it occurred on one day, but movements of 10% or more in a couple of months are pretty common.  These are traded futures values of oil, and include the anticipated price changes based on reported inventory levels and geopolitics.   I believe in a month or two,  this event will be buried in the usual fluctuations in crude prices.

Second,  Trump’s reaction is way over the top.  He announced he’s given approval to make withdrawals from our Strategic Petroleum Reserve if needed.    It won’t be necessary.    He’s threatening to retaliate against Iran, which seems ridiculous to me.   Yes, Iran helped arm the Houthis, but around the world, the US helps governments or their enemies, without a second thought.   Libya comes to mind, when we assisted the civil war there in 2011.   Our assistance to insurgents in Syria was very open.

Finally, the comments from Mike Pompeo to blame Iran and not the Houthis, even after they claimed responsibility for the attack, still seems weak.  Others have spoken out.   Senator Rand Paul arguments closely align with my own – see link.  The UN is the right place for presenting everything we know about the attack.

Stay tuned,

Dave

Links:

Oilprice.com 

CNN:  Sen Paul: Don’t bomb Iran

CNN: US is ‘locked and loaded’ 

NYT:  Saudi Oil Photos implicate Iran, US Says

Maybe it should state “US thinks” as it is clear the evidence is weak reading through the article,  I guess I’d like to know if cruise missile attack did occur, could it have been seen from satellite photos?  Good article.

The attack on Saudi’s oil installation

The recent attack on Saudi’s oil installation, was incredible with 5.7 million barrels of oil per day shut-in, roughly half of their oil production. For comparison the US produces about 12 million barrels per day.  So, economically, Saudi Arabia is losing 300 million dollars per day.  However, the New York Times reported that analysts who closely follow the Saudi oil industry, were hearing the damage to the facilities was not severe resulting in only a few day’s outage,  This sounds like some of the shutdown was really just a precaution.   The oil analysts are predicting a rise in oil prices when trading begins Sunday (September 15) night, likely to change quickly as engineers assess the damage.  Spot oil prices in the next week will be a reflection of how long until Saudi production is restored.

The question is, right now, who did this?  The Houthi’s are claiming responsibility for the drone attack, yet the Mike Pompeo, US Secretary of State, claims it was Iran.   I beginning to get the idea that the US just doesn’t know where the drones came from, and Iran seemed a convenient culprit.  The US is not taking this to the UN Security Council, which would be the obvious place to begin to show all that we know.   Pompeo did not say that the drones were sent from Iran, just that they were responsible for the attack.

The attack took place 500 miles from Yemen.   UN investigators have reported that the Houthi’s had drones capable with a range of 930 miles.  The Houthi’s said the attack was done by 10 drones.

The current war in Yemen began in 2015, and the civilian losses due to war or starvation have been terrible.  It is a proxy war, with Saudi Arabia and the US helping the Yemen government with aerial bombing and Iran’s support of the Houthis.    There are excellent summaries of the conflict on Wikipedia.

I think Trump is looking for a pretext to attack Iran.  Also, he has no problem of supplying Saudi Arabia with a pretext to attack Iran.  It also makes no sense that, given the current conflicts between the US and Iran, that Iran would be involved in an attack on Saudi Arabia.   Iran is suffering economically due to the sanctions imposed by Trump.  It is desperately trying to convince the rest of our allies not to be pressured by the US in extending these sanctions.

Stay tuned,

Dave

Links:

Houthi Movement

 

 

 

 

Weaker alone and it’s getting worse (China, Iran, Climate Change) + Over the top distractions

Trump has started a number of highly disruptive “wars” without a clear end in sight.  The two big ones is his economic war with China and the political war with Iran.   A third huge division among us and our allies is our recent action against international cooperation in climate change.  Our Department of Justice is currently waging war against our automobile manufacturers who are working with California to improve exhaust emissions standards.  I guess the idea is that we all must breathe the same polluted air.   I’ll leave this last one for separate blog.

— Trade War – No end in sight.

The trade war with China, just seems to get worse every month.  According to experts, China has engaged in unfair trade practices.  But, the current trade wars are just the US and China.  We failed to obtain international support.  We created the World Trade Organization to address issues such as unfair trade practices and currency manipulation.  Now we take action without their involvement.  Trump pulled out of the Trans-Pacific Partnership Agreement (TPPA) which included 12 countries (China not one of them) and would have been the best counter measure against China’s unfair practices.  Trump has correctly stated that prominent Republicans and Democrats were against it.   Likely, if Clinton were elected president, then she would have attempted to make  changes in the agreement.

The TPP agreement is long and complex.  It has survived without the US in a new agreement, the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP).   The US was insisting on certain provisions which would be best for the US. and none of the other countries before we signed it.  See links below.  When Trump pulled out, all the contested provisions were pulled out.  It includes however, what seems at the top of Trump’s wish list – respect for intellectual property as follows:

It [CPTTP] includes the most detailed standards for intellectual property of any trade agreement, as well as protections against intellectual property theft against corporations operating abroad.

Manufacturing as measured by the US ISM manufacturing employment index, last month hit a two year low of  47.4 in August 2019, down from a high of 60.17 on September 2017.  See link.

Trade wars are a lose-lose proposition.   There are 18 countries which are party to the CPTPP agreement including Japan, Mexico, Australia, Singapore and Canada.  They are stronger together, and the US is now weaker as it stands alone.

—  IRAN

Now Iran.  As long as the sanctions were lifted, Iran obeyed by its commitments.  They had a strict monitoring program.  The agreement basically called for the US to lift sanctions as long as Iran was in compliance.  When Trump imposed economic sanctions by refusing to import oil from Iran, it put the US in violation of the agreement.  Further, the US was pressuring other countries and companies not to lift Iran’s oil.

Thus, Iran correctly stated that they had the right not to be bound by the terms of the agreement, primarily on the amount of uranium it could enrich.   None of our European allies want Iran to get nuclear weapons, so they are pleading with the US, to drop the sanctions, so Iran can be brought back into compliance.  President Macron is leading this effort.  The head of the UN atomic energy watchdog agency (IAEA)  is in Iran now,   Iran makes no secret of its violations of the treaty and in fact will comply with thorough IAEA inspections,   It is simply tit-for-tat against actions taken by the US.

Trump’s theory, that once Iran felt the pain of sanctions, it would do anything to please the US hasn’t worked at all.  In fact, it has been a terrible failure.   Treaties are tough to put together, but much easier to fall apart.

I’ll stop here.  I’ve got a lot more to say on Trump’s misguided policies on reducing our carbon emissions and minimizing the real threat it is creating throughout the world, including droughts and extreme weather events.  But that will be a separate blog.

— DISTRACTIONS

I have to contend with a huge number of distracting events in July and August.  It’s really nuts.  Vice President Mike Pence wants an American on Mars by 2024, about 6 years earlier than planned, price tag around 500 billion dollars (a trillion here and there eventually adds up to real money) plus the militarizing of space with the Star Wars themed “Space Force.”   Then the trip to Ireland, was a publicist nightmare.  His grandfather was Irish, but he fled Ireland as a refugee escaping violence and poverty, just the folks Trump is trying to ban from the US.  Plus,  it was a terrible snub to stay at the Trump hotel, far outside of Dublin, for “security reasons.”  Nobody bought this one.   See link.

What else:  Trying somehow link Bill Clinton and Jeff Epstein by repeating social media nonsense,  buying Greenland and insulting Denmark (whose next?), the Trump drawn hurricane maps to include Alabama, pulling funds for Puerto Rico hurricane rebuilding effort to build the Mexican border wall (seeing just how far the National Emergency Act can be stretched), and a barrage of tweet attacks against Jay Powell for basing his decisions on interest rates on economic data and Fed Reserve objectives, rather than Trump’s polling numbers.  Remember, Jay Powell was Trump’s nominee to the Fed and highly qualified for this position by both Democrats and Republicans.

I’m not sure if any of the above means much. Our policies on Iran, China and Climate Change are real issues where an immediate course correction is necessary.  More like 180 degree turn, as we are “stronger together.” This will have to wait until the 2020 elections.

Stay tuned,

Dave

Links:

Manufacturing Unemployment index is down

Wikipedia: Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)

Atomic watchdog chief in Iran for high-level talks

The distractions:

Mars Confusion 

Pence’s disasterous trip abroad

The Irish love anyone who can drink beer and has a bit of Irish heritage.  I believe they’ll make an exception with VP Mike Pence.

Irish Times Review of Mike Pence’s visit