US president Donald Trump has taken steps towards war with China and Iran, even as he seeks peace with North Korea. But things may not be quite what they seem.
At the beginning of May, the Trump administration declared trade war on China.
The US gave China a punishing list of economic demands, including a reduction in the US-China trade imbalance by $200bn by June 2020. (This would require the Chinese government to effectively take over the economy, when the US has been saying for years it wants less state control in China.)
Among other humiliations, the US demanded that the government of president Xi Jinping allow unrestricted US investment in China, while passively accepting US limits on Chinese investment in US technology sectors.
One of the world’s leading economic commentators, Martin Wolf, described the US ‘ultimatum’ as ‘unacceptable’, ‘ridiculous’ and ‘crazy’: ‘No great sovereign power could accept such a humiliation.’ Writing in the Financial Times, Wolf went on: ‘This may be a decisive moment for relations between the world’s two greatest powers.’
Smash Iran?
Within this context, the US decision to rip up the nuclear deal with Iran creates another potential flashpoint with China.
Firstly, Trump withdrew from the agreement on 8 May without consulting either China or Russia, both signatories to the 2015 accord. (This isn’t a good sign for a North Korea deal that will depend on China’s support.)
More importantly, Trump isn’t just sanctioning Iran, he’s imposing ‘secondary sanctions’ on any countries that continue to trade normally with Iran. These secondary sanctions will come into force in stages over the next six months and are likely to force European companies to withdraw from the Iranian market (unless they get exemptions from the US).
This is a problem for China. According to one estimate, almost a third of Iranian oil exports this year have gone to China. There are oil traders who think China will defy the US and continue importing Iranian oil, while there are China analysts who think president Xi has plenty of alternative sources and will go along with US demands on oil.
On the other hand, Iran is an important part of China’s $1 trillion ‘One Belt, One Road’ policy of creating an economic corridor across Eurasia. That might be harder to give up.
Some people suspect that Trump’s real goal is not to sanction everyone in sight, but to pile on the pressure during the next six months in order to negotiate a ‘new’ agreement that can be announced as ‘Trump’s Iran deal’, replacing and burying ‘Obama’s Iran deal’.
Perhaps declaring trade war on China comes from a similar place. The list of outrageous demands may not be meant literally, but may just be a form of superpower bullying designed to force concessions from a rival.
The trouble with this kind of brinkmanship is that if your target does not submit completely, you have started a downward spiral that leads eventually towards military conflict. This is why French president Emmanuel Macron said of Trump’s withdrawal from the Iran deal, ‘We would open Pandora’s box. There could be war.’
Deliberate madman?
US president Richard Nixon had a ‘madman theory’ of international relations: if he could convince opponents that he was unstable and erratic enough to do anything, even use nuclear weapons, he could force them to back down. Many commentators have drawn parallels with Trump’s approach to global politics.
Writing in Forbes Magazine, US economist Phil Levy points to a problem with the theory:
‘When the unsettling behavior of a leader brings the other side to the table, the approach then has to change. The payoff to the strategy only comes if the threatening leader can find sufficient sanity to make reasonable demands at the negotiating table. If the negotiating demands are as wild as the actions in the lead-up, there are no gains to be had, just conflict.’
Levy points to the ‘equally wild demands’ Trump has made at the negotiating table on trade issues. One example: ‘His team negotiated a deal with S. Korea which promises to hurt American steel users while ensuring that the United States gets no tariff revenue.’
Trump’s version of deliberate irrationality would be more suitable for a weak state facing more powerful enemies. That’s the argument US academics Dani Nedal and Daniel Nexon made in Foreign Policy in April:
‘No rational policy calculation for the United States favors sudden policy reversals, a failure to communicate consistent interests or preferences, consistently mixed signals, or any of the other forms of “flexibility” now on the table.’
Maximum pressure
Trump likes to claim that it is his policy of ‘maximum pressure’ that has led to the current breakthrough on North Korea. No doubt his wild (‘fire and fury’) threats did have an effect on North Korean leader Kim Jong Un. They may have had more of an effect on the Chinese leadership, which has taken unprecedented action against North Korea since last autumn.
On the other hand, Kim repeatedly provoked China with the timing of his military spectaculars.
In February 2017, Kim tested an intermediate-range missile that landed in the Sea of Japan, and he also assassinated his half-brother, Kim Jong Nam, who had been living under Chinese protection (and who was potentially a Chinese-sponsored replacement for him). On 18 February, China suspended all coal imports from North Korea for the rest of the year (with exceptions in August and September).
Kim tested a ballistic missile in May 2017, upstaging a huge international conference in China, and a nuclear bomb in September, overshadowing an important Chinese summit with Brazil, Russia, India and South Africa. In response, China announced that it would limit oil exports to, and stop buying textiles from, North Korea in line with new UN sanctions that it had agreed to.
China has reportedly worried that it is being side-lined in the South Korea-North Korea-US peace process. That sense of exclusion led to the first-ever visits to China by Kim Jong Un in March and May, after six years in power. (His father, Kim Jong Il, made eight visits to China during 12 years in power, according to one record.)
One worrying sign for China can be found in the Panmunjom peace declaration signed by South Korea and North Korea on 27 April.
A Korea expert in Beijing, Zhao Tong, pointed out that the statement refers to future trilateral peace conferences involving the two Koreas and the United States or four-way meetings involving the two Koreas, the United States and China. ‘The trilateral format would exacerbate China’s concerns about being left out,’ Zhao told the FT.
China is being subjected to not-quite-maximum pressure by the US, with multiplying points of friction. While Trump is unlikely to want war in the near term with either China or Iran, the road ahead is more dangerous after his recent moves.