US - Transatlantic Dialogue - Elcano Royal Institute empty_context Copyright (c), 2002-2018 Fundación Real Instituto Elcano Lotus Web Content Management <![CDATA[ From trade diplomacy to economic warfare: the international economic policy of the Trump Administration ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/wp10-2019-higgott-from-trade-diplomacy-to-economic-warfare-international-economic-policy-trump-administration 2019-05-31T12:23:59Z

This paper is an analysis of the discursive practices of the international economic policy of the Administration of President Donald Trump, writ large. Within this conceptual context it offers an empirical case study of the US-China relationship across the spectrum.

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Index

Introduction
(1) The global context
(2) Concepts and theories
(2.1) Discursive practices: from securitisation to economic warfare
(2.2) Economic theory and international economic relations: the rise and fall and rise of economic statecraft and mercantilism
(3) The securitisation and weaponisation of US economic policy: the Trump agenda
(4) The US-China relationship: towards economic warfare?
Conclusion: assessing a Trumpian strategy of political (economic) warfare
The record
Donald Trump and the changing nature of geopolitics
References

Introduction1

This paper is an analysis of the discursive practices of the international economic policy of the Administration of President Donald Trump, writ large. Within this conceptual context it offers an empirical case study of the US-China relationship across the spectrum, from tariff conflict through to the growing struggle for control of the 21st century high-technology industries. The argument is that the Trump Administration utilises the discursive practices of what some scholars call ‘securitisation’ (Buzan et al., 1998) through to what might more appropriately be described as a discourse of ‘economic warfare’.

The paper is in four parts. Part 1 provides a brief discussion of the changing historical and international context of the study. Part 2 provides a conceptual discussion of the discursive practices of securitisation, economic statecraft and economic warfare on the one hand and the theory of international trade captured in the idea of the rise and fall of mercantilism and its re-emergence in the international economic agenda of the Trump Administration on the other. Part 3 looks at these concepts as they pertain to current US international economic policy. Part 4 concentrates on US policy towards China particularly. The paper concludes with some reflections on the success or otherwise of contemporary US policy.

(1) The global context

The cooperation that developed during the period of US ‘self-binding’ hegemonic control (Martin, 2004) over a liberal international order had been under strain in the US since the 1980s when the bilateral deficits with Japan became a major political issue. But it has been since the financial crisis of 2008 that the order has really begun to unravel. The Japan challenge was not sustained but great power competition from both China and Russia has grown. Always fragile, the popular consensus in support of a global liberal order –which was only ever partially liberal and partially global (see Acharya, 2017)– has further dissipated as strong ideological populist challenges have fuelled nationalist politics with attendant practical implications for economic globalisation and international relations in the post 2008 era (see Higgott & Proud, 2017).

This unravelling and great power competition pre-dates Donald Trump becoming President of the US. But it has been exacerbated by his economic nationalist counter-agenda to globalism; an agenda voiced not only by President Trump but also by subordinates in his close policy community –initially by Steve Bannon, but also others such as US Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin and Special Economic Adviser Peter Navarro–.2

As this paper will argue, the challenges faced in a search for a new, post-liberal global equilibrium are reflected in both the conceptualisation and practice of economic securitisation and warfare as an instrument of US policy. The contours of any new order will be a highly contested with an increasing interdependence of the two key issues areas –economics and security– and increasing competition between the two principal combatants –the US and China. What might have started as a fairly traditional recourse to a protectionist trade agenda is steadily, and rapidly, morphing into a wider battle between the US and China across the whole spectrum of relations, and especially the battle for technological ascendency in the 21st century. We are witnessing not simply a rhetorical securitisation of US economic policy discourse but a more intense economic and political response to economic globalism in general, and the ascendency of China as a rival global economic power in particular.

For much of the post-World War II era, the relevant government agencies in the US (especially the US Treasury, abetted by the USTR) and the many interested trade and commerce lobbies and pressure groups had sought to treat international economic policy in general, and trade policy in particular, in a manner different to the normal rules of foreign and security policy. Trade policy was seen as a quasi-preserved domain with its own epistemic discourse. This has changed in the current era, where expert knowledge, when not directly rejected or increasingly belittled, is less valued (see Nicholls, 2017).

We are now in an era in which international trade policy, underpinned by a belief in the welfare-enhancing nature of trade openness is under challenge (see Irwin, 2017). This should not lead us into thinking that the globalisation of the international economy as a set of sinews, networks, activities and practices that developed over the last 40 years are somehow coming undone. This is clearly not the case (see Slaughter, 2018; and Baldwin, 2018). Rather, US policy has undergone a major change. An open liberal economic system has been characterised as a licence for others to cheat in their economic relationship with the US.

(2) Concepts and theories

(2.1) Discursive practices: from securitisation to economic warfare

Following 9/11 it became fashionable in some academic and policy quarters to talk about the ‘securitisation’ of US international economic policy. In academic language, securitisation (following the work of the Copenhagen School) was defined as a set of socially constructed and contextual speech acts and processes in which ‘… an issue is framed as a security problem’ (Waever, 1995, p. 75; and Buzan et al., 1998). Evidence of the securitisation of economic globalisation in US policy can be traced far back: from the time of the Raegan Administration and its introduction of the use of VRAs and VERs against the Japanese in iron and steel, machine tools and cars in the 1980s (Reich, 1989) through the to the Bush Administration. It was 9/11 that (perhaps unsurprisingly) firmed up the trend as the Administration proved unable to resist the siren calls to link the narratives of foreign economic and security policy.

For the Bush Administration, globalisation became not only an economic issue but also a ‘security’ problem. As a consequence, the discourse and practice of the securitisation of foreign economic policy developed accordingly. This trend was particularly acute in trade policy where, to illustrate, the granting of the bilateral Free Trade Agreements (FTAs) under negotiation at the time to those who supported the US Gulf War Two initiative (Australia and Singapore) contrasted with the explicit withholding of them from those who refused to join the Gulf War coalition (New Zealand and Chile) (see Higgott, 2004).

The earlier discourse of securitisation did not operationalise the concept of economic statecraft, let alone economic ‘warfare’ –concepts largely applied to non-liberal regimes, notably Russia and China. This study will demonstrate a step change between the Bush era and the contemporary era of the Trump Administration. It will demonstrate that contextual global change and the empirical narrative of international economic policy in general, and trade policy in particular, under the current Trump Administration requires a recognition of both the similarities and differences in the securitisation-economic warfare dialogue not required in the age of George W. Bush. Current US policy is taking us beyond both the securitisation problematic of the Copenhagen School and the traditional understanding of economic statecraft restated recently by Blackwill & Harris (2016). Rather, current US international economic policy should be interpreted through the discursive lenses of an aggressive and pro-active –as opposed to the earlier defensive and reactive– economic warfare.

Current US strategy in trade policy under the Trump Administration offers a counter-veiling argument to the notion that democracies will invariably prefer, à la Joseph Nye, (2004) a soft power diplomatic approach to more atavistic approaches. The preference is now to challenge longstanding commitments to multilateral collective action in the global trade regime with a preference for a strategy based as much on threat as on reward. A comparative analysis of the Bush and Trump Administrations suggests two major differences:

  1. The securitisation strategy of the Bush Administration after 9/11 was underwritten by assumptions of ‘existential threat’ but still with a significant commitment to multilateral institutionalism. By contrast in the Trump Administration’s strategy, without formally articulating it, it is clear that President Trump has a longstanding belief in a mercantilist view of trade with little or no commitment to multilateral institutionalism.
  2. The impact of the communication and technological revolutions on how the dissemination of a securitised trade policy under the current US Administration is practiced, when compared to the tools at the disposal of the Bush Administration, is both more intense and more sophisticated. George Bush did not have the populist communicative skills of Donald Trump nor the weaponry of digital social media, especially Twitter. The message of economic warfare is much easier to disseminate today.

Current strategy and policy harness the discursive instruments, tools and practices short of war to secure the enhancement of national objectives over those of adversaries. If we use the language of security studies we are seeing what Mahnken et al. call ‘… the coercive use of non military instruments to alter adversary behaviour’ (2018, p. 3). This allows us to demonstrate the degree to which our understanding of the discursive practices of trade war can be extended in two ways:

  1. To include allies as well as adversaries as targets.
  2. To extend our focus beyond Russia and China, to the discursive practices of econo-political warfare beyond the traditional understandings of US economic statecraft in recent years (see Blackwill & Harris, 2016).

This comparison of language and practice in US international economic policy is not of courses to suggest any wider similarity between the US on the one hand and China and Russia on the other. The US, for all its current problems, remains a robust democracy while Russia and China are both strongly authoritarian states. But comparative discursive narratives can be identified. In their case study on Russia, Mahnken et al. (2018, p. 10) identify what they see as key themes in the post revolution Bolshevik narrative. Four of the six they identify –(a) ‘we are special’; (b) the ‘country is threatened’; (c) there is a ‘sacred mission’; and (d) ‘victory is assured’– do warrant comparison and find resonance in the Trumpian international economic playbook that stresses:

  1. The residual myth of American ‘exceptionalism’ (‘we are special’).
  2. That the US is disadvantaged by the cheating and free riding behaviour of its major trading partners (‘the country is threatened’).
  3. The presidential mission is to ‘Make America Great Again’ (MAGA as ‘a sacred mission’).
  4. In the economic domain, this has meant a turn to aggressive and unilateral protectionist measures addressed to competitors and allies alike and based on the premise that, in Trump’s own words, ‘trade wars are easy’ (‘victory is assured’).

The analogy permits two further discursive comparisons. First, Vladimir Putin believes Russia was betrayed by the West after the Cold War with its support for the ‘colour’ revolutions in regional neighbours and the eastward expansion of NATO. Similarly, this sense of betrayal is mirrored in the US President’s belief that European allies have been free-riders on US largesse in both the security domain (NATO) and the economic domain (trade imbalances). If his resentments reflect core elements of Trump’s world view, then they lend themselves to explaining his policy responses: bilateralism, transactionalism, aggressive competition, and punishment and retaliation rather than cooperation and multilateralism. In addition, the observation of Trump’s attitudes towards the US’s European allies (for example, his position on Brexit and suggestions to President Macron that France leave the EU) also suggests a willingness to sow division amongst allies where possible. Secondly, the MAGA discourse mirrors Xi Jingping’s emphasis on enhancing respect for China globally after years of humiliation. This theme –that the US must be respected– is to be found in much presidential rhetoric about the lack of deference paid to the US by ungrateful allies.

Richard Higgott, PhD, FRSA, FAcSS
Emeritus Professor of International Political Economy, University of Warwick
Research Professor, Institute of European Studies and Distinguished Professor of Diplomacy, Vesalius College of Global Affairs, Vrije Universiteit Brussel


1 The author is grateful to Luis Simon, Patrick Low, Simon Reich, Jaihong Chen, John Hart, Anthony Milner and Uli Penzkofer for their helpful comments.

2 See Navarros’s documentary, Death by China

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<![CDATA[ How should the EU confront President Trump? ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari115-2018-steinberg-eu-facing-hostility-president-trump 2018-10-15T06:04:14Z

To what extent is the Trump Presidency just an anomaly or a symptom of something more profound? How should the EU react?

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Original version in Spanish: La UE ante la hostilidad del presidente Trump

Theme

To what extent is the Trump Presidency just an anomaly or a symptom of something more profound? How should the EU react?

Summary

The surly challenges that President Trump has hurled at his European partners have increased at the same rate as his disdain for the liberal international order that the EU so highly values. This paper analyses to what extent Trump is simply an atypical President whose vision will eventually fade in the US or whether, on the contrary, his foreign policy positions reflect a deeper, structural change underway in the US. In addition, the analysis explores how the EU should react. It is imperative for the Union to begin to articulate its own strategic autonomy, independently of the transatlantic relationship, and to construct a common voice in economic and security matters. This requires overcoming the EU’s internal divisions and the mutual distrust between its member states.

Analysis

Concern is spreading across European capitals and particularly within the EU’s institutions. The foundations of the liberal international order that has allowed European countries to attain unprecedented levels of security and prosperity are now under pressure.1 Although European decline could be expected sooner or later, because dominance of the world economy –alone or in partnership– cannot last forever, few expected to be betrayed by the American friend. But this is precisely what has happened since Donald Trump has been occupying the White House since 2017. In fact, today it appears that the US has a tighter strategic relationship with Russia than with the EU.

Since the end of World War Two, the US has been the main guarantor of European security, an important backer of the European integration process and a global leader of the rules-based liberal economic order upon which a large part of European prosperity has been built and sustained. Furthermore, even as the world became economically more multipolar, the US remained a reliable ally. In fact, initiatives like the free-tree agreement between the US and the EU (known as the TTIP) –so criticised by broad segments of European society– were intended to geopolitically rejuvenate the transatlantic relationship, to allow the West to maintain its global leadership and to establish the ground rules for 21st century globalisation in the face of the rise of emerging powers.2 But these initiatives have not prospered. Trump has rejected the TTIP (although it now appears he wants to salvage its least controversial component, a further reduction in tariffs on merchandise trade) and he is now abandoning Europe to its own fate. He has no interest in leveraging the transatlantic space or in cooperating with other traditional allies of the US to deal with a rising China (which Trump perceives as the main threat to US hegemony). Indeed, Trump is willing to bury the very same multilateral institutional apparatus –especially NATO and the World Trade Organisation (WTO)– that the US very comfortably led until just a short time ago.

But the worst for Europe is that Trump recently switched from merely criticising the EU to attacking it outright.3 His friendship with the anti-European, xenophobic and illiberal movements that have become increasingly popular within the Union –and now threaten to destroy it from within– is especially worrying for the establishment in Brussels, Paris and Berlin. For Trump, ‘the European Union is possibly as bad as China, just smaller… It’s terrible what they did to us… Last year… if you look at the trade deficit… 151 billion dollars…. On top of that, we spend a fortune on NATO to protect them’ (as Trump said in a recent interview with Fox News, 1/VII/2018). He has even said clearly that ‘the European Union is a foe (because of) what they do to us in trade’ (in another interview with CBS, 15/VII/2018). Trump is the first US President to see the Union as an economic rival rather than as a geopolitical ally. Furthermore, Trump is more comfortable with strong authoritarian leaders like Putin, Xi Jinping and Erdogan –something the elegant and diplomatic Europeans find incomprehensible– than he is with the Presidents of the G-7, whose powers are limited by the liberal democratic system’s checks and balances and the separation of powers that seem to bother Trump so much.

Although the President of the European Commission, Jean Claude Juncker, was able to come to an agreement with Trump in June 2018 to call a truce in the transatlantic trade war, his attitude towards Europe in recent months has been rude and threatening.4 He has demanded that Russia be admitted again as a member of the G-7 (after having been expelled from the group in the wake of the annexation of Crimea), refused to sign the G-7’s joint communiques, accused Germany of being subject to Russia on account of its energy dependency, came up with the impossible demand that NATO’s member countries raise their defence spending to 4% of GDP if the US is to remain loyal to the organisation (the commitment is currently 2% but only a few countries meet it) and has often claimed that Brexit –a tragedy for Europe– is wonderful, adding that had Theresa May followed his advice negotiations would have been more in her favour, and that the UK should sue the EU.

In short, Europe’s leaders feel bewildered, betrayed, uncomfortable and vulnerable. Aware that Trump’s manner is particularly corrosive to international cooperation in general and to the transatlantic relationship specifically, they are in a quandary about how best to react.

Containment or confrontation

For the EU to respond to Trump, it must first understand what it is facing. For the time being there are two competing theories: (1) that Trump is a transient anomaly; or (2) that on the contrary he is a symptom of something deeper that has come to stay, which would force European countries (and especially the EU) to modify both their foreign policy and their alliances (particularly in security and defence).

Most Europeans would prefer to think that Trump is just an accident, the result of an accumulation of circumstances that unexpectedly took him to the White House and that once his term comes to an end he will have been just a bad dream. This idea assumes that Trump would not have reached the Presidency had it not been for the anomaly that an outsider won the Republican primaries, that the winner of the popular vote –Hillary Clinton– failed to win a majority of Electoral College votes and that certain aspects of the election campaign were ‘interfered with’ in the social media. According to this interpretation, Trump –only the second populist and anti-establishment President in US history (the first was Andrew Jackson, President from 1829 to 1837)– will cause no lasting structural changes in US foreign policy and that the liberal international order beloved by –and convenient to– Europeans will survive. Indeed, Jackson’s eight years as President did not essentially change the nature of the US at that time or its still marginal role in the world. If such a hypothesis proves correct, what Europe should do would be to weather the storm without losing its dignity while keeping up a continuous and constructive dialogue with those who continue to advocate a stronger transatlantic relationship, especially the liberal internationalists of the Republican Party. It should respond prudently to Trump’s bravado, particularly on trade matters, but without significantly modifying its position in the expectation that the next US President will be ‘normal’, understand the value of the Atlantic Alliance, support European integration and once again be willing to sustain, with the help of others, the increasingly necessary structures of global governance. Indeed, many Europeans –perhaps confusing desire with reality– do not believe that Trump will even complete his first term due to a possible impeachment and that, in any case, he will not be re-elected in 2020.

However, there is another possibility that Europeans are reluctant to accept but might be a truer reflection of current developments: that ‘Trumpism’ goes beyond Trump himself and points both to the deepening fractures within American society and to a readjustment of US national interests in an increasingly multipolar world and the West in decline. Therefore, Trump’s election might well reflect a structural discontent of American voters –with the establishment, the cosmopolitan liberals of the East and West coasts, and with the unfair distribution of the benefits of globalisation and technological change– that has come to stay. Such a sentiment is echoed in Europe by support for Brexit, the rise of political parties like Lega in Italy and the National Front in France, and in the position of the current Austrian Chancellor and the illiberal policies implemented by the Hungarian and Polish governments without their popularity being diminished.5 Beyond this leading to electorates that are more inclined to tighter border controls and protectionism (summed up by Trump’s ‘America First’, whose effects are beginning to be felt), there is now a greater likelihood of Trump being re-elected in 2020 and of US foreign policy becoming increasingly isolationist and more focused on containing the rise of China, which would be damaging for the EU.

Under such a scenario, the US would gradually withdraw the security umbrella it has deployed on Europe’s behalf for over 70 years, forcing Europeans to take responsibility for their own security (and, above all, for their relationship with Russia). Thus, although the next President might be better mannered and less aggressive than Trump, it is possible that the US might consider that being the main provider of global public goods –from security to the existence of legitimate rules-based international economic governance structures– is no longer in its own best interests. After all, the US economy is relatively closed compared with Europe’s or China’s, so that a certain erosion of economic globalisation might be less damaging to it than to others, particularly as it is well on the way to achieving energy independence, is retaining its structural power within the global financial system and can still use its power to ensure its commercial and technological interests are respected in a global economy where might is right. Furthermore, US public opinion –disenchanted with globalisation in the face of increasing inequality and rising protectionism– may not have the appetite to reverse Trump’s isolationist bent.

To the extent that the key geopolitical confrontation of the 21st century will take place between China and the US, from a geostrategic point of view it might make sense for the US Administration to weaken the EU to prevent it from adopting a position of neutrality as regards disputes between the two global powers, particularly in economic issues. In fact, a careful look at Obama’s foreign policy already reveals some signs of a strategic US retreat. However, because the former US President was more popular than Trump in Western Europe, his ‘pivot to Asia’ and his refusal to commit the US militarily to disputes near Europe’s borders went relatively unnoticed (although it must be said that Obama never championed protectionism, question international institutions or try to weaken the EU, even if he did ask his European allies to increase their defence spending).

Therefore, the US has been paying increasingly less attention to international affairs for years now, while attempting to reduce its foreign policy spending in order not to suffer what the historian Paul Kennedy has called imperial overstretch. Historically the phenomenon has led to the collapse of empires that were simultaneously engaged on too many external fronts.6 Trump did not begin the trend and it seems unlikely to be significantly reversed in the future.

What should the EU do?

Only time will tell whether Trump is just an accident, or even how long his presidency will last. But it does seem clear that the longer Trump is in the White House, the greater will be the erosion of the multilateral liberal order, especially of the WTO and the Atlantic Alliance, and the more difficult it will be for his successor to rebuild the relationship with Europe. The EU would do well to imagine itself in the worst possible scenario –as Angela Merkel has already suggested–, seek greater strategic autonomy, re-think its relationship with China and strengthen its alliances with countries that share its values. Such a coalition should begin with Canada, Japan and Latin America, and then try to expand from there.

The main problem facing the EU in this regard is that it is not a state and therefore lacks a real common foreign policy and security strategy. Even its enormous economic power is projected in a fragmentary way and is not integrated with other aspects of strategy. Europe is a ‘herbivorous power’ in an increasingly carnivorous world where great power rivalry is rapidly undermining the system of multilateral rules within which the Union most comfortably operates.7 In such a new international context, in which international law is increasingly being displaced by the law of the jungle, the EU appears divided, a player who is slow, unwieldy and ineffective compared with the US, China, Russia and even India. While it once used to be seen as an economic giant and a political dwarf, the truth of the matter is that the EU’s economic weight is now already diminishing8 while the new international geopolitical situation is condemning it to a further erosion of its political influence unless it can find a way to project itself both economically and militarily with a single and consistent voice.

In terms of defence, for instance, it is true that the sum of EU member-state military expenditure is considerable (close to US$200 billion, nearly four times Russia’s, if only one third of the US total). However, the EU does not engage in military spending jointly and can therefore not exploit economies of scale or optimise the distribution of tasks. Any progress in integrating European defence policies more quickly would be welcome. In fact, steps have been taken in the past two year that would have been unthinkable a decade ago. At the end of 2017 25 European countries established the EU’s Permanent Structured Cooperation (PESCO) for security and defence. In addition, nine countries, including the UK, have agreed to create a multinational command structure to facilitate the availability and deployment of reinforcements. While it cannot yet be called a rapid intervention force, both doctrine and equipment are now shared within this structure, which allows quicker decision making. In addition, the European budget for 2021-27, currently under negotiation, will almost certainly include for the first time a line-item of €1.5 billion annually for defence-related research and development. But there is still a need to develop better strategic thinking and be more ambitious at a European level, given that presently European collective defence is still ruled out by the current European Global Strategy. In conclusion, Europe needs to prepare for the (even if unlikely) worst-case scenario that the US withdraws from NATO without time for an orderly or progressive adjustment. But it must also lay the groundwork, if the US remains committed to Alliance, for European countries to develop the capacity to shoulder more of their share of the burden and to not depend so heavily on the US when there is a need to intervene. EU leadership is the key to achieving this goal, but for it to be possible the level of mutual trust between member states must be improved, which is a difficult prospect.

Where the EU remains a leading player and is accustomed to speaking with a single voice is in trade matters. It could therefore also take additional steps on this front, although it should go further and wield its commercial clout as a more active foreign policy tool. Without going so far as to accept China’s offer to forge an alliance to counter Trump’s protectionism (which is not in its interest either), the EU should continue to weave a network of free-trade agreements with like-minded countries that want to sustain an open, rules-based multilateral trading system. The system undoubtedly needs reform but it remains a precious asset that the EU must preserve. The agreements the Union has recently concluded with Japan, Canada, Singapore and Mexico should be added to others with MERCOSUR (now being negotiated), Australia and other Asian countries (the EU is currently negotiating a trade agreement with India and an investment agreement with China).9 These new agreements should aim not only to bring together as many countries as possible under the leadership of the EU but also to provide a model for commercial relationships that more effectively balance the interests of companies and citizens in particularly sensitive areas (such as environmental and labour protection, and investor treatment) in such a way that support for free-trade agreements in particular, and globalisation in general, rises within the Union.

But these agreements should also serve to promote two further and more ambitious objectives. First, the WTO needs reforming, although that will require having the US on board. The idea would be to adopt the WTO to the current economic situation, strengthen the institution’s surveillance of member-country trade policies so that they do not violate the rules and ensure the continued functioning of its dispute resolution mechanism, currently blocked by the US.10 The aim would be to bring China to the WTO-reform negotiating table in order to agree on new more legitimate rules to ensure a balanced playing field and to prevent incipient trade wars from getting worse. Secondly, this network of trade agreements should help to start promoting the use of the euro as a vehicle currency for payments in international commercial transactions. As Juncker claimed in the debate on the state of the Union in September 2018, greater use of the euro in international trade would be the first step towards its wider use as a global reserve currency. But even though it would require, above all, a reform of internal euro governance –unfortunately still pending (including banking and fiscal reforms, and the creation of Eurobonds)–, greater use of the euro in international finance would also require a more significant political push to be successful.11 Meanwhile, US protectionism, coupled with the threat of sanctions recently announced by the Trump Administration against European companies doing business with Iran, provides an excellent opportunity to give the euro precisely that political boost. Beginning to pay for imported oil in euros and constructing an interbank financial transfer system beyond the reach of the SWIFT system (controlled by the US) would be two places where the EU could start.

Conclusions

When Donald Trump arrived at the White House the EU lost the US as its main international partner and backer. Trump might be just an accident, a gap of four to eight years in the historically strong relationship between the countries of both sides of the North Atlantic that has held, with ups and downs, since at least World War Two. But it could also be the case that the EU will need to accustom itself to operating without the security umbrella historically provided by the US or the leadership of the liberal international order the US has exercised so far, which in turn has allowed the EU to achieve unprecedented levels of prosperity and security.

As noted, the Union should hope for the best but prepare for the worst. Although the Trump Administration should continue to disdain Europe, there are many politicians and civil society players in the US who continue to think that the EU should be the preferred partner of the US, that the transatlantic relationship remains key to sustaining the values and interests that the US has represented for the West for decades and that, in any case, it is more useful to work together to redefine the new international order –prompted by the rise of China– than to be divided. It is imperative, therefore, to maintain a good dialogue with such US players and to work jointly on issues where possible transatlantic consensus is discernible. Given that it remains unlikely that the US will decide to up-end the board and abandon NATO or the WTO, there might still be room for dialogue, even if it is less amicable than Europe’s leaders would like.

Nevertheless, Europeans must understand that the world of the 1960s, when the ‘American friend’ protected Western Europe, granted economic privileges and encouraged European countries to integrate, is gone for good. Therefore, they would do well to stop yearning for it. The world is now moving towards a new international (dis)order, where the EU might aspire to play a significant role, even if it remains to be defined. What does seem clear, however, is that the new world will be marked by a more isolationist US, a more assertive China, a Russia that will continue to punch above its weight for many years and weaker multilateral institutions. In short, it will be a less cooperative world shaped by intensifying geo-economic rivalry, with emerging countries demanding greater shares of power and influence in accordance with their growing economic weight and military clout. In such a context, the EU must re-think its foreign policy tools, both on its own and in cooperation with the US and other traditional partners (and perhaps even some new ones). The EU has the necessary economic and political levers at its disposal, but it must dare to use them strategically if it is to build an authentic European foreign policy. To achieve this, however, it must strengthen its own internal cohesion and overcome the internal fractures left in the wake of the euro and migration crises. And that will not be easy.

Federico Steinberg
Senior Analyst, Elcano Royal Institute
 | @Steinbergf


1 See the special issue of Foreign Affairs (vol. 97, nr 4, July/August 2018) devoted to the threats currently posed to the liberal international order, in which it analyses the threats from different perspectives, exploring to what extent such an order actually exists and how resilient it might be in the face of the new challenges stemming from US foreign policy.

2 See Federico Steinberg (2013), ‘Negociaciones comerciales entre la UE y EEUU: ¿qué hay en juego?’, ARI nr 42/2013, Elcano Royal Institute.

3 In September 2018 the US-based Brookings Institution launched a new tool, the Transatlantic Scorecard, to evaluate the state of the transatlantic relationship. In its first edition the relationship had the noticeably low score of only 3.6 points out of 10.

4 In any case, it is only a fragile truce: the import tariffs imposed by the US on European steel and aluminium, as well as the reprisal tariffs levied by the EU on US products, have now come into effect and will not, for the moment, be rescinded.

5 See the special section of The Economist in its issue of 15/IX/2018.

6 See Paul Kennedy (1988), The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000, Unwin Hyman, London.

7 For an analysis of the concept of ‘herbivore power’ see José Ignacio Torreblanca (2011), La fragmentación del poder europeo, cap. VII, Editorial Icaria/Política Exterior, Madrid.

8 According to estimates by Alicia García Herrero and Banco Natixis, between 2015 and 2025 China will contribute 21% of global growth, India 18%, the US 10% and Europe only 6%. Over the same period, the economies of Indonesia, the Philippines and Korea will grow to jointly equal the size of the German economy, while those of Myanmar, Taiwan and Malaysia will grow to jointly surpass the economy of France.

11 See Miguel Otero-Iglesias (2014), The Euro, the Dollar and the Global Financial Crisis, Routledge.

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<![CDATA[ Juncker and Trump end the trade war and revive a watered-down version of TTIP ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-steinberg-juncker-trump-end-trade-war-revive-watered-down-ttip 2018-10-02T05:32:58Z

It is good news that Trump treated Juncker as an equal and has understood that the EU is the key trade partner of the US.

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Original version in Spanish: Juncker y Trump frenan la guerra comercial y resucitan el TTIP, en versión descafeinada

The US and the EU have decided to end their trade war, at least for the moment. After a meeting in Washington on 25 July, the President of the European Commission, Jean-Claude Juncker, and the US President, Donald Trump, committed themselves to working together to create a transatlantic free-trade zone that would have no tariffs, subsidies or non-tariff barriers (although it would exclude the automobile sector). To begin with –although it is not at all clear how this will be achieved– the US will export more liquified natural gas to the EU (which would lower EU energy dependence on Russia) and the EU countries will buy more US agricultural produce (especially soy bean products). They will also begin to back away from the mutual tariff escalation that began a few months ago when the US imposed tariffs on European steel and aluminium imports, alleging (absurdly) reasons of national security and provoking a proportional response of reprisal tariffs from the EU. Therefore, while the negotiations remain underway, no new tariffs will be established (the US had promised to impose new tariffs on EU automobiles) and the two sides will work to eliminate the tariffs that have recently been approved. Finally, both powers will study together a possible reform of the World Trade Organisation (WTO) that would allow it to once again play an arbiter’s role in the governance of globalisation that, in recent years, it had been denied by the US.

“If Trump’s aim is to eliminate transatlantic tariffs he could have avoided this last year of rising trade tension”

In short, after months of playing a game of ‘who blinks first’ –which turned into a dangerous tariff escalation with no end in sight and that, in addition, undermined the confidence of both sides–, the US and the EU have decided to wind down the tension and search for a negotiated solution. This is good news for everyone. So, neither ‘trade wars are good and easy to win’ nor ‘tariffs are great’ (according to Trump via Twitter). The global economy had much to lose if the situation was not resolved soon. Although the trade war would not have generated a recession by itself (and its effects would have been fully felt only over the medium to long terms), escalation of the conflict dangerously threatened to destroy the WTO’s multilateral system of rules that has underpinned the liberal international order and a large part of the prosperity generated in recent decades (even if its distribution has remained overly unequal). Furthermore, the dynamic of confrontation also threatened to generate an irreversible breach in the transatlantic relationship, clearly visible both at the latest G7 Summit in Canada and at the summit meeting of the Atlantic Alliance in Brussels.

Nevertheless, things have not returned to normal. First, Trump continues to be an unpredictable nationalist whose word is worth very little. To the extent that this decision allows him to sell to his electorate the notion that he has forced the EU to bend to his will with his impressive negotiating skills, then Trump will be true to his word. But if that does not work, or becomes unnecessary, he could easily change his mind, especially when he sees that the US current account deficit does not decline (and it will not as long as the country continues to reduce taxes and undermine the national saving rate) or that German exports to the US remain strong due to the Americans’ inclination to continue buying top-of-the-range German cars.

Secondly, what has really happened with all this is that we have simply returned to the negotiation agenda of the forgotten TTIP, the trade and investment treaty between the US and the EU (under negotiation since 2013 but abandoned by the Trump Administration in 2017). If Trump’s aim is to eliminate transatlantic tariffs he could have avoided this last year of rising trade tension. The TTIP already incorporated a negotiated reduction of practically all manufactured goods tariffs between the US and the EU. The negotiations had also agreed upon an increase in the LNG trade as well as a deeper convergence between transatlantic regulatory standards. On the other hand, the TTIP had already got bogged down over the harmonisation or mutual recognition of the rules governing both markets (essential for facilitating transatlantic trade in services). The treaty had also run into substantial resistance generated by the different regulatory traditions in respect to the precautionary principle, consumer protection, food security and financial regulation, among other areas. The TTIP had also been strongly opposed both by Europe’s citizens (because it would establish an investment arbitration mechanism championed by the US) and by the US authorities (who have not countenanced the idea of opening their lucrative public procurement markets to European companies). Given that neither of these stumbling blocks will be resolved soon (in fact, the opposition to Trump in Europe will make an ambitious transatlantic trade accord that much more difficult to achieve), the best case scenario might produce a light TTIP (focused on the full elimination of tariffs), the benefits of which we could already have been enjoying for the past two years if we had wanted that version of the treaty. But because Trump likes to seem the great negotiator who resolves problems he must first generate a false conflict where none existed before so that later he can give the impression that he has resolved it, when actually he has done nothing more than pull back his position, and always with an intimidating attitude and a disdain for the rules which allow international affairs to be something more than a minefield.

Beyond the need to bring the current trade war to an end, it is now paramount for the US and the EU to work with Japan and other like-minded powers to adapt the international trade rules of the WTO to the current economic reality in a way that can integrate China within the governance of globalisation without having to fight a trade war with it. This is the major challenge that we face and the most difficult. But it is good news that Trump treated Juncker as an equal and has understood that the EU is the key trade partner of the US.

Federico Steinberg
Senior Analyst, Elcano Royal Institute, and professor at the Autonomous University of Madrid
| @Steinbergf

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<![CDATA[ Spain-US relations and the transatlantic relationship ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari98-2018-tovar-spain-us-relations-and-transatlantic-relationship 2018-08-13T01:14:15Z

The recent visit of Felipe VI to Washington provides an opportunity to analyse and reflect on the state of bilateral relations. In the short term, these relations will be framed by the arrival of a new government in Spain and by the increasing distance between President Trump and the European allies.

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Original version in Spanish: Las relaciones España-EEUU en el marco de la relación transatlántica.

Theme

The recent visit of Felipe VI to Washington provides an opportunity to analyse and reflect on the state of bilateral relations. In the short term, these relations will be framed by the arrival of a new government in Spain and by the increasing distance between President Trump and the European allies.

Summary

The first visit of King Felipe and Queen Letizia to the White House was the second top-level encounter between Spain and the US during Donald Trump’s first term. Nevertheless, the trip was marked by tension between the US and some European allies arising from differences over values, defence and (especially) trade policy, and recent domestic changes in Spanish politics. Therefore, given the many important interests at stake, there is a need to find formulas that can guarantee the stability of the bilateral relationship and avoid a new political debate upsetting it.

Analysis

On 19 June 2018 the Spanish King and Queen made their first visit to President Trump in the Oval Office. In the brief public encounter that took place after their meeting, President Trump –in addition to stating his intention to visit Spain– emphasised the close relationship between the two countries, mentioning, paradoxically, the most controversial issues in the context of transatlantic relations: trade and defence. After underlining the importance of the historical and cultural legacy that unites the two countries –the central motive for the visit, which also included New Orleans and San Antonio (Texas)–, King Felipe VI, for his part, identified democracy as an important asset the two nations have in common.

Despite the cordiality and robustness of the bilateral relationship, the Spanish Royals’ visit to the US took place in a context of political debates and changes with potential consequences for both the bilateral relationship and the EU-US relationship. These changes and discussions have unfolded within two different contexts: (1) the transatlantic relationship; and (2) domestic politics in Spain.

Political controversies clouding the transatlantic relationship

The debates unfolding across the vectors of the transatlantic relationship have focused primarily on two central themes: trade and defence. A third topic might also be identified: the question of values, which for Europeans has both an international and an internal dimension.

The first of the controversies stems from the disputes that President Trump has provoked with his principal allies with his changes to US trade policy, including tariff barriers on various imported steel and aluminium-related products from the EU. Originally, the European countries (like other US allies, such as Canada) were exempted from their application. Nevertheless, the tariffs were ultimately imposed, and the EU responded with reprisal tariffs on a range of US products, following the example of other countries like Canada and China.

It is no secret that President Trump (going back at least to his election campaign) has made trade issues and the fight against the trade deficit one of his most important banners. Upon assuming the presidency, he withdrew the US from the negotiations and ratification process of the Trans-Pacific Partnership (TPP), despite the agreement’s political significance for relations with the states of East Asia, and he began re-negotiating NAFTA. Later, during his address to APEC in November 2017, Trump defended US participation in free-trade agreements but only if preferential, bilateral and ‘fair’. He himself defined the trade issue as a ‘vital’ interest for the US, and he made this argument all through his Asian tour, even with allies like South Korea and Japan; on the other hand, he also signalled the maintenance of US security guarantees in those countries.

These differences were nowhere in plainer view than at the G7 meeting in Montreal on 9-10 June 2018. The US President’s vision collided there with that of European allies like Germany and France. His prickly exchanges with Canada’s Prime Minister even led Trump to refuse to ratify the final declaration that had been previously agreed upon and drafted by consensus before the summit.

While trade has been the central part of the debate on both sides of the Atlantic, questions of security, defence and values have also been present in the discussions.

In the field of security, the US criticisms of the scant defence spending among the European allies, and the concomitant US reticence to share the costs (financial and human) of different armed conflicts are not new –and were characteristic of a number of previous Administrations– and have stimulated the development of an option for an alternative defence relationship to NATO, based on a new European security and defence policy known as Permanent Structured Cooperation (PESCO). This new direction, observed with certain suspicion by the US, and even as much by NATO, is still subject to significant uncertainty regarding its reach and possibilities for materialisation as a realistic alternative to the US presence. Despite the many declarations by European leaders, including the High Representative, Federica Mogherini, on PESCO’s compatibility with NATO, its development has not contributed to an improvement in the relationship with the US, particularly given the exclusion of US financing from European defence and security projects.

Some of the unilateral diplomatic decisions taken by the US have not contributed to an improvement in the transatlantic relationship. Prime examples include the US withdrawal from the nuclear agreement with Iran –never mind the negative consequences for the security of the Middle East– and the sudden warming of relations with US allies like Saudi Arabia and Israel. Despite the political will of European states (like the UK, German and France), and of the EU itself, to remain in the Iranian agreement to guarantee that it survives, without US participation –the key when considering the real implications of re-establishing sanctions– its survival will be difficult to maintain.

Shared values –the defence of human rights, and of liberal democracy as a form of government– have been a traditional asset of the transatlantic relationship. This traditionally shared pillar of identity is today nevertheless in crisis and subject to growing debate. The appearance of so-called ‘illiberal’ democracies and the rise of populist movements –both to the right and the left– have caused a crisis in one of the pillars of the transatlantic relationship straddling the Atlantic. Although the Trump Administration and the major EU leaders have contrary positions on the issue, it should be noted in this regard that it would be an enormous simplification of reality to maintain that such divisions only exist between Europeans and Americans.

Currently these disagreements on democracy, human rights and migration issues also exist between different domestic political forces in the US and within European states themselves; but the divisions are also there between European countries, with Germany and France on one side, and Italy, Austria and the countries of Eastern Europe on the other. But even within Germany, the same divisions have affected the government, forcing it to work hard to maintain its complex political balance.

Relations with the US and domestic politics in Spain

The censure motion of 1 June made Pedro Sánchez Prime Minister. This is a significant political change, even if its consequences, along with the new government’s elbow room, will remain limited by the current composition of the Congress of Deputies and by the limited time (two years) remaining in this legislature.

As analysed elsewhere, the bilateral relationship with the US has often been subject to political debate and has typically been at the centre of most major disagreements in Spanish foreign policy (including the 1986 referendum on NATO and the 2003 debate over the Iraq war). There was a cold personal relationship between President George W. Bush and Spain’s Prime Minister Jose Luis Rodríguez Zapatero. A string of diplomatic incidents only made matters worse, and the relationship only began to recover after Obama’s election victory in 2008 when Rodríguez Zapatero made important decisions to incorporate Spain into the European anti-missile shield (for which four US destroyers would be based in Rota).

Since then, the bilateral relationship has remained on cordial terms. However, there has been little US interest to make the bilateral relationship more visible. Obama’s visit to Spain only came at the end of his second term, greatly disappointing the Spanish authorities.

Despite the potential risk for a political debate to break out around the bilateral relationship upon Trump’s assumption of power, the Rajoy government was able to maintain a cordial relationship. On 26 September 2017 Mariano Rajoy was invited to visit the Oval Office, where he gained US support on the all-important Catalan issue (support for Spain that was even stronger than that of some of the European partners). Trump even went so far as to support an increase in trade with Spain. Of course, this openness was facilitated by the fact that the bilateral trade balance is in surplus for the US (in contrast to many other countries with which the US maintains a bilateral trade deficit). Within the bilateral relationship, the Rajoy government did not openly align itself with the countries (like Germany) most critical of Trump, but nor did it give anything like unconditional support for US positions.

The new government poses at least some uncertainty as to the potential for continuity –or rupture– in the bilateral relationship. Traditionally, US interests in Spain have revolved around questions of security, economy and trade, and the defence of intellectual property. Although the latter issue is now less contested, the other two could easily see new controversies.

In the realm of security, the Spanish commitment to increase its defence spending to 2% of GDP –first made at the Cardiff Summit in 2014 and clearly in Spain’s best interest to achieve– has cooled to a certain degree with the passage of time. Even with the previous government and despite successive increases in defence spending, the percentage calculation for this year is no higher than 0.91% of GDP –very similar to the level when Donald Trump became President–. The former Minister of Defence, María Dolores de Cospedal, proposed that defence spending increase to a ceiling of 1.53% in 2024 –instead of the 2% set in Cardiff–. The trend has been confirmed by the new Minister, Margarita Robles, when she said that to reach a level of defence spending of 2% of GDP, as established by NATO, ‘is not a realistic objective’.

It remains to be seen how this decelerating trend in Spanish defence spending –contradicting Trump’s extreme discourse, which nevertheless maintains a clear continuity with the positions of past Administrations– might affect the bilateral relationship, or if it will take a back seat to the issue of the military bases –perhaps the most important US assets in Spain–. Some indication on this could arise at the next NATO summit on 11-12 July 2018 in Brussels, where the first encounter between the US President and the Spanish Prime Minister will likely take place.

Trade is another key issue. However, excepting the black-olive case, the issue will be highly conditioned by US trade policy towards the EU and by the US Administration’s overall goal to reduce trade deficits without distinguishing between allies and adversaries. In this policy area, Spanish interests will likely tend towards an alignment with the rest of the countries of the EU, given that the US has imposed tariffs on a wide range of European products.

The risk remains (as it does for other European countries) that Trump’s lack of popularity and low public-opinion rating in Spain (only 2.2 out of 10, according to the latest Barometer of the Elcano Royal Institute) will prompt new political debates over the bilateral relationship. This would not benefit the important security, economic and cultural interests that Spain has at stake in the bilateral relationship with the US (Spain’s leading foreign investor). Despite Trump’s low popularity in Spain, paradoxically, most Spaniards (64%) consider the US a good ally. This is even higher than last year, implying a certain departure in the positive sense from the more traditional ‘personalisation’ of the bilateral relationship, which has typically meant that the current leader temporarily occupying the presidency tended to become a decisive variable. It is very possible that the need for US support for Spain on issues as complex as the Catalan independence process have contributed to this new perception of Spanish public opinion.

Given the important interests at stake in the Spain-US bilateral relationship, one of the most important objectives is to maintain stability, regardless of who temporarily occupies the presidency. In this respect, in the wake of his recent US visit, the King can play a decisive role. It is well known that for decades the US has cultivated a relationship with the King of Spain, perceiving him as a key to the stability and continuity of the bilateral relationship. The King’s recent visit only strengthens this position. In complex political circumstances like those today and given the transatlantic political realities of the moment, along with the uncertainty generated by the recent domestic political changes in Spain, the King could play a key diplomatic role in guaranteeing a certain level of stability in the bilateral ties with the US.

Cultural ties have an important position in the bilateral relationship and served as an additional motive for the trip. This was clear from the King’s attendance at the 300th anniversary of the founding of both San Antonio and New Orleans (where Spain’s 40-year presence –from 1763 to 1803– is more significant than is generally recognised in other parts of the country like the south-west or Florida). The celebrations will publicise the knowledge of Spanish links with states like Louisiana. Such little-known Spanish ties with the US have recently been brought to light by the spreading of new, concrete symbols attached to the bilateral relationship (as with Bernardo de Gálvez).

The US trip also occurred at a moment of controversy over migration issues –as the two countries have generally opposing positions– but particularly at the European level, where a tightening of EU migration policy is expected at the next European Council on 28-29 June. The domestic debate and division in the US over immigration does not sit well with Spain’s traditional aspiration to represent the Hispanic population. But the objective is not very realistic; in any case, it should be subordinated to other more important objectives for the national interest, in line with how other EU countries (like Germany, France and Italy) manage the issue within their bilateral relationships with the US, which is what the current US Administration would prefer. A different question is whether common points can be found on issues of mutual interest (ie, a solution to the Venezuelan crisis in which Spain could play a leading role).

Conclusions

The Spain-US bilateral relationship has traditionally been the controversial source of much dissent and debate. The visit of the Spanish Royals to the US came at a particularly complex moment across several crucial debates unfolding on both sides of the Atlantic over migration, trade and defence policies.

The ‘Jacksonian’ posturing of the Trump Administration on these issues has made dealings with the allies (and not just the Europeans) very complex, while the lack of a defined global strategy exposes US foreign policy to abrupt shifts, lending it an unpredictable character. Despite everything (as mentioned above), the lack of hostility towards Spain on the part of the US President reduces the most pernicious effects of such dynamics.

Given the important security, economic, cultural and even domestic political interests at stake, it remains in Spain’s best interest to maintain cordial relations with the Trump Administration –even despite the ongoing lack of US awareness as the vital nature of this relationship, as revealed in strategic documents and the public pronouncements of US leaders–. The new Spanish government should avoid committing the mistakes of the past; nor should it place the Spain-US relationship up for a new debate.

Therefore, a policy of continuity should be applied to the bilateral relationship. This will allow Spain to avoid aligning unconditionally with either the US Administration or the European states (who have totally contrary positions), and to strive for an autonomous and neutral stance that guarantees Spain’s defence interests without ruling out the possibility that when US and Spanish interests clash its reaction can be tailored and discreet and undertaken within the EU context (just as is expected to happen with trade).

One important factor to keep in mind is the need to dissociate the bilateral relationship from the individual temporarily occupying the US presidency. Spanish public opinion has already begun to make this distinction, seeing the US as a good ally even despite the very negative view on President Trump held by Spanish public opinion. Spanish leaders should be able to make the same distinction.

Security and defence are the most important aspects of the bilateral relationship. Nevertheless, it would be wrong to think that the increase in defence spending is simply to do with the desires of Trump and his predecessors. Expenditure should be seen as a strategic investment in Spain capacities and in its position in the international system –not as an unpopular move prompted by pressure from the US Administration–.

The Royal visit also raises the visibility of the important diplomatic role played by the King in Spanish foreign policy. His contribution could be key to the stabilisation of bilateral relations and as a guarantor of their continuity. While the Royals have prompted controversy, they remain highly important for Spain’s interests, particularly in the current moment of the Spain-US bilateral relationship.

Juan Tovar Ruiz
Professor of International Relations, University of Burgos | @JuanTovarRuiz

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<![CDATA[ Relations between the US Intelligence Community and US Presidents, including the Trump Administration ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/wp15-2018-diazmatey-relations-us-intelligence-community-us-presidents-trump 2018-07-16T12:20:53Z

Technology and covert operations have been the driving forces in the Community’s evolution, which has been tremendously divided since its inception and has moved progressively towards its own centralisation with the aim of improving coordination and efficacy.

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Original version in Spanish: Las relaciones de la Comunidad de Inteligencia de EEUU con sus presidentes y con la Administración Trump

Index

Summary – 3
(1) Technology and covert operations: the main dynamic forces of the US intelligence community – 3
(2) Why does the US President need an intelligence community? – 6
(3) The President’s Daily Brief: what kind of intelligence does the President need? – 11
(4) In search of greater effectiveness through better coordination with, and within, the intelligence community – 14
(5) In search of difference: the presidential relationship with the intelligence community from the Obama Administration to the new Trump Administration – 17
(6) Conclusions: challenges and opportunities for the Trump Administration in its relationship with the intelligence community – 18

Summary

Intelligence is the main response to the risks and threats facing the national security of a country. The relationship of the intelligence community with decision-makers is the key to the correct way for undertaking intelligence work. In the US case the relationship between the producers and consumers of security is not immune to polemic and throughout history a number of conflicts have developed between the US intelligence community and the White House.

This working paper analyses the historical evolution of the US intelligence community (also referred to in this paper simply as the ‘Community’), including its structures and its products. Technology and covert operations have been the driving forces in the Community’s evolution, which has been tremendously divided since its inception and has moved progressively towards its own centralisation with the aim of improving coordination and efficacy. This paper also analyses the interaction between different Presidents and the Community, especially the latter’s relationship with the current President, Donald Trump.

Very often we were critical of what we were getting,
but we weren’t very clear in demanding what we needed.’
—Zbigniew Kazimierz Brzezinski

Gustavo Díaz Matey
PhD, Adjunct Professor at Madrid’s Complutense University (UCM) and Intelligence Manager at ICEX, the Spanish Board of Foreign Trade and Investment (ICEX España Exportación e Inversiones)

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<![CDATA[ The Trump Administration’s National Security Strategy ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/wp14-2018-garciaencina-trump-administration-national-security-strategy 2018-07-13T11:05:02Z

The new National Security Strategy aspires to move beyond ‘leading from behind’ to a deeper engagement with this global competition. The US will strive to regain its leadership in new technologies and innovation and to adapt to the new competition in cyberspace and outer space.

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Original version in Spanish: La Estrategia de Seguridad Nacional de la Administración Trump

Index

(1) Summary – 3
(2) Introduction – 3
(3) A hyper-competitive world – 6
(4) Protecting the country – 9
(5) Economic security is national security – 10
 (5.1) Technology and innovation – 12
 (5.2) Energy Dominance – 14
(6) Peace through strength – 16
 (6.1) ‘Capacities’ and ‘capabilities’ – 17
 (6.2) Nuclear capacity and capabilities – 18
 (6.3) Outer space – 20
 (6.4) Cybersecurity and Artificial Intelligence – 21
(7) Promoting interests and values – 23
(8) Conclusions – 26

(1) Summary

At the end of 2017 the US published a new National Security Strategy (NSS), replacing the previous NSS of 2015 in record time.

This working paper analyses the new NSS. The US strategy now perceives a hyper-competitive world on the horizon, very different from that seen in decades past. The NSS argues that the US should be prepared to compete in the best of conditions, beginning with its domestic scenario. This paper focuses on the four pillars (areas of national interest) identified by the new NSS: (1) to protect the territory, sovereignty and the ‘American way of life’ of the US; (2) to promote the country’s prosperity; (3) to preserve peace through strength; and (4) to promote US influence in the world.

Th structure of this working paper is based on these same four pillars, but it also analyses the three broad categories of threats facing the US –at once military, political and increasingly economic– in the context of this geopolitical competition. China and Russia –characterised as revisionist powers that challenge the power, influence and interests of the US by attempting to erode its prosperity and security– comprise the first group. In the second group are the ‘rogue regimes’ –North Korea and Iran– that pursue the possession of weapons of mass destruction, support terrorism and destabilise. Finally, there is another group that includes transnational and other criminal threats, along with terrorism. Significantly, after more than a decade and a half, the fight against terrorism is no longer the top priority of US national security.

The new NSS aspires to move beyond ‘leading from behind’ to a deeper engagement with this increasingly tough global competition. The US will strive to regain its leadership in new technologies and innovation and to adapt to the new competition in cyberspace and outer space. This will be done while prioritising US interests under the heading of an ‘America First’ foreign policy and placing more emphasis on competition than on cooperation.

(2) Introduction

‘America first’, economic security, nuclear, space and cyberspace capacities in a return to geopolitical competition between great powers

The new National Security Strategy of the US is the latest of a series of documents devised by successive US Administrations that integrate foreign policy, national defence, international economic relations and development aid policy. This type of document is typically supposed to be, at least in theory, the culmination of a complex bureaucratic and inter-agency consultative process in which each participating entity establishes a series of objectives and priorities to contribute to national security. Furthermore, it also typically defines a common vocabulary for all of those charged with executing such a strategy, designing and pursuing specific sub-strategies and action plans, in turn linked to concrete budget appropriations and therefore based upon actually available resources. This is to say that everything that follows from the formulation of the strategy is what actually lends it coherence and significance.

Over time these NSS documents have become increasingly less relevant as they have become less precise, cliché ridden and overly ambitious. The strategies have tended to identify too many priorities (and therefore fix no clear priorities) without recognising any resource constraint (ie, the budget that the federal government has available to implement the strategic agenda). In this respect, the new NSS falls into similar traps to those of the past: it fails in its attempt to balance means with ends, overemphasising the latter at the expense of the former. Indeed, the Trump Administration submitted its budget requests to Congress months before it had finalised the new NSS. The strategic objectives that are established in any NSS lack real meaning until they are linked to, and supported by, the required military, economic and diplomatic means. Planning should therefore proceed in parallel with a realistic evaluation of capacities.

As with its predecessors, the objectives set forth in the Trump Administration’s new NSS do not appear to acknowledge any specific material or political limitations. This also occurred under George W. Bush when the central objective of his 2006 NSS was defined as ‘ending tyranny in the world’. On the other hand, Barack Obama established eight priority challenges, ranging from climate change and infectious diseases to the proliferation of weapons of mass destruction and failed states.

Not since 2002 –when George W. Bush’s doctrine of preventive war made its appearance– has so much attention been paid to the publication of the NSS document. Growing doubts over the role of the US in the world –generated by a President who presents himself as ‘disruptive’ in the face of the traditional modes of approaching national security– has raised much interest. One should add, however, that the National Security Council of the US has tried to demonstrate a certain degree of coherence on international political issues, particularly since the arrival of the new National Security Advisor, H.R. McMaster, and in spite of the contradictions of US foreign policy during the Administration’s first year.

The new NSS was something of a surprise. On the one hand, it is one of the longest NSS document in US history –nearly double the length of the 2015 version–. It was also published before the Administration’s first year had ended –always desirable but usually not possible given the difficulties inherent to its creation–. However, despite the credentials of H.R. McMaster, Dina Powell, Nadia Schadlow and Seth Center, doubts have emerged as to how much inter-agency coordination took place during the NSS’s preparation (given the amount of time typically involved in the past, but also due to the complexity of the current international scenario). But these are not the only doubts. One of the principal problems facing the team which devised the strategy was that it had too little material to work on: there were no previous documents or keynote addresses by Trump on national security. Furthermore, the presidential transition was chaotic and in Trump’s inaugural address he offered an overly dark picture of ‘America First’. The subsequent departure of his first NSC advisor, Michael Flynn, and other changes at the National Security Council, left the NSC without a real team until March 2017. Nor should we forget the struggles between those in Trump’s government who have been pushing his most radical impulses (ie, Steve Bannon, Sebastian Gorka and Stephen Miller) and those who are working to facilitate more traditional behaviour dynamics (ie, Jim Matthis, John Kelly, Rex Tillerson and H.R. McMaster).

The presentation of the new NSS was also unusual. It was publicly made by the President himself (something which is not normally done). For some reason, Trump wanted to take advantage of the opportunity to make an important policy address, and it was widely expected to be in line with the new strategy. However, it turned out to be more of a campaign speech in which Trump laid out a list of the achievements of his first year as President and another of criticisms of the previous Administration. The disconnect between what Trump actually said and what is contained in the new NSS testify without much doubt to the problems facing his advisors in constructing an intellectual framework for Trump’s ‘America First’ instinct and transforming it into a foreign policy doctrine. His words for China and Russia were notably soft. Although they represent potential rivals, Trump affirmed that he would seek opportunities for collaborating with them, and he even thanked Vladimir Putin for some less than significant gesture. Nevertheless, the formal NSS document is much tougher with respect to these countries, claiming that their objective is to transform the world in a way that opposes the values and interests of the US (NSS, 2017, p. 25).

There are also numerous contradictions between what Trump has said and affirmed both before and since moving into the White House, on the one hand, and the new NSS on the other. The President has called US ‘exceptionalism’ dangerous, while the new NSS affirms that US principles are ‘the lasting force for good in the world’ (p. 1). There are also doubts as to the possible common ground for ‘sharing values and visions’ through collaboration (p. 48), considering the odd transnational vision that Trump has of foreign policy. And if diplomats are ‘indispensable for identifying and implementing solutions to conflicts in unstable regions of the world’ (p. 33), the question arises as to why Trump has tried to gut the State Department. Even more significant: the NSS faces the difficult task of mapping out a strategic path for an impulsive decision-maker. Many of the most important decisions –from the withdrawal from the Trans-Pacific Partnership (TPP) and the Paris Agreement on Climate Change, to the non-certification of the Iran deal and the recognition of Jerusalem as the capital of Israel– have not been made as the result of a studied evaluation of options. Everything seems to indicate that there is a greater likelihood of Trump choosing the short-run perspective and pursue tactical victories, as opposed to any policy based on long-term priorities, as the NSS attempts to articulate.

In the end, the new NSS is an amalgam of traditional US national security culture with many purely Republican Party concepts, but it also includes angles which are uniquely Trump.

This is clear from the emphasis on China, Russia, Iran and North Korea, and on transnational threats like terrorism, which inevitably recall earlier US national security strategies. The NSS also maintains the perennial reference to the traditional US leadership role in the world –the notes are different this time around, but the song is the same– and the standing commitment to prevent global disorder which would involve some cost to its interests and values. It also breaks down the world into regions, as in past strategy documents. The emphasis on the economic strength of the country reappears, along with US competitiveness and resilience –all elements contained in Obama’s NSS from 2015–. Up to this point, the components of the national security strategy show a certain continuity that the US has maintained over the past decades. The emphasis on anti-missile defence, nuclear weapons and certain economic issues, like tax reform and deregulation is new but all these issues form part of the mainstream Republican platform. However, the focus on border security, immigration limits and trade policy, along with the absence of any concern for climate change and the ‘America First’ refrain are the clearest new ‘Trumpian’ elements of national security strategy.

Carlota García Encina
Analyst, Elcano Royal Institute
 | @EncinaCharlie

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<![CDATA[ Shifting trafficking routes for illicit narcotics and the importance of Spain-US counter-narcotics cooperation ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari79-2018-olson-gordon-shifting-trafficking-illicit-narcotics-spain-us-cooperation 2018-06-25T02:10:36Z

Flows of illicit drugs transiting the Atlantic into Spain from the Americas are of growing concern to Spain and the US with law enforcement, judicial, military and intelligence agencies intensifying cooperation in an effort to disrupt the global distribution of illicit drugs.

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Theme

Counter-narcotics cooperation between Spain and the US is of growing importance to both countries but remains limited in scope.

Summary

Flows of illicit drugs transiting the Atlantic into Spain from the Americas are of growing concern to Spain and the US with law enforcement, judicial, military and intelligence agencies intensifying cooperation in an effort to disrupt the global distribution of illicit drugs. This cooperation is described by various Spanish and US officials as ‘excellent’, ‘fluid’ and ‘successful’. At present, the primary focus of cooperation involves interdiction efforts between the US Drug Enforcement Agency (DEA) and the Spanish National Police, Guardia Civil and Customs agency. Effective judicial cooperation leading to successful prosecutions of traffickers, while important, is hampered, at times, by differing judicial systems. Judicial cooperation should be intensified to more effectively prosecute traffickers and dismantle criminal networks. Defence cooperation and the role of the US military in counter-narcotics efforts is limited in scope and mostly takes place in the context of multilateral efforts.

Analysis

Narcotics trafficking from the Americas to Spain

Spain has for several years been one of the most important southern entry points for cocaine and other drugs entering Europe and cultivated and processed in Latin America. The flow of illicit drugs into Spain is not only destined to the broader European market1 but also supplies a significant Spanish market for cocaine and other drugs such as methamphetamine. According to data from the UN Office on Drugs and Crime (UNODC), Spain has one of the highest rates of cocaine use in the world, falling behind only the UK and Albania. According to the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) Drug Markets Report, seizures of illicit drugs in Spain are the highest among EU states.2

The routes used by traffickers to enter Spain have varied over time. In 2006 and 2007 cocaine was entering via transatlantic routes through Western Africa. The drugs, principally cocaine, originated in the Andean region of South America and were smuggled into Venezuela and Brazil, then shipped across the Atlantic into the Western Sahel region of Africa. The Bight of Benin, between Ghana and Nigeria, as well as Senegal and Guinea Bissau, were the main transit points. From there the narcotics were smuggled northwards through the Maghreb region of North-West Africa, across the Mediterranean and into Spain.3

While there is evidence of shifting trends and declining importance of the Africa trafficking routes, these should not be discounted entirely. The use of West Africa as a transit route could increase again if interdiction efforts in the Caribbean force traffickers to shift international drug smuggling patterns.4

The persistence of weak governance capacity and high corruption levels continue to make West Africa an attractive option for trafficking. According to the 2017 United Nations World Drug Report, the decline in cocaine intercepted in Africa in recent years may be the result of ‘poor capacity of detection and reporting rather than a decrease in the flow of cocaine’. The 2018 International Narcotics Control Strategy Report (INCSR) likewise states that Guinea-Bissau’s ‘weak law enforcement capabilities, corruption, porous borders and convenient location make it susceptible to drug trafficking’. While these countries are not a significant source of illicit drugs, they continue to be a significant transit zone for drug trafficking from South America to Europe.5

Furthermore, the existence of state and non-state actors in West Africa that have developed well-established trafficking routes also suggest the region will continue to be an attractive alternative for traffickers. In some cases, terrorist groups such as Boko Haram and al-Shibab have specialised in smuggling illicit drugs into Europe via West and North Africa using both air couriers and vehicles. It is assumed that the involvement of violent extremist organizations (VEO) in the drug trafficking business is intended as a source of financing for other terrorist activities.

Nevertheless, despite the continued importance of African trafficking routes, several recent reports and data suggest the Caribbean has become the principal trafficking route for cocaine destined for Spain and Europe. Figure 16 below illustrates the variety of routes traffickers use to bring illegal narcotics into Spain and Europe.

Figure 1. Main cocaine trafficking rotes to Europe

The 2016 EMCDDA report further highlights the importance of Caribbean maritime routes. It notes the relatively porous border between Colombia and Venezuela and the ease with which cocaine can be transported on ‘go fast’ boats between Venezuela and Caribbean island nations, particularly Jamaica and the Dominican Republic.

A recent study by InSight Crime suggests there may be multiple reasons for the shift to Caribbean routes.7 Venezuela’s economic collapse means that there are fewer commercial flights and less commercial shipping between Venezuela and Europe or Africa. As a result, the island nations of the Eastern Caribbean offer a convenient alternative because of their geographic proximity. Furthermore, the Dominican Republic, and to a lesser extent Jamaica, offer a convenient stopover for drugs because of the high volume of tourists, which contribute to local demand, and the well-developed tourist infrastructure that attracts travellers from the US and Europe, including Spain. Furthermore, both the Dominican Republic and Jamaica have well-established criminal networks with significant trafficking expertise built up over time. Figure 2 shows these newer routes.8

Figure 2. Principal cocaine routes through Venezuela to the Dominican Republic

It should be noted, however, that the bulk of cocaine (on average 90%) is destined for the US and is entering the US market via the Central American and Mexico corridor. Nevertheless, the dramatic increase in the cocaine supply in Colombia has resulted in the Caribbean becoming an important, albeit lesser, route. In this context, the Dominican Republic in particular has become an important hub for cocaine heading for Europe.

Operational success based on law-enforcement cooperation

Given the importance of Spain as a consumer market for illicit drugs, and its importance as a supply route feeding the broader European market, the urgency of counter-narcotics cooperation between Spain and the US has increased in recent years. Over the past five years the US government, as well as the Spanish and international press, have reported numerous cases of successful narcotics interdiction that have resulted from stepped-up US-Spain counter-narcotics cooperation.

This cooperation has led to numerous important seizures of illicit drugs –primarily cocaine– and is the by-product of ‘fluid communication and collaboration’ between both countries, according to one Spanish official. The US Department of State has characterised bilateral cooperation with Spain similarly stating that it maintains ‘excellent bilateral and multilateral law enforcement cooperation (with Spain)’9 in the annual International Narcotics Control Strategy Report (INCSR).

Because of Spain’s importance as a consumer market and transit point into Europe for cocaine originating from South America, Spanish law enforcement agencies have played a critical role in interdiction efforts. According to the INCSR and numerous press accounts, the Cuerpo Nacional de Policía de España and the Guardia Civil have implemented several effective strategies to interdict drugs before they enter Spain and the rest of Europe. These strategies included ‘strong border control and coastal monitoring, sophisticated geospatial detection technology, domestic police action, anti-corruption and internal affairs investigations, and international cooperation’ in 2017.10

The following table highlights some of the recent successes in U.S.-Spain law enforcement cooperation including arrests and seizures, combining data from INCSR reports as well as international news sources.

Figure 3. Recent reported successes for US-Spain counter-narcotics cooperation
Date Arrest/seizures Joint-cooperation description Source
November 2017 40 people arrested and nearly 4 tons of cocaine seized Long-term anti-drug cooperation between the Cuerpo Nacional de Policía de España, along with Moroccan domestic intelligence and intelligence cooperation with the US Drug Enforcement Agency (DEA) and German and Italian security services North Africa Post
October 2017 3.7 tons of cocaine seized from a vessel in the Atlantic Joint-cooperation between the Aduana Española and the Cuerpo Nacional de Policía de España in conjunction with the US DEA and UK National Crime Agency (NCA) under the overall coordination of the Maritime Analysis and Operations Centre-Narcotics (MAOC-N) BBC
July 2017 Spanish citizen entering Spain arrested for carrying 600 grams of cocaine Cooperation between the Aduana Española and US Homeland Security INCSR
May 2017 Seven crew members in the Atlantic Ocean on board a ship under the Venezuelan flag arrested and more than 2 tons of cocaine (2400 kg) seized Operation of the Cuerpo Nacional de Policía de España along with intelligence cooperation with the US DEA, UK National Crime Agency (NCA) and the Portuguese Police ReutersBusiness Insider
April-September 2017 950 kg of cocaine and over €10 million in bulk cash seized, destined for a cocaine supplier in South America Joint operation of the Spanish authorities with the US Drug Enforcement Administration and US Immigration and Customs Enforcement INCSR
February 2017 24 members of a Colombian drug trafficking organisation operating in Spain arrested and 2.45 tons of cocaine seized Cooperation with the Cuerpo Nacional de Policía de España and the US DEA INCSR
January 2016 Vehicle in Southern Spain intercepted, leading to the seizure of 3 tons of cocaine Joint-Cooperation between the Cuerpo Nacional de Policía de España along with the US DEA and the UK NCA United Press International

The mechanics of law-enforcement cooperation

As these examples suggest, cooperation has been primarily law-enforcement based –between the US Drug Enforcement Administration (DEA) and three Spanish law enforcement agencies: the Policía Nacional, the Guardia Civil and the Aduana Española. Many of the reported joint interdiction cases are based on intelligence information developed by US sources and brought to the attention of Spanish officials by DEA liaison officers stationed at the US Embassy in Madrid. Other cases are the result of intelligence gathered and analysed at fusion centres in Florida or Portugal.

It is noteworthy that there is no formal agreement and no formal Memorandum of Understanding to define or guide current counter-narcotics cooperation between the two countries. Instead, cooperation occurs in the context of existing accords such as extradition agreements and international conventions to combat illicit drugs and is often based on case-by-case requests that result from specific intelligence brought to the attention of law-enforcement authorities.

The kind of US counter-narcotics assistance overseen by the Department of State’s Bureau of International Narcotics and Law Enforcement Affairs (INL), and typical in US-Latin American cooperation, is inexistent in US-Spain counter-narcotics efforts. INL works in more than 90 countries to counter crime, illegal drugs and instability. Nevertheless, Spain is among a list of nations that are precluded from receiving INL assistance because they are deemed sufficiently developed and possess adequate institutional capacity, rendering unnecessary the kinds of institutional strengthening INL normally provides.

Intelligence fusion centres

An important element of US and Spanish counter-narcotics cooperation is the two fusion centres where intelligence is gathered, analysed and shared between the US military and representatives from multiple US government agencies, as well as foreign countries.

For the US, the most important of these is the Joint Inter-Agency Task Force-South (JIATF-South), an intelligence fusion centre and part of the US military’s Southern Command. Based at the Naval Air Station in Key West in the state of Florida, JIATF-South’s mission is to conduct ‘detection and monitoring (D&M) operations throughout their Joint Operating Area to facilitate the interdiction of illicit trafficking in support of national and partner nation security’.11

As a fusion centre, its primary purpose is to gather, analyse and produce actionable intelligence for the US and partner nations. For instance, JIATF-South gathers real-time radar and intelligence information to track an average of 1,000 targets a day. It also provides a space for coordination (or fusion) between the US military and multiple civilian law enforcement and intelligence agencies such as the Justice Department (DOJ), DEA, FBI, the Department of Homeland Security (DHS) and its Customs and Border Protection (CBP). Additionally, it has a multilateral function in which Country Liaison Officers (CLOs) from 13 other countries, including Spain, are stationed there.12

In addition to detecting and monitoring targets, JIATF-South will also ‘find and deploy assets’ to interdict the targets. One such operation, with the code-name Martillo, is a multinational effort employing military and law-enforcement units from 14 participating countries, including Spain, in an effort to ‘deny transnational criminal organisations the ability to exploit these trans-shipment routes for the movement of narcotics, precursor chemicals, bulk cash and weapons along Central American shipping routes’. As the description suggests, JIATF-South’s priority is to stop the flow of drugs into the US. Nevertheless, the increasing use of Caribbean routes and the importance of the Dominican Republic as a transfer point to Spain suggests that the fusion centre also tracks transatlantic trafficking. Since its inception in January 2012, Operación Martillo has resulted in the seizure of 693 metric tonnes of cocaine, US$25 million in bulk cash, 581 vessels and aircraft detained and the arrest of 1,863 suspects.13

A second fusion centre is the Europe-based Maritime Analysis and Operation Centre-Narcotics, known by its acronym MAOC-N. With its headquarters in Lisbon, its operations are very similar to those of JIATF-South. MAOC-N member states include Spain, the UK, Ireland, France, the Netherlands, Italy and the host country, Portugal. The agency is co-funded by the EU’s Internal Security Fund and serves as a base for multi-lateral cooperation to combat illicit drug trafficking both by sea and air, with the aim of intercepting shipments before they arrive in West Africa and Europe. MAOC-N coordinates multi-lateral criminal intelligence and information exchanges between the partner countries to support police action with naval and law-enforcement agencies.

Like JIATF-South, MAOC-N is staffed by Country Liaison Officers (CLOs) including police, customs, military and maritime authorities from its member states. Though the US does not have a CLO at the MAOC-N, a permanent US observer from the DEA is stationed at the centre. There are also several additional observing parties at MAOC-N, including the European Commission, EUROPOL, UNODC, EMCDDA, the European External Action Service (EEAS), the European Defence Agency (EDA), EUROJUST and FRONTEX.

The centre has conducted several successful operations since its launch in 2007, having ‘supported the coordination and seizure of over 116 tons of cocaine and over 300 tons of cannabis’ between its inception and 2016.14

Judicial cooperation and prosecutorial challenges

While Figure 3 above offers a partial catalogue of successful law-enforcement counter-narcotics cooperation between the US and Spain, the successes are primarily operational in nature and, at times, do not result in judicial prosecutions. As a result, bilateral counter-narcotics operations have led to the seizure and removal of illicit drugs from the supply chain, as well as many arrests, but have not always generated the successful prosecution of traffickers and criminal networks.

Both governments favour prosecutions and, in fact, some important successes have occurred. For example, in a sentence handed down by the Tribunal SupremoSala de lo Penal, in February 2016, the court recognised the role of the DEA and established a limited principle that foreign police forces cannot be held to Spanish legal standards. An excerpt from the Court’s decision follows:

En el ámbito de la cooperación penal internacional en el que se juega el enfrentamiento contra los graves riesgos generados por la criminalidad organizada trasnacional, y en el que nuestro país tiene asumidas notorias obligaciones adaptadas a un mundo en el que la criminalidad está globalizada (Convención de las Naciones Unidas de 1988 sobre estupefacientes, entre otras), no pueden imponerse las reglas propias determinadas por problemas legislativos internos a los servicios policiales internacionales, por lo que ha de respetarse el ordenamiento de cada país, siempre que a su vez respete las reglas mínimas establecidas por los Tratados de Roma o Nueva York. De la misma manera que no es posible ni exigible imponer a otros sistemas judiciales la autorización judicial de las escuchas, tampoco lo es imponer a otros servicios policiales las mismas normas que la doctrina jurisprudencial ha establecido para los servicios policiales españoles.’15

Nevertheless, judicial cooperation in counter-narcotics efforts will require further deepening to ensure greater effectiveness.

Differences in judicial cultures, norms and practices has been a primary challenge in effective judicial cooperation. This is not surprising since judicial practices such as the rules of evidence and norms for establishing case facts vary from country to country based on the legal history and practices developed in a particular country over time. Furthermore, the commonly used practice of using confidential informants in the US is less well accepted in Spain, which can contribute to difficulties in effective prosecution. These experiences are not dissimilar to those of US-Mexico judicial cooperation, so it should be no surprise that Spanish and US law enforcement and legal systems experience similar challenges.

A recent decision handed down by the Tribunal Supremo de España provides some insight into the challenges both countries experience in effective judicial cooperation. According to the Tribunal’s finding from 12 March 2018, the US DEA conducted covert operations to track a small fishing vessel on the high seas it believed to contain between 300 to 500 kilos of cocaine hidden in its interior. Intelligence on the shipment suggested that its intended destination was Spain and that its organiser was Luis Alberto Moreno Ruiz, a Colombian citizen and legal resident of Spain. Moreno was known to act as an intermediary between Colombian cocaine suppliers and buyers in Spain and throughout Europe. Using phone records, the court record shows that the DEA tracked down Luis Henry Restrepo Morales, who would be coordinating the delivery arriving in Spain.

Based on court documents, it appears that the DEA seized the Boston Whaler, a smaller fishing boat inside the catamaran, with support from the US Coast Guard and subsequently transferred it to the US territory of Puerto Rico. The Boston Whaler, with cocaine allegedly hidden in its hull, remained in a warehouse in Puerto Rico for nearly a month between June and July 2014. At the end of that time, the boat, with cocaine still on board, was transported to Spain on a USAF plane, where it entered the custody of the Policía Nacional de España. At this point, the boat’s hull was broken open, revealing 240kg of cocaine.

In the original lower court ruling of 17 May 2017, the National court ruled that the defendants –Luis Henry Restrepo Morales, Julián del Prado Montero, Gloria Efigenia Echeverry Mesa, Yaneth Betancur Gómez and Juan Carlos Dámaso Halfhide– were not guilty (given a sentencia absolutoria) because there was no way of determining with full certainty that the boat sent by the US Coast Guard to Spain in July 2014 was the same as that seized on the high seas by the DEA the month before. A year after the National Court’s decision, the public prosecutor (ministerio fiscal) appealed the case in March 2018 to the Tribunal Supremo de España on the following grounds:

Esta sala ha visto el recurso de casación num. 1496/17 interpuesto por el Ministerio Fiscal, por infracción de ley e infracción de precepto constitucional, contra la sentencia absolutoria dictada por la Audiencia Nacional (Sección Tercera) en fecha 17 de mayo de 2017, en causa seguida por delito de tráfico de drogas’… ‘Sostiene el Fiscal que la conclusión recogida en este último párrafo del relato de hechos probados se sustenta en una motivación arbitraria e irrazonable, y como tal vulneradora del artículo 24.1 CE.16

Nevertheless, the defendants offered a statement from Sr Rebullido Lorenzo, a Spanish naval engineer, maintaining that the DEA would not have been able to intercept a boat on the high seas with that amount of cocaine loaded inside it without a significant number of people, docking it or using a crane to raise it. Sr Rebullido’s statements created doubt in the veracity of the sequence of events and chain of custody while the boat was held by the DEA. Based on the naval engineer’s statement and evidence from the original ruling, the Tribunal Supremo de España dismissed the public prosecutor’s appeal, siding with the National Court and upholding the original not guilty ruling. Though a significant amount of cocaine was seized, no one was convicted in this case.

Fortunately, the kinds of challenges in judicial procedures, such as those related to chain-of-custody issues, can be overcome when judicial cooperation is central to overall law-enforcement efforts from the outset. Integrating judicial and prosecutorial aspects into counter-narcotics operations can ensure that seizures and interdiction efforts have a longer-term impact through effective prosecutions of traffickers. This has certainly been the case between Mexico and the US, where effective judicial cooperation has deepened and law-enforcement agencies in both countries are increasingly aware of the judicial standards in the other country. There is no reason to doubt that Spain and the US can achieve this type of effective cooperation over time but it will require building greater trust to ensure that effective prosecutions and the dismantling of criminal networks are the result. This process can begin by making the most of specialised units within the Spanish Prosecutor’s Office, such as the Spanish Antidrug Prosecution unit and inter-regional stakeholders such as the Ibero-American Network of Antidrug Prosecutors.

Another step in building greater trust is in the presence of a judicial liaison officer (magistrado de enlace judicial) stationed at the Embassy of Spain in Washington DC. The scope of this position is much broader than counter-narcotics cooperation and includes issues related to common crime, extradition and terrorism. Given the variety and complexity of judicial issues between both nations, one simple recommendation might be to increase the number of liaison officers assigned to each capital and include a specialised judicial officer focused specifically on counter-narcotics cases.

Broader US-EU cooperation

Finally, it should be noted that US-Spain counter-narcotics cooperation also takes place in the broader multilateral setting, especially in the context of US-EU cooperation. UNODC implemented a project on law-enforcement and intelligence cooperation against cocaine trafficking from Latin America to West Africa and into Europe. The programme is supported by the European Commission and has facilitated the signing of several bilateral agreements to encourage joint investigations and the timely exchange of operational information between law-enforcement agencies to promote intelligence-led investigations for intercepting drugs in participating countries.

Another example of multilateral cooperation is the AIRCOP programme (also supported by the European Commission) and implemented jointly by INTERPOl and the World Customs Organisation (WCO). Its primary goal is to strengthen cooperation and intelligence exchange between airports in the three continents.

Defence cooperation

As suggested above, the US military play an important support and coordination role in Trans-Atlantic counter-narcotics efforts with European governments and Spain in particular. This is particularly the case with US Southern Command and in the context of JIATF-South, as we have seen. Additionally, the US Department of Defense (DOD) Intelligence Resource Program lists Spain as one of several Partner Nations (PN) that work closely with the US to disrupt the production, transport and distribution of illicit drugs, as well as money laundering operations associated with this activity.17

In addition to the operational support and coordination with Spain, the US DOD has provided Spain with some limited funding from its ‘counter drug assistance’ programme known as Section 1004.18 Figure 4 reflects the various security aid programmes and assistance from the US DoD to Spain over the past decade. Programmes during that time have included: the Combatting Terrorism Fellowship Program, which educates and trains mid- and senior-level partner defence and security officials;19 Section 1004 Counter-Drug Assistance, which includes counter-drug activities and counter narcotics training; and Excess Defense Articles, which transfers excess defence equipment to partner nations to modernise their forces.20

Figure 4. Security aid programmes and assistance from the US DoD to Spain, 2007-16
Year Programme Amount (US$) Item
2016 Combatting Terrorism Fellowship Program 18,000  
2015 Excess Defense Articles 500,000 Aircraft spare and repair parts F/A-18, P-3
Section 1004 Counter-Drug Assistance 94,000  
Combatting Terrorism Fellowship Program 6,749 Four students received counter-terrorism training in Greece and other locations at the Center for Civil-Military Relations and the US Special Operations Command
2012 Combatting Terrorism Fellowship Program 30,615 National Defense University (NDU) and Special Operations Command (SOCOM)
2011 Combatting Terrorism Fellowship Program 19,098 George C. Marshall European Center for Security Studies (GCMC) and Defense Institute of lnternational Legal Studies (DIILS)
2009 Combatting Terrorism Fellowship Program 14,948 Center for Hemispheric Defense Studies (CHDS) and George C. Marshall European Center for Security Studies (GCMC)
Section 1004 Counter-Drug Assistance 12,000 Training in intel analysis
2008 Combatting Terrorism Fellowship Program 2,575 George C. Marshall European Center for Security Studies (MC)
Section 1004 Counter-Drug Assistance 10,000 Training in intel analysis
2007 Section 1004 Counter-Drug Assistance 116,000 EUCOM CN operational support
Section 1004 Counter-Drug Assistance 40,000 JIATF-South

As Figure 4 makes clear, the amount of resources expended by DOD for counter-narcotics activities with Spain are minimal. Nevertheless, coordination with at least three combatant commands (Southern, Europe and Africa) are at varying degrees related directly or indirectly to counter-narcotics cooperation with Spain. With SOUTHCOM cooperation is more direct through JIATF-South, but with EUCOM and AFCOM it is either in the context of broader multilateral efforts (EUCOM) or more indirect in the case of AFCOM.

In the case of AFCOM, three of its five ‘Lines of Effort’ (LOEs) have some connection to counter-narcotics activities that are relevant to Spain. In two instances the focus is on degrading violent extremist organisations (VOE) in the Sahel and Maghreb regions, and to contain and degrade Boko Haram and ISIS-West Africa. In both cases the VOE’s are known to engage in narcotics trafficking as it enters West Africa. In a third LOE the priority is to ‘Interdict Illicit Activity in Gulf of Guinea and Central Africa’.21

According to testimony by AFCOM’s commander, US Marine Corps General Thomas Waldhouser, ‘In addition to the VEO threat throughout Africa, criminal and smuggling networks remain a persistent danger within the Gulf of Guinea and Central Africa. US Africa Command supports our African partners who work with international and interagency partners to interdict and to disrupt illicit trafficking and smuggling networks that finance trans-national criminal organizations’.

Furthermore, ‘US Africa Command (executes) the African Maritime Law Enforcement Partnership (AMLEP) and support the Yaoundé Code of Conduct, a strong regional framework for information sharing and operational coordination. In 2017, under the AMLEP, US Coast Guard and Cabo Verde security personnel embarked a Senegal Navy ship for joint patrol operations in Senegal and Cabo Verde waters’.

To the extent that narcotics trafficking to Spain includes routes in West Africa and Cabo Verde, then the work of AFCOM is relevant to Spanish counter-narcotics efforts and contributes indirectly to their success.

Conclusion

Spain’s geographically strategic location and its large consumer market make it one of the principal gateways for illicit drugs entering Europe and originating in South America, transiting via the Caribbean and West Africa. This puts Spain in a unique position of having to confront the transatlantic drug trade coming from multiple directions and using a variety of trafficking techniques. Spain’s success depends not only on its own capacities but the support and coordination it receives from many partner nations.

US counter-narcotics coordination with Spain is an important element of this strategy and, to date, has shown some important successes. Cooperation is both strong, fluid and growing, but remains limited in scope. This reflects, in part, the priority the US places on reducing the flow of drugs into the US, leaving transatlantic trafficking as an important but less vital aspect of the overall US strategy against illicit narcotics trafficking.

Nevertheless, US-Spanish counter-narcotics cooperation is occurring at many levels and in various contexts would appear to be growing and deepening. Law-enforcement cooperation, especially between the DEA and the Spanish Policía NacionalGuardia Civil and Aduanas is the principle venue for addressing narcotics trafficking. Several successful and impressive seizures of cocaine have occurred as a result and led to a temporary market disruption. However, the growing volume of cocaine processed in Colombia suggests that the challenges of cocaine interdiction headed for Spain will only increase.

Judicial and prosecutorial cooperation are a second important element in bilateral counter-narcotics cooperation. Here there have been important successes, but also some setbacks in part because of differing judicial systems, norms and procedures that set varying standards for prosecution. These are not insurmountable challenges, but they do require continued close cooperation and effective learning by the judicial authorities from both countries. One helpful suggestion may be to fully integrate judicial authorities, such as prosecutors, in law-enforcement operations from the outset so as to avoid potential legal challenges in the prosecution phase and contribute to degrading criminal organisations through successful prosecution.

Ultimately, US-Spanish counter-narcotics cooperation is on a strong footing but has room to grow and expand further. The question remains whether new leadership in Spain and the US will prioritise this relationship.

Eric L. Olson
Deputy Director of the Wilson Center’s Latin American Program and Senior Advisor to the Wilson Center’s Mexico Institute
 | @Eric_Latam

Nina Gordon
Research Assistant at the Mexico Institute


1 In 2016 it was estimated that the cocaine market in Europe was valued at between €4.5 billion and €7 billion. See Europol (2016), EU Drug Markets Report: Strategic Overview, European Monitoring Centre for Drugs and Drug Addiction, p. 8.

2 European Monitoring Centre for Drugs and Drug Addiction (2017), Spain Country Report 2017.

3 See Ross Eventon & Dave Bewley-Taylor (2016), ‘An overview of recent changes in cocaine trafficking routes into Europe’, European Monitoring Centre for Drugs and Drug Addiction; and United Nations (2016), International Narcotics Control Board Report 2016, p. 92.

4 Congressional Research Service (2009), Illegal Drug Trade in Africa: Trends and US Policy.

5 US Department of State Bureau for International Narcotics and Law Enforcement Affairs (2018), International Narcotics Control Strategy Report (INCSR) Volume I: Drug and Chemical Control. March, p. 181.

6 The map is reproduced by InSight Crime and originally appeared in EMCDDA (2016), ‘2016 EU Drug Markets Report’.

7 Insight Crime (2018), ‘The Dominican Republic and Venezuela: cocaine across the Caribbean’, Venezuela Investigative Unit, 24/V/2018.

8 Ibid.

9 US Department of State Bureau for International Narcotics and Law Enforcement Affairs (2018), op. cit.

10 Ibid.

11 JIATF-South’s Area of Responsibility is 42 million square miles, 12 times the size of the US.

12 See Global Sentinel (2017), ‘8 notable security influencers in the Western Hemisphere, 1/II/2017; Department of Defense, Defense Department Intelligence and Security Doctrine, Directives and Instructions, FAS Intelligence Resource Program; and Forum of the Americas (2011), MAOC-N Nets Drugs on the High Seas, Diálogo Digital Military Magazine, 1/I/2011.

14 Forum of the Americas (2011), op. cit.; and Maritime Analysis and Operations Centre (MAOC N).

15 Tribunal Supremo, Sala de lo Penal (2018), ‘Sentencia número 673/2016. Fecha de sentencia: 25/02/2016’.

16 Tribunal Supremo, Sala de lo Penal (2018), ‘Sentencia número 117/2018. Fecha de sentencia: 12/03/2018’.

17 Department of Defense, Defense Department Intelligence and Security Doctrine, Directives and Instructions, FAS Intelligence Resource Program.

18 Section 1004 refers to the section of law that authorises the US military’s involvement in counter-narcotics efforts.

19 Department of Defense (2017), ‘Historical Facts Book FY 2016’, Washington, 30/IX/2017.

20 Department of Defense (2017), ‘Defense Security Cooperation Agency, Excess Defense Articles online database’, accessed 20/XI/2017.

21 For a full explanation of AFCOM’s LOE see ‘United States Africa Command 2018 Posture Statement March 6, 2018’.

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<![CDATA[ G7 in Canada: Trump’s bravado annoys Europe ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-oteroiglesias-g7-canada-trumps-bravado-annoys-europe 2018-06-15T01:25:44Z

The G7 meeting has been one of the most disastrous in years.  The debate in Europe will continue to be whether Trump is just a blip, with the White House returning to the good old Western alliance once he departs, or whether there has been a permanent and structural shift in US foreign policy.

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A picture is worth a thousand words, or even two thousand, but for a better insight into what occurred at the G7 Summit in Canada and what it means for Europe, please read on.

The build-up

“Against all odds, European unity actually held throughout the G7 summit”.

Donald Trump is a person who is utterly disliked in Germany, and many there are starting to think that he is not just an accident but rather the embodiment of a more inward-looking, illiberal and reactionary US. The G7 in Canada has only confirmed the impression. For most Germans this is tough because their relationship to the US is very emotionally charged, as reported by Susan B Glasser. The link is a bit like that of a father with a son, with the former becoming dysfunctional and reneging on his duty to protect the latter. This has led many German officials to start considering a plan B. Germany needs to develop a foreign policy independently from the US and closer to its European allies, especially France. But that would be a long-term strategy.

For now, Germany, and the other European countries, are fully aware of their strategic weaknesses and that is the reason they have tried to engage positively with Trump. However, things started to unravel in March 2018 when Trump dismissed Gary Cohn and substituted him by Larry Kudlow as Chief Economic Advisor. Together with Peter Navarro as Director of the National Trade Council, Wilbur Ross as Commerce Secretary and Mike Pompeo as Secretary of States, and with John Bolton in National Security, these are all hardliners who believe in Trump’s ‘America First’ logic and are unlikely to speak up against the President. The only globalist is Steven Mnuchin, the Secretary of the Treasury, but he is relatively weak.

John Bolton is of particular concern because he is behind the idea of imposing import tariffs on national security grounds. As the President of the European Council, Donald Tusk, put it, ‘if you have friends like this, who needs enemies?’. Many in Europe believed that Trump’s strategy was to apply tariffs to China but not to the EU and other allies. Officials in Brussels discreetly recognised that they did not like Trump’s bullish methods but that if it could make China open up and liberalise its market further, ultimately not hurting Europe, they would be content. But that has not been the case. Trump decided to apply tariffs on European and Canadian steel and aluminium only a couple of weeks before the G7 meeting in Canada.

No wonder then that the days before the meeting were tense. After trying to be understanding with Trump for so long, the G6 leaders said they would tell Trump face-to-face of their discontent with his actions. As usual, the Europeans knew that the only way to be firm with Trump was to present a united front. For that purpose, they held a meeting a few hours before the summit. The idea was to coordinate themselves and devise a joint position. Present at the meeting were Angela Merkel, Emmanuel Macron, Theresa May, Jean-Claude Juncker, Donald Tusk and also the newly-elected Italian Prime Minister, Giuseppe Conte, who hours before had backed-up Trump via Tweet saying that Russia should be re-admitted to the G7.

Many believed this to be a master stroke by Trump, taking advantage of the new Italian Government’s softer stance on Russia, to divide the Europeans. But the effect was otherwise. It is not clear whether Conte changed his mind at the meeting or later, but the fact was that European coordination worked and Conte corrected himself by saying that he meant that Russia should be apart of the G7 but only after altered its policy in Ukraine.

Against all odds, European unity actually held throughout the G7 summit. Perhaps it helped that during the Europeans’ coordination meeting, Trump arrived by helicopter and the deafening noise prevented any sort of conversation. The message was clear: here comes the chest-beating American; there are few things that quite unite the Europeans more than that.

The row

The G7 meeting has been one of the most disastrous in years. Trump’s attitude throughout the summit was condescending and arrogant. Until only a few days before the gathering it was not even clear whether he would attend, displaying a significant lack of respect to the Canadian hosts. He was the last to arrive and the first to leave and he was tactless on many occasions. He announced he would not attend the second part of the second day, covering issues related to climate change, development and the reduction of plastic waste in ocean and seas. On Friday he accosted all the leaders at the table telling them how and why their countries were taking advantage of the US. The G6 leaders argued back but Trump was totally undeterred. Macron felt encouraged to give Trump a lesson in economics in an attempt to explain why free trade entails a great benefit while a trade war would be detrimental even to US farmers and workers.

In Europe the feeling is that the US is trying to destroy the WTO. The Europeans agree that it might need to be revised and improved but, talking with Trump and other top US economic officials, their impression is that the US that is just not enough. Trump wants to go to a pure power-based international system with few rules. His proposal of creating a tariff free zone for all G7 countries is interpreted in this light. From a European point of view there is no free trade without rules and regulations. What Trump proposes, however, sounds more like the survival of the fittest and the law of the jungle. The language that he used against Germany and the EU points in that direction. Apparently, he was especially harsh with the EU Competition Commissioner Margrethe Vestager (who has taken on big US companies like Apple and Google), who he called the ‘tax lady’ who ‘hates the US’.

While Friday was tough, Saturday was even tougher. Trump arrived more than 15 minutes late to the breakfast session devoted to gender equality, which angered the IMF Chief Christine Lagarde, who was chairing the meeting. Neither did he deign to appear in the final G7 picture with the outreach leaders. His mind was already on Singapore where three days later (in fact, he could have stayed on until the end of the Charlevoix summit had he wished to) he was to meet North Korea’s Kim Jong-Un. Trump departed after a headline-filled press conference. He blustered that the US was being treated like a piggybank that everyone was plundering, that it had to end and that if other countries raised their trade tariffs on the US he would be willing to close off the US market wholesale. On a kinder note, he did say that he was happy to sign the joint communiqué after such difficult negotiations, almost as a gesture of goodwill, to show that he was a reasonable man.

“The debate in Europe will continue to be whether Trump is just a blip (…) or whether there has been a permanent and structural shift in US foreign policy”.

However, the positive mood was not to last. Justin Trudeau explained at his press conference that Canada would retaliate against tariffs imposed by the US because Canadians were an agreeable and friendly people but would not be pushed around. Trump, already on board Air Force One, became so annoyed that he began a tweetstorm against the Canadian Prime Minister. He immediately said the US would now refuse to sign the joint communiqué and that he was ready for any impending trade war even with tariffs on imported cars if need be. More shocking still was Peter Navarro’s justification for Trump’s reaction: Trudeau’s words (‘Canadians will not be pushed around’) made him look weak only days before the historic meeting with Kim Jong-un; that was unacceptable to Trump, prompting him to lash out at the Canadian leader and the rest of the G-6 to boot. Navarro further claimed there was ‘a special place in hell’ for someone like Trudeau, capable of stabbing Trump in the back. From a European perspective, such a tantrum is simply further evidence of the US President acting like a spoilt child.

The future

The debate in Europe will continue to be whether Trump is just a blip, with the White House returning to the good old Western alliance once he departs, or whether there has been a permanent and structural shift in US foreign policy. Those who still hope for the best have been disappointed by so few congressmen and senators –save exceptions like Senator John McCain– criticising Trump. The penny is slowly dropping and, given Trump’s overtures to Putin and Russia, European leaders are increasingly coming to think that the US might cease to be a reliable partner, even in places like Poland where many first cheered Trump on but now fear his intentions may not live up to their expectations. Sources on the ground indicate that when it became known in Warsaw that Trump wanted to re-invite Russia to the G7, the silence among policymakers became deafening.

In any case, the truth is that Europe is still highly reliant on the US for its security and prosperity. In a tit-for-tat trade war the EU would have much more to lose because it is a more open economy. Militarily, it is also highly vulnerable: true, the UK and France are nuclear powers but, as shown by the war in Syria, their hitting power is very limited. Without US support they would be incapable of holding back a potential Russian attack. Nonetheless, it is true that a more aggressive Russia, Brexit, Trump and the rise of China have started to change some perceptions. Slowly but steadily, the EU –especially the core countries comprising the Eurozone– are beginning to think more strategically and starting to share intelligence. Meanwhile, there have been some moves towards a European defence union, with a Permanent Structured Cooperation (PESCO) capacity, and there is full agreement that at the next multiannual financial framework there will be greater resources for the military element and the defence and security of the Union’s borders.

Outsiders should especially focus on what happens in the Eurozone, the EU’s core and its most ambitious integration project. After years in crisis, the European Monetary Union has managed to bounce back stronger thanks to the rescue packages (there is a now a European Stability Mechanism with a €500 billion capacity), a more pro-active European Central Bank and the creation of the European Banking Union. More needs to be done to make the euro sustainable in the long term, but Macron has brought to the table a new reform agenda. Precisely this weekend, when Merkel was battling with Trump in Quebec, Germany’s Finance Minister Olaf Scholz said his government favoured a European unemployment insurance system and a European financial transaction tax to plug the financial hole left by Brexit. He also suggested creating a European sovereignty and a Eurozone budget, both highly significant. Ultimately, the EU’s future unity, and that of its core, the eurozone, will depend on the Franco-German tandem (with the active cooperation of Italy, Spain and the Netherlands). As Chancellor Merkel put it in a TV interview once back in Berlin after recognising that the G7 meeting had been very disappointing, the key question for Europe is will it be able to have a common foreign policy or will one part slip away to strike a deal with the US while another does the same with China?”.

Miguel Otero-Iglesias
Senior Analyst in International Political Economy, Elcano Royal Institute, and Adjunct Professor, IE University, Madrid
| @miotei

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<![CDATA[ The US and North Korea: will their Presidents shake hands? ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-arteaga-esteban-us-north-korea-will-their-presidents-shake-hands 2018-04-26T06:24:43Z

The best news that we can hope for is that the summit does finally take place and that it serves as a new call to an essential negotiation process capable of achieving concrete results in terms of nuclear non-proliferation goals and East Asian stability.

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Original version in Spanish: EEUU y Corea del Norte: ¿sus presidentes se darán la mano?

The agreement to hold a meeting between the US President Donald Trump and the North Korean President Kim Jong-un has recently dominated the world’s headlines. Before March 2018 the headlines were occupied by alarming news suggesting the possibility of military conflict and an escalation of a latent conventional conflict into an open nuclear one. The balance of evidence seemed to point to the risk of escalation provoked by North Korean nuclear and missile tests and by President Trump’s strongly-worded statements. Indeed, most analysis of the Korean conflict has focused on such risks, ignoring the possibility that other non-military means –and not just the lever of economic sanctions– might have positive effects. To the contrary, the Elcano Royal Institute –in addition to analysing the significance of ongoing events for the delicate balance of regional stability– has also maintained that the situation could be contained through discrete bilateral diplomacy between the US and North Korea.

After ruling out other measures for stabilising the conflict as unviable, a May 2017 ARI on how to avoid a military conflict on the Korean peninsula indicated that ‘given the situation, even a sub-optimum accord that seeks to freeze, rather than to eliminate, nuclear weapons is preferable to the continued status quo in which North Korea continues to develop its nuclear and missile delivery capacities at a rapid pace’. This conclusion was consistent with the arguments deriving from a research visit to Pyongyang in September 2016, and later confirmed by researchers and think-tank analysts from Asia and Europe at a seminar in June 2017 at the Elcano Royal Institute. The publication synthesising the conclusions reached at this seminar, ‘Windows of opportunity in the Korean peninsula’, reiterates that ‘the most realistic option to face the DPRK nuclear crisis is to reopen a process of political dialogue’ and that ‘the best and most plausible scenario would be the opening up of negotiations based on a North Korean moratorium on nuclear and missile tests’.

This conclusion differed substantially from the mainstream analysis of the strategic community at the time, but it was based on solid objective arguments setting it apart from more speculative analysis and which time has continued to confirm. The Institute’s line of argument is that once the unacceptable risks of a military option, the insufficiency of economic sanctions and the impossibility of a dialogue that could lead to complete, verifiable and irreversible denuclearisation of North Korean are recognised, the most realistic option is to start a new diplomatic dialogue without any preconditions unacceptable to Pyongyang with the aim of searching for pragmatic agreements beneficial to all sides involved and that can contribute to regional stability.

As indicated in these analyses, the crisis demands an urgent diplomatic response to avoid the escalation that would come as soon as Pyongyang demonstrates to the world its capacity to hit the West Coast of the US with nuclear intercontinental ballistic missiles; and, in addition, a negotiation framework is needed that would allow for the current nuclear levels to be later reduced, ideally even to achieve full, verifiable and irreversible nuclear disarmament of North Korea.

“Moon has always demonstrated his willingness to dialogue with Pyongyang, but without falling into the two great policy traps of the Sunshine Policy (1998-2008)”

Although he has been in office for less than 10 months, the South Korean President, Moon Jae-in, seems to understand the situation perfectly, and he has become a leading protagonist in the attempt at a diplomatic solution between the US and North Korea. In contrast with his two predecessors, Moon has always demonstrated his willingness to dialogue with Pyongyang, but without falling into the two great policy traps of the diplomatic strategy towards Pyongyang known as the Sunshine Policy (1998-2008), which was not coordinated with the US and which rewarded North Korea simply for agreeing to talk.

The South Korean leader took advantage of the window of opportunity opened up by Kim Jong-un’s New Year’s address expressing North Korea’s desire to send a delegation to participate in the Winter Olympic Games at Pyeongchang. The subsequent conversations not only realised this possibility, in the form of a joint Korean delegation, but also allowed a high level North Korean delegation to visit the South during the games. Kim Yong-nam, the official, formal North Korean head of state, and Kim Yo-jong, the sister and confident of Kim Jong-un, were among the North Korean delegation, and they invited President Moon to hold the first inter-Korean summit in more than a decade and the first in which Kim Jong-un would participate. The South Korean President accepted this offer on the condition that it would be accompanied by a parallel process of contact between the US and North Korea. This bore fruit: during a meeting held in Pyongyang at the beginning of March with a South Korean delegation, Kim Jong-un expressed his desire to meet Trump and his commitment to stop all nuclear and missile tests, and to accept joint military exercises between the US and South Korea, during such negotiations. A few days later the same South Korean delegation visited the White House to deliver Pyongyang’s message and secured President Trump’s green light for a possible summit meeting with Kim during the upcoming month of May.

Although analysts insist on belittling their rationality, Trump and Kim are pursuing their own logic even if it does not coincide with that of most of the brainy strategic community. They both have a personalist idea of leadership which does not fit into the conventional analytical frames of national security advisers, and they believe they must take the initiative to lead their peoples to great moments and that the hour to do so has arrived. Kim has accelerated a process that has allowed him to negotiate from a position of strength and to prompt gestures of rapprochement, first from the leaders of South Korea and now, possibly, from his US counterpart. For his part, Trump has no military solution that can stop the will of the North to acquire superior nuclear warhead delivery capacity, but he believes that his policy of maximum pressure has now sufficiently weakened their economy to make the North Koreans willing to make important concessions. Both sides would like to leave such a meeting with some immediate result with which to reaffirm their personal leadership; and neither has anything to lose since they can always blame the other side for any failure.

“It should be remembered that this would be the first time in history that a standing US President has met the principal North Korean leader”

The announcement has been received with optimism and hope by most of the international community. It is widely seen as a singular opportunity to advance toward a solution to this conflict which has threatened the security of East Asia for decades and become a major threat to the global nuclear non-proliferation regime. It should be remembered that this would be the first time in history that a standing US President has met the principal North Korean leader. However, some factors suggest that optimism should be moderated. The meeting might not take place, or it could yield little practical results, like previous rounds of negotiations; or it could be a complete failure that leaves us closer than ever to a military conflict.

North Korea has already made its first concessions, freezing its nuclear and missile testing and accepting joint military exercises between the US and South Korea. In addition, other gestures –like releasing the three US citizens detained in North Korea (along with a Canadian and Australian in the same situation) or moving towards a resolution of the case of the Japanese citizens kidnapped between 1977 and 1983– might be expected before or during an eventual Trump-Kim summit.

It is typical of the process of diplomatic negotiation that the summits between the highest-level authorities are the culmination points of a long undertaking of previous work in which the parties negotiate the differences in their positions. However, that this is not the case in this instance was made clear by the statements by Rex Tillerson from Ethiopia –just hours before Trump announced the upcoming meeting with Kim– that the US was ‘very far’ from starting negotiations with North Korea. We should not expect, therefore, that the meeting between the two leaders necessarily produces an agreement, which at this stage, at least, appears premature.

In the many declarations of the Trump Administration on the North Korean crisis, the emphasis has been placed on what the US was not willing do to in order to negotiate with Pyongyang, and not on what it might be willing to offer, beyond a simple subsequent withdrawal of sanctions, in exchange for the de-nuclearization of North Korea. Such a diplomatic offer limited to lifting sanctions is apparently not enough to produce any kind of agreement. Trump will have to risk something more if he wants to move towards a solution to the crisis. He will need to offer some form of security guarantees. These might range from the reduction of the joint military forces with South Korea, to the signing of a peace treaty, to the normalisation of diplomatic relations, or even to the withdrawal –if still improbable– of US troops from the Korean peninsula. Different kinds of economic and humanitarian assistance could be added to the offer to help stimulate economic development in a country that has languished for years due to many factors, and not just international sanctions.

Therefore, the best news that we can hope for is that the Trump-Kim summit does finally take place and that it serves as a new call to an essential negotiation process capable of achieving concrete results in terms of nuclear non-proliferation goals and East Asian stability. On the other hand, an abject failure of such a meeting could push Kim to re-double his efforts to develop his country’s nuclear missile programme and provoke Trump to consider the military option as the only possible way to prevent the US from falling within North Korea’s nuclear range. For this reason, we hope that both leaders are up to the task and that they do not bring us any closer to a terrible military conflict.

Félix Arteaga
Senior Analyst, Elcano Royal Institute
 | @rielcano

Mario Esteban
Senior Analyst, Elcano Royal Institute
 | @wizma9

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<![CDATA[ From policy to populism: Donald Trump’s trade policy in global context ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari47-2018-higgot-from-policy-to-populism-donald-trumps-trade-policy-global-context 2018-04-10T06:34:17Z

An open multilateral trade system is under direct challenge from the policies of President Donald Trump. The year 2018 will be crucial.

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Theme

An open multilateral trade system is under direct challenge from the policies of President Donald Trump. The year 2018 will be crucial.

Summary

This paper reviews US trade policy one year on after the election of Donald Trump. It demonstrates that after a year of exacerbating transactionalist and protectionist rhetoric we are now in a position to observe the direction policy is taking in practice. Sadly, it is becoming clear that practice is indeed matching rhetoric. The evidence is gathering. Commencing with withdrawal from the TPP, policy has hardened towards an open multilateral system. The year 2018 has seen attacks on the WTO (stopping appointments to the Appellate Board), followed by moves to introduce tariffs on white goods, aluminium and steel and a strategy for direct activity towards China. The year will also see a hard line towards NAFTA re-negotiations. The prospects of enhanced trade tension –trade war, even– is the obvious next stage flowing from Trump’s policy. Major players are likely to retaliate.

Analysis

Introduction

Just after his election but prior to his ascent to office in 2016, I wrote a short piece for the Elcano Royal Institute on the prospects for US trade policy under Donald Trump (see Higgott, 2016) in which I suggested his populism would be moderated by the rationales, logics and imperatives of policy once he was in office I argued that while he would be rhetorically protectionist and bilateral in tone he could, nevertheless, be expected to surround himself with people of talent and experience who could resist his more outrageous protectionist sentiments. Office, I argued, would instil in him the norms and principles of a rules-based, multilateral open world trade system.

With the benefit of hindsight, I was naively optimistic to believe that good sense would prevail. Trump’s first year or so in office has proved to be detrimental to, and dangerously destabilising of, a global liberal order, albeit one in need of reform (see, inter alia, Ikenberry, 2017 and 2018; Kaplan, 2017a and 2017b; and Luce, 2017). Enough has happened, and more is foreshadowed, to confirm the fears of even the most pessimistic observer of the global economic order in general and the global trade regime in particular.

Instead of a assuming the continuance of a liberal global order built on three interdependent ‘pillars’ –North America, Western Europe and East Asia–, what we are seeing is a strong populist-nationalist ‘thread’ across the international spectrum from Trump’s America First, through the rise of ‘illiberal’ democracy across parts of West and Central Europe, a ‘Putinesque revanchisme’ in Eastern Europe and a Chinese model of authoritarian capitalism in large parts of Asia (see, inter alia, Brubaker, 2017; Werner Muller, 2016; Mudde & Latwasser, 2017; and Higgott & Proud, 2017) leading to a model in which Russia and China, for their different reasons, are dissatisfied with a liberal order underwritten by US power –which they now see as challengeable and a US unwilling to continue underwriting that order–. Where others once saw the US leading that order as a ‘self-binding hegemon’ (Martin, 2004) the current Administration now sees a self-denying ordinance tying US hands in the global economic (and political) order.

Nationalist trends in the organisation of the contemporary global economic order have been in train at least since the time of the Global Financial Crisis (GTC) of 2008, but it is the more recent populist challenge in the US and many European countries and the accompanying growth of ‘culture wars’ that are replacing broad economic understandings of the benefits of an open global economy that gives it life. Recourse to these views by populist leaders reflects a disturbing ignorance, or wilful disregard, of the relationship between security and international economic openness that makes contemporary US trade policy a genuine cause of concern for global stability. It is the purpose of this short paper to put current US trade policy into its proper context and to identify several key issues in need of deeper scholarly and policy analysis.

Global trade needs analytical friends not ideological boosters

The progressive evolution of the GATT into the WTO over a 50-year period of regular trade rounds created a liberal rules-based trading system with a set of agreed norms and practical rules that were deemed, at the time of the creation of the WTO in 1995, to be sensible, legitimate and on balance a good thing. Indeed, the formation of the WTO and the subsequent membership of China seemed to be the tipping point for global acceptance of the universalism of the global trade system in which an open, but managed, international trade regime became non-contentious. The same assertion cannot be made today. The system and the WTO are in trouble. Support for the multilateral process has stalled and a range of hurdles has presented itself to the global trade system. The last decade has seen, among others:

  1. The failure of the Doha Development Round.

  2. A dramatic growth of interests in preferentialism of both a regional and bilateral nature –with an increase in the number of preferential trade agreements at the bilateral level and the Trans Pacific Partnership (TPP/RCTPP) and the Transatlantic Trade and Investment Partnership (TTIP) as the exemplar of mega regional trade negotiations.

  3. The drift into ‘murky protectionism’ in the wake of the 2008 GFC (see Baldwin & Evenett, 2009).

  4. More recently, and most substantially, the backlash against an open global trade system on the back of the growth of populism (see Brubaker, 2017; and Higgott & Proud, 2017) and protectionist rhetoric.

It is the current populist anti-trade rhetoric and practical political follow-on that has the potential to do the greatest damage. Such rhetoric is invariably bereft of any comprehension of 20th-century trade history. It reflects no knowledge of the 1930s depression in which ‘beggar thy neighbour’ protectionist policies, especially the passing of the Smoot Hawley Act of 1930, represented a massive exercise in self-harming for the US and furthered the collapse of world trade (see Irwin, 2017.)

Under conditions of globalisation, hard-line Hayekian neo-liberal advocates of unfettered free trade have played into the hands of the populists. A failure to be honest about some of the downsides of free trade has given it a negative reputation it does not deserve. Free trade generates massive aggregate global welfare gains. But it invariably does so with uneven distributional effects that have meant that not every sector of the community gains in every exchange. As Heckscher-Ohlin, Stolper Samuelson (HOSS) theoretical trade-modelling tells us, low-skilled workers in developed countries can, in the long run, lose out to similarly skilled workers in poorer countries (see Krugman, 2008), although the magnitude of this impact on the economy and wage rates in a developed country such as the US remains widely disputed (see Stone & Cavasos-Cepada, 2012).

This is not the same as saying that trade inevitably fuels inequality. Indeed, the evidence suggests that this is not the case. Trade would appear to be but one factor, and a marginal one at that, in recent explanations of growing inequality (see Frankel, 2018). However, that there may be no strongly measurable relationship between a country’s trade deficit (or surplus) and a decline in employment, wage levels and inequality is less significant than the political utility of a trade deficit in the hands of a populist nationalist politician.

If these challenges have not put globalisation into reverse they have put the brakes on deeper international economic integration. In recent years trade has ceased to grow at rates significantly greater than output, which had been the prevalent relationship until the early 2000s. This poses tough questions for the architecture of international trade governance, with the WTO especially being weakened as an instrument of global public policy coordination in recent years.

As is now widely understood (see Rodrik, 2017a, 2017b and 2017c), failure to acknowledge the complex reality of trade and an unwillingness to develop public policy correctives to its unequal distributional consequences has provided ammunition for advocates of the worst kinds of populist protectionism (on both the political left and right). This is complicated economics. In the hands of a populist ideologue it can easily be used to argue the case for protectionism. It is in such a context that the trade policy of the world’s largest economy and most powerful state becomes so important.

The present: why it is rational and not alarmist to worry about Donald Trump

Ironically, at a time when the US is looking as though it will need to share global power with old and new rising great powers in the future, its role in securing or undoing the economic stability of the current order is becoming greater than ever. How it behaves in the economic domain affects the wider geo-strategic picture more than the behaviour of any other state. In what amounts to a fundamental break with the past, US policy under Trump is no longer about enhancing a global liberal trade regime. It is about rectifying large bilateral trade imbalances wherever they exist and notwithstanding that much of the explanation for these imbalances is to be found at home in the US, where less than 1% of companies export anything at all and where thoughtful domestic policy reform could have a bigger impact on US export competitiveness than international retaliatory action (see McKinsey, 2017).

Of course, the US remains a commerce-minded international power. US foreign policy may not be isolationist and Trump’s actions to make America great again may have been more rhetorical than real in the international trade domain to date (Boot, 2017). But the US under Trump is currently operating with a narrow, bilateral and transactionalist conception of interest. America First might not imply America Alone, but it does suggest that the US is no longer inclined to accept responsibility for the 70-year-old wider global order underwritten by a network of multilateral institutions. In the economic (and security) domain, US trade partners and political allies are having to readjust to a less predictable, lower-trust environment where contest and conflict rather than cooperation and consensus in US trade relations (and the management of the global financial regime) is becoming the norm.

Trumpian trade rhetoric (and practice) is disruptive and self-defeating for the contemporary trade order. Essentially mercantilist, Trump sees trade as zero-sum. He insists on reciprocal and fair trade, yet his only measure seems to be if the US is running bilateral deficits –sufficient proof for him of foreign cheating and/or poorly negotiated trade deals–. His view is both wrong and misleading. His focus on goods –primarily industrial and manufacturing– reflects in part atavistic thinking associated with classic economics regarding value and accumulation. Trump ignores that in the all-important service sectors –finance, banking, insurance, AI and intellectual property– US providers invariably run surpluses.

Further, it is not low tariffs that explain dramatic industry closures in the manufacturing sectors of mature economies such as the US. Manufacturing jobs are on the decline globally (see Baldwin, 2017). Global ability to produce is outpacing growth in demand. Technological innovation, especially AI and robotisation, means that fewer jobs are created. And those that are not only require higher skills they will not automatically land in those parts of the US that have undergone high job loss in the last several decades. Relocation will continue as China and India (both major beneficiaries of a liberal economic order) become more integrated actors in a global economy dominated by the development of an unbundling of production and ever more complex global supply chains. This genie is not about to be put back in the bottle, US presidential determination or not.

Thus, the future of global trade viewed from a Trump-led Washington is firmly about undoing the multilateral progress of the post World War Two age. Donald Trump is explicitly opposed to multilateral trade cooperation; especially the mega-regional initiatives such as the TPP and TTIP (in its current form) (see ‘Fears for global trade as Trump fires first shots to kneecap WTO’). His decision to quit TPP is reinforced by his determination to renegotiate NAFTA (which Trump has called the worst trade deal ever made). Strongly supported by US Trade Representative Robert E. Lighthizer, Trump has also turned his rhetorical guns on the WTO as an institution and multilateralism as a modus operandi for trade.

For Trump, the WTO is merely a forum where other states have for too long taken, and continue to take, advantage of the US. Wrongly asserting that the dispute mechanism discriminates against the US (which has, in fact, won 90% of its 100+ appealed legal disputes) he has set in train a campaign against the role of the WTO in dispute settlement. The initial blocking of appointments to the WTO Appellate Body may only be a first step, with more to follow in 2018. The US is, of course, not the only critic of the WTO. Europe too would like to see reform.

Nor is Trump wrong about the political challenge from China, but he sees it simply, and incorrectly, as an issue of bilateral trade deficits. This misses the wider significance. China’s failure to live up to its institutional obligations since joining the WTO is not accidental. Indeed, it is clear that China, in its own way, is systematically challenging the norms of a liberal international economic order. Greater integration into the world economy since its accession to the WTO has not encouraged China to behave as a normal (OECD style) market economy. Its economy, and Chinese business, remain a de facto arm of state power. Companies that trade successfully in China do so very much on China’s terms. China works with the norms and rules that suit it but plays fast and loose with those that do not. For example, the Belt and Road Initiative (BRI) is governed by Chinese dispute resolution norms, not those of the WTO.

While the EU and Japan support the US in bringing pressure to bear on China (see ‘EU, Japan and US to ramp up trade pressure on China’), a continuing hostile US attitude to the WTO by the Trump Administration and, perhaps more immediately, the renegotiation of NAFTA will be litmus tests of US trade policy between now and 2020. The year 2018 is crucial, and how the Administration deals with NAFTA and the impact of its aggressive implementation of tariffs and deficit-reducing policies towards trade-surplus states and regions such as the EU –especially should TTIP, as some think might be the case, come back into play (Rashish 2017 & Manning, 2018)– could have dire consequences for global trade.

January 2018 saw the first shot in any tariff confrontation when Trump signed into law the introduction of 30% tariffs on imports of solar panels and some white goods to the US. It is a move clearly aimed at China. The latter, of course, is asserting that it will retaliate (see ‘Trump’s 30% tariffs on solar imports anger global sector’). These, it seems, were opening salvos in future trade conflict. Steel and aluminium were added to the list in March and further white goods and intellectual property can be expected to follow if practice is lined up with Trump’s rhetoric.

We should note that to date, the other major trading powers, notably the EU and China, have not shown any inclination to follow Trump’s line. The EU’s Strategic Vision (2016) was and remains firmly committed to an open, liberal and multilateral economic order. And Xi Jinping’s 2017 Davos commitment to global economic openness was a positive response to the rise of protectionist rhetoric that accompanied Donald Trump’s election (Yong Wang, 2017).

Equally, it is worth noting that US withdrawal from the TPP, while it initially dampened enthusiasm for the organisation, did not kill off support for it amongst its other members. TPP came into effect in March 2018 under its new name of the Comprehensive and Progressive Agreement on Trans Pacific Cooperation (CPTPP) (see ‘Trans-Pacific trade deal to go ahead without US’). While the absence of the US market from the CPTPP is sub-optimal, most of the Agreement’s key provisions remain intact. Moreover, it is still a more advanced exercise in regional economic cooperation in East Asia than the Regional Comprehensive Economic Partnership (RCEP) pushed by China.

But Trump’s rhetoric and practice have, nevertheless, given China the opportunity to take a global leadership role in the domain of trade (and also the environment) at the same time as US power and standing in Asia diminished throughout 2017 (Camroux, 2017). In this regard, seemingly keen to undo Obama’s vision of the region, Trump’s withdrawal from TPP was as much a strategic mistake as an economic one. CPTPP already is, and will become, more than an economic organisation. CPTPP’s structure keeps it open to further members from countries such as South Korea, Thailand and Indonesia, which have all expressed interest. Most importantly, it sends a message that the dominance of the region will not simply be gifted to China if the US continues on its current absent-minded route.

Of course, future membership of CPTPP also remains open to the US. And it is not axiomatic that the US will simply and successfully undertake bilateral deals on a one-off basis with CPTPP members. Both Japan and Vietnam have declined invitations to talk and Trump surprisingly announced in January 2018 that he ‘… would do TPP if we made a much better deal than we had’ (see ‘Trump opens door to US rejoining TPP’).

Yet Trump’s messaging on trade is accompanied by wider practical implications. Not only does US policy allow China to play an increasingly successful role in the domain of global institutional economic governance in established bodies like the IMF, World Bank and WTO, it has also encouraged it to develop new bodies like the AIIB. While other actors such as the EU –and Germany and now France individually– have aspirations, they are not playing a global leadership role reflective of their influence and standing. Threats to the international economic and political orders in the absence of both individual and collective leadership from the world’s greatest power is real. While the US is still a major player in the overall economy of the Asia Pacific, it has effectively vacated the institutional playing field. APEC, as with the Da Nang November 2017 Summit) is treated merely as a platform for Trumpian rhetoric while the rest of the region appears to get on with its economic business.

Even discounting for the problematic impact of Trumpian diplomacy in the Asia Pacific, the US is a diminished regional player. But what the Trump Administration does not contemplate is that the US could also be a major loser from its combative trade diplomacy. It is possible that the US becomes progressively isolated from any new trade-liberalising activity in which it would usually be included, if not indeed be a leader. As the Financial Times has argued –possibly prematurely, we should caution– ‘Trump may huff and puff. The rest of the world will limit the damage’ (see ‘A protectionist advance is far from inevitable’).

How to think about global trade now?

The current struggle to keep global trade open is very much part of the wider geo-strategic game to determine the shape of the emerging global order that looks to gradually be pushing beyond the US led order that prevailed for much of the post World War Two era. In this context, trade is not simply an add-on. It is not a mere necessity that will take care of itself. It affects and is affected by practically everything else that takes place at the interface of national and international relations. We require a closer alignment for analytical purposes of the international economics of global trade and the wider changing and increasingly contested geo-political and-strategic environment in which trade occurs.

So, in that time-worn phrase, what is to be done? Particularly, how should we respond to the current role of the US other than hope for the best and plan for the worse? There is no law that forces the US to accept global responsibility/leadership. It did, lest we forget, sit out the 1920s and 1930s while the rest of the world collapsed economically. Unlike the 1920s-30s, however, US geography and wealth no longer insulates it from exigencies of global economic and political calamity in a manner it might have once done. The technological wiring of the global economy cannot by-pass the US. Notably, most US productive export activity is embedded in complex global supply chains from which its major corporations are unable or unlikely to disengage. Moreover, while US economic power for much of the 20th century was near absolute, now it is not. There was no rising China and India or other big economic players in the inter-war period of the 20th century. Trumpian logic –practising what Richard Haass, President of the Council of Foreign Relations calls the ‘doctrine of withdrawal’– does not provide the US with a real exit option in any global economic failure this time.

The contemporary global trade regime is replete with serious problems of both a political and technical nature that need to be addressed if we are to ward off some of the worst exigencies of the contemporary backlash against international trade openness in the era of Donald Trump. There is a literature emanating from the trade academic community (see, for instance, Braga & Hoekman, 2018) that addresses some of the technical questions. But there is little literature that deals with global trade as a political question embedded in wider geo-strategic contexts. We have to think about trade differently in the 21st century. We need to understand the wider geo-strategic contexts in which trade takes place. We must take account of three sets of inter-linked issues: the international, the domestic and the institutional.

Key international challenges

Internationally, the key challenges are: (1) managing the combative economic relationship between the US and China; (2) the slower growth in the transatlantic area (the US and Europe); and (3) the role of regional trade agreements (RTAs).

As regards managing the combative economic relationship between the US and China, there is a very real prospect of heightened trade conflict –trade war if you must– in the relationship between the US and the major economic powers following President Trump’s quixotic 1 March announcement of the introduction of tariffs on steel and aluminium. Notwithstanding the target for the tariffs was China, the victims will be major allies, notably Canada, Germany and South Korea, notwithstanding that Trump is fighting the wrong battle with China. Intellectual property, not steel, is the battleground on which China is challenging the US. The introduction of the tariffs on steel and aluminium, if that does eventuate –and if the WTO is unsuccessful (as is most likely given current US policy and attitudes to the DSM) in mediating the case–, will certainly be greeted by retaliation. Indeed, the EU, Canada and Brazil have already indicated that will be the case.

The level of escalation of any such action cannot be known at this stage. But a trade war will exacerbate the weakening of, if not destroy, the liberal norms of openness that have characterised the global trading regime since the end of World War Two. It will detract from China’s infractions of the global trade system, cede moral high ground to China and very possibly strengthen its relations with Europe at the very time when transatlantic cooperation is also being weakened by US behaviour.

The slower growth in the transatlantic area (the US and Europe) is generating discontent and nourishing populism. While noting that the relationship began to unwind before Donald Trump and is unlikely to return to normal after Donald Trump (Steltzenmuller, 2018), the need to reboot the transatlantic economic dialogue is paramount to the wider strategic dialogue if the rapidly shifting centre of economic gravity towards East Asia that is tilting the traditional balance of power is to be moderated.

The role of regional trade agreements (RTAs) for the global trade regime is becoming even more theoretically problematic at the same time as it becomes more practically salient. While there is a massive literature on the subject there is no definitive agreement on whether they are to be trade-enhancing rather than defensive mechanisms in the wider geo-strategic game. Analysts and practitioners alike are not sure if RTAs are distractions or a complement to a more broad-based approach to global trade governance. For example, are a sub-optimal TPP and a dormant TTIP reflection of the wider malaise facing the WTO in particular and multilateralism more generally or are they an economically fruitful (as opposed to politically expedient) alternative routed to the organisation of global trade?

Key domestic trade challenges

Domestically, the key trade challenge is to address the sustained failure by governments to defend an open global trade regime and its advantages. Preferring, often by default, to let trade relations (dealings with foreigners) take the blame for technological disruption is leading to increased domestic political and international tensions. This is not helped by the unwillingness of governments to take adjustment policy seriously. This has major implication for the relationship between the citizen and the state and the future of democratic governance that cannot be discussed here (see Higgott & Devetak, 1999).

Key challenges facing the WTO at the institutional level

At the institutional level, the key challenges facing the WTO are that:

  1. Decision-making in the WTO is close to paralysed. Consensus-based decision-making all too often turns into veto politics, incoherence and turf battles amongst members, yet consensus in some form or another remains essential to legitimacy and good policy implementation.

  2. The WTO has focused far too much on trade liberalisation since its creation. Large multilateral trade negotiations are no longer feasible and many other venues for sector-specific negotiation exist.

  3. More attention needs to be paid to upholding the WTO’s rule-making function. The existence of the rules –not necessarily their use– is a global public good that is uniquely supplied by the WTO. And the rules are more important than is understood by populist rhetoric as mechanisms for enhancing pre-commitment, levelling and compliance.

  4. The future of the WTO is in jeopardy unless responsible global actors can pick up the baton dropped by the US. To give two small examples here, other WTO members must defend the DSM by continuing to act in line with their commitment towards each other regardless of US behaviour They could also decide to appoint judges to the appellate body by a large majority consensus (see Elek, 2018).

Conclusions

In sum, the future of the global trade regime, and especially trade governance, is in much greater danger than we think. This is the case at both the normative level of a lack of commitment to an open liberal multilateral system and, at the practical level, of the problematic future of the WTO. Trade needs more, not less, openness and liberalisation, but also greater institutional cooperation, preferably operating under WTO rules. The future of the global trade regime depends on educating President Trump, his supporters, and indeed other populists, that an open liberal trade system is an opportunity, not a risk, and the WTO, even in an age when it is not overseeing multilateral trade negotiations and its Dispute Settlement Mechanism is under challenge, remains the best source of trade-policy information sharing, norm compliance and the major forum for the resolution of key global trade policy issues in an age of increasing great power economic competition.

Richard Higgott
Senior Research Fellow at the Elcano Royal Institute’s Office in Brussels, Emeritus Professor of International Political Economy (University of Warwick), Research Professor (Institute of European Studies) and Distinguished Professor of Diplomacy at Vesalius College at the Vrije Universiteit Brussel

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