Does America First herald the demise of Pax Americana?

J Boima Rogers – June 2017

The second half of the twentieth century was the era of Pax Americana as the country dominated the world politically, militarily and economically.  Yes there was the Soviet Union but its power was limited to military might and politically through coercion of its satellite states and aspirations of communist parties and third world movements.  But the Soviet Union became estranged from its most powerful ally, China, western socialist parties were more inclined to social democracy, rather than the doctrinaire communist ideology.   Communist insurgents in less developed countries were besieged and apart from isolated cases never came into power.  When the Soviet regime folded in the late 1980’s, it left America in pole position leading commentators like Francis Fukuyama to proclaim “The end of History”, which implied that that Pax Americana and its ideals were here for ever.  Trump’s mantra, America First resonated with his base on three counts.  Firstly, that America had lost its position in the world and was not respected by allies and foes.  He would reverse that trend.  He stated that America was being taken for a ride by allies, China and other countries that had unfairly devastated American industry and jobs. He would make allies pay their way, reinvigorate the rust belt and bring back jobs.  He was highly critical of Islamist terror which he vowed to exterminate.

How did Trump come up with these themes?  Yes there were dark clouds in America’s hegemony but in many ways Trump’s analysis and solutions are delusionary.   The US economy which at the turn of the last century under Clinton saw rapid growth was going through transformation as international trade was liberalised, notably, under World Trade Organisation (WTO) rules, NAFTA and the emergence of a major player China, which abandoned communist economics.  Western corporations were blindsided by the size of the Chinese market with over one billion consumers, and encouraged and coerced into making the country the factory of the world.  The WTO, the China factor, NAFTA and export led growth in other countries resulted in huge shifts in production away from America and Western Europe.  US corporations were active participants, shifting production to take advantage of low wages to maximise profits. This trend which has continued in the 21st century has devastated America’s rustbelt.  This was however not the full story because new technology and automation in particularly, was largely responsible for the loss of industrial jobs.  Another factor is the mighty dollar, which according to a recent report is 30% over valued on a trade weighted basis.  All things being equal, the huge and persistent trade deficit that America has accumulated would have caused the value of the dollar to depreciate thereby rectifying this trade imbalance.  This has not happened because of the use of the dollar as the world currency; foreigners have tended park their earnings in the US and/or hold them in the currency.

The US has the largest army and significant outreach politically and militarily.  It spends far more on defence as a share of its GDP than its allies.  It has prodded its NATO allies to spend up to 2% of their GDP on defence.  They are still in transition and most have yet to get to that goal.  It should be noted though that the US defence budget is controlled by hawks in Congress who continually increase outlays and their decision is in no way guided by the NATO guideline.    Furthermore, this is the price of being the only super power and the US made a decision to engage in two wars, without any consultation of its allies, one of which, Iraq, was totally unnecessary.

With regard to Islamic terrorism, we need to place the issue in some historical perspective.   In Afghanistan, America encouraged and assisted rebellion against the soviets, in the 1970s and intensified this support under Reagan, sowing the seeds of Islamic insurgency as Islamic ideology pervaded rebel movements fighting the secular soviet supported regime.  US support for the corrupt Shah of Iran and Israel, the failed peace process between Israel and the PLO and autocratic regimes gave rise to the Islamic revolution in Iran, Hamas in Gaza and turned large segments of the Arab world to Islamists. The removal of Saddam Hussein, a brutal but staunchly secular leader and the subsequent dissefranchinisation of his minority Sunni support base created fertile grounds for ISIS.   The removal of Gaddafi from power in Libya instigated by European leaders but supported by America, with Secretary of State Clinton prodding a reluctant Obama, was another bonus for Islamists who filled the space created by the ouster of the autocratic leader.  Trump needs to take into account this historical perspective before wading into the quagmire because US intervention in virtually all these developments noted above have had unforeseen consequences.

Against this background of America’s diminished economic power, China’s emergence as a power, slow economic growth and wages in the US, terror attacks by Islamists, Trump’s simplistic positions seemed like the right solutions to his base, White working class Americans.  As is often the case with demagogues, Trump sold himself as the fixer, akin to his role in The Apprentice, untarnished by the corrupt Washington elite.  The scorecard to date has been vastly different from his campaign posture.  Indeed he has weakened America considerably at home and abroad.

At home, America has not seen a more dysfunctional administration, without any significant legislation success.  He has made little headway in major legislative priorities he had championed, such as healthcare (the house bill is languishing in congress) tax reform and infrastructure because of his incompetence, flawed policies and a fractious Republicans conference in congress.     He is besieged by lawsuits and strong and vocal opposition by civil organisations, states, local authorities and the media.  The judiciary continues to oppose his travel ban on Muslim majority countries.  The darkest cloud is the alleged collusion between his election campaign and Russia. Former FBI Director, whose devastating testimony to Congress about this allegation has described Trump’s statement on the issue as “lies, plain and simple”, characterising the President as a bully, using his office to obstruct the investigation.  This cloud weakens the administration, dominates the news and makes it difficult for Trump to develop and implement his agenda and impose his authority on lawmakers, with many Republicans in congress worried that a deeply unpopular president will reduce their chances of getting re-elected.

The political situation in America is the most polarised ever.  This prevents parties from working together for the mutual benefit of the country and Trump exacerbates the situation.  Two glaring examples of this situation are attempts by Trump and his party to repeal the Dodd Frank rules aimed at protecting the public and economy from a repeat of the ravages of the recent great recession.  Another example is the repeal and replace move on Obamacare.  Republicans just appear to hate these sensible regulations primarily because they were enacted by Democrats.  In the case of Obamacare there are reports that after the house gutted the regulation, the senate, sensing the political price that will follow the enactment of the house bill, is reinstating much of the original Obamacare features so that it has been called Obamacare light. What seems to have been lost in the process is for lawmakers to have paused and said how we could improve on the existing legislation.

This dysfunction is playing out on a number of issues that could actually strengthen the country but are bogged down by a highly polarised congress.  Key among these and a major driver in Trump’s election relates to the high and persistent US trade deficit.  Republicans have proposed a Border Adjustment Tax (BAT) that will tax imports and effectively subsidize exports which will not incur the tax.  BAT will address a number of issues; it will minimize America’s voracious appetite for imports and encourage import substitution and exports thereby reducing the trade deficit and, raise tax revenues to offset the country’s large budget deficit.  This proposal is unlikely to move forward partly because of partisan politics, because Republicans want to use savings for tax cuts, but ironically, because it does not have Trump’s support (it is not in his budget) even though it is in line with his America First mantra.  Lawmakers and business leaders have acknowledged the need to improve America’s infrastructure, but Republicans vehemently opposed Obama’s initiatives. Now with a Republican President they have embraced the issue.  The only problem pointed out by analysts is that Trump’s proposal is merely an opportunity for corporations to make money on projects, serving metropolitan areas while ignoring less attractive but badly needed infrastructure in Trump’s (low output) heartland.  Investment in clean energy is an area that would be good for the country and has the support of the general public and the business community but Republicans and the Trump administration are hostile towards this area as demonstrated when Trump pulled out of the Paris climate agreement.  Investment in science and technology will improve America’s competitiveness and is supported by scientists and business leaders but attracts little support from Republican budget deficit hawks and Trump has actually reduced the budget for this area.  America is being prevented from achieving its greatness because of partisan interests and Trump’s lack of vision and support and despite his assertions to be a non-politician, politics is in the way and he is at the centre of it.

The administration’s foreign policy agenda and Trump’s handling of it is even more worrisome. Shortly after firing the FBI Director Trump met with Lavrov, the Russian Foreign Minister, displaying bonhomie that is absent from his interaction with America’s European allies.   European allies viewed this event with alarm because of Russia’s occupation of Ukraine, veiled threats against former satellites, intervention in elections in Europe and Putin’s policies in Russia which are anathema to their democratic principles, notably, his treatment of opposition parties and the media.  Trump’s recent trip to the continent was a disaster.  He failed to confirm America’s commitment to NATO’s Article 5, which states that an attack on any country in the alliance would be countered by force by all members. Trump deleted that statement in his speech that his State Department and National Security Adviser had helped prepare.   While he subsequently affirmed America’s commitment to Article 5, two weeks after the meeting with NATO members, the damage was done and his earlier action says more about Trump’s true views about the alliance.  The main thrust of his speech was berating NATO members for not spending enough on defence.  He behaved arrogantly, refused to bond with European leaders – at one stage riding a cart rather walk with other leaders.   Photos show how he pushed aside the Montenegro leader to get in the front row.  He would not commit to endorsing the Paris Climate Change agreement, and repudiated it as soon as he got home.

Back home, rather than showing sympathy with Londoners in the recent horrific terrorist attacks, he was highly critical of its Muslim mayor; ironically while commenting at length about the London attack he was notably silent about the terror attack that killed two men who were protecting Muslims from abuse by a White supremacist in the US about the same time.  He has got embroiled in the dispute between Qatar and its neighbours and in the typical Trump fashion claimed credit for that country being demonised by other gulf Arab states.  Trump as usual has not taken into account the fact that Qatar hosts the largest contingent of US forces in the region. His message of “condolence” to Iran on the recent terror attacks has been described as “repugnant” by that country’s foreign minister.

America, which had lofty ideals about democracy, seems to be retreating from that sphere as demonstrated by a recent directive from Rex Tillerson the Secretary of State, who directed his diplomatic staff to separate “the way people are treated” from foreign policy, its friendship with dictatorial regimes and hostility to world forums and agreements.

Trump’s disastrous foreign policies and actions have drawn the ire of Senator John McCain, the Republican chair of the Senate Arm forces committee who while a fierce critic of President Obama, stated in a recent interview that the former President was better than Trump “ as far as American leadership is concerned” on the global stage.  His actions on NATO and the Paris Climate accord has caused the German leader to state that Europe “must take our fate into our own hands”, implying that Europe cannot count on the US anymore.  Other allies are also wary and uncertain about this neophyte, naïve and unpredictable president,    Besieged at home, losing the friendship and respect of allies abroad.  Trump would have hoped to make up with his buddy, Putin but that relationship cannot develop because of the cloud of Russian interference in the US election and defence hawks in his own party who are wary of the Russian bear.  The senate has recently unanimously passed legislation to impose further sanctions on Russia and make it impossible for Trump to lift Obama’s and the new sanctions without their authority; Trump was apparently planning to lift those sanctions.

Tump’s election and the populist mantra reflect a deficiency in the American electorate mechanism and the political climate in general.   In a paper by Jonathan Rauch and Benjamin Wittes, titled, More professionalism, less populism: How voting makes us stupid, and what to do about it, the authors note that “participation is effective only when supplemented by intermediation, the work done by institutions (such as political parties) and substantive professionals (such as career politicians and experts) to organize, interpret, and buffer popular sentiment”.  They contend that the Electoral College system “was intended as a firewall against the popular selection of a dangerous or unqualified president”.  The authors analyse the dangers of unbridled populism that the founding fathers envisaged and how the nation should be protected from the likes of Trump. They cite polls which show that a third of the public (and half of Republicans) believe that Obama was born in Kenya and that Hilary Clinton was involved in a satanic paedophilia ring.  The public make “rational decision” but need guidance from intermediaries.  In this digital landscape with an abundance of fake news and alternative facts a large section of the electorate have abandoned mainstream media for what they consider as trusted sources such as social media and when they do read the mainstream media, they tend to go for highly partisan ones, in the case of Trump supporters, Fox News.  Hence we have showman Trump who constantly reminds his supporters not to trust mainstream media, which he claims are the enemy, rather than purveyors of objective news and analysis.  The Republican Electoral College process helped in Trump’s nomination. The Party unlike the Democrats, operates on a winner takes all basis and super delegates do not have the freedom to vote according to their evaluation of the candidate but must adhere to the votes cast in their states even though they are much more qualified to assess the qualifications of candidates; there was no “firewall”.

Pax Americana is truly on a downward slope, thanks to Donald Trump. Respect is earned and so far Trump has only advocated hard (military) power, with no time for soft power.  His attitude and policies means America is not seen as a beacon of liberalism and democratic values.  Europe will no doubt be seriously considering Chancellor Merkel’ statement.  The economic ails that Trump gripes about are imaginary because Obama left him a much better economy than he inherited and is envied by other countries but Trump could squander it because of inappropriate policies.  The view that America is being taken for a ride is a simplistic notion, there is a complex dynamic at play and Trump does not seem to understand or have an interest in policies that will keep America in the forefront of allies, the world as a whole and cutting edge issues and sectors such as clean energy technology.  His approach on terrorism and forays in the Middle East ignore the historical perspective and risk America being sucked into a very complex dynamic.  The American political and electoral process, in particular, the Republican Party’s approach, without a firewall, has allowed an unqualified President to take the mantle.  The country is paying the price for it.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford, www.oxfordmemo.co.uk.

 

 

 

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Trump’s 100+ days – a dysfunctional wannabe strongman

May 2017 – J Boima Rogers

The election of Donald Trump, the most unqualified president in terms of experience and temperament is playing out as I envisaged to the detriment of Republicans, the US and the world.  He is trying very hard to be the strongman he promised with disastrous results.  The latest case is the firing of the FBI Director, James Comey who had recently stepped up his investigation of the alleged collusion between the Trump campaign and Russia. Trump the wannabe strongman took a similar posture prior to and during the election with Obama, his Republican opponents and Hilary Clinton.  As President he has continued his tirade against the Obama administration, Democrats in congress, judges and the media.  He is always on the attack for spurious or no reasons other than to let the whole world know that he is top dog. Analysts are increasingly worried that he is trying to move away from what America’s founding fathers envisaged, a democratic state with a strong congress, judiciary, media and civic society.  This of course does not bother the Donald who has lauded other strongmen leaders who presumably inspire him.   What are the underlying principles of the Donald? How has this played out in the country and abroad?  What are the implications for America and the rest of the world?

In assessing Trump’s progress or more aptly, lack of progress to date we need to look into the underlying factors at play.  The strongman aura is really a manifestation of insecurity of the man, which he tries to mask.  He is only happy when he is the centre of attention and hogs the news, hence he tweets outrageous statements and lies at all hours of the day and night  When this is combined with his ignorance and unwillingness to learn it can be very embarrassing and dangerous for a man in such a powerful position.    The Donald does not understand, care for or have empathy with low income and poor Americans.   Trump is racist as demonstrated early on in his career when he discriminated against African Americans in renting out his properties, eventually having to come to a court settlement on this issue.  He hounded innocent ethnic minorities in the 1980s.  He has surrounded himself with racist advisers who have pushed him into positions such as the wall with Mexico, rounding up and deporting primarily non-white illegal immigrants and of course the Muslim ban.  Finally it should be noted that Trump does not have any overall, coherent and consistent strategy or political principle.  He makes things up as he goes, says things he feels will make him popular and in many ways is a rogue Republican.

How can we assess Trump so far?  He has appointed a Supreme Court judge, rather, the senate, after denying Obama’s choice a hearing appointed Trump’s nominee.  He has signed a flurry of Executive Orders (EO) cancelling Obama’s environmental and financial rules.  The house of representative has passed a healthcare bill (that they prepared with little or no input from Trump) that will repeal and replace Obama’s healthcare legislature. The bill will deprive millions of poor and sick people basic healthcare while giving huge benefits in the form of reduced taxes to the rich. The independent Congressional Budget Office (CBO) had estimated that 24 million people would lose insurance in the first proposal.  Lawmakers did not obtain a CBO analysis before they voted for the version that they passed.   He has bombed Syria, even though he opposed such a move as candidate. Trump the candidate who strongly objected to the US’s overseas military projects has in addition to bombing Syria, authorised a disastrous campaign in Yemen, detonated the largest bomb in Afghanistan and sent an armada to the Korean peninsula.  It is rather odd that this commander in chief, who railed against foreign entanglements as a candidate and dodged service in the Vietnam War, is suddenly a warmonger, willing to sacrifice American lives abroad.

This record is paltry relative to the sweeping moves he promised from day one and his failures have more prominence, notably, his Executive Order banning travellers from seven (amended to 6) majority Muslim countries that has been blocked by judges.  He has failed to get funding for the US/Mexican border wall in the budget for the government up to September 2017.  Congress dismissed Trump’s budget wish list which would have significantly increased allocations for the military by ten percent while drastically reducing allocations for other items such as the state department, the Environmental Protection Agency (EPA) and other departments that Trump considers unimportant.  His administration has failed to fill many positions which have made it very difficult to initiate and roll out the Trump agenda. Trump’s ignorance and lack of guiding principles and strategy have resulted in him taking positions that are diametrically opposed to Trump the candidate.  He has gone back on this initial strong opposition to NATO, China and NAFTA.

Trump’s management style has weakened the office considerably while alarming many observers.  The ban on Muslim countries was unsuccessful because the Executive Order was poorly drafted and judges made use of his pronouncements on the issue before and after order was published.  The healthcare bill was passed before it had been costed by the CBO, an unprecedented action that would cause it to face serious problems in the more moderate senate and general public. The sacking of National Security Adviser General Flynn was done weeks after Trump had been advised that he was liable to blackmail by the Russians.  The sacking of FBI Director James Comey was followed by conflicting accounts by Trump and members of his team.  The acting Director of the FBI contradicted the White House spokesperson who claimed that one of the reasons Trump had sacked Comey was because he had lost the support of rank and file staff at the bureau, saying that Comey had overwhelming support among staff. Trump admitted in an interview by NBC that the investigation of alleged collusion between his campaign and Russia was a factor in his decision. He stated in that interview that “when I decided to just do it, I said to myself, I said, ‘You know, this Russia thing with Trump and Russia is a made-up story, it’s an excuse by the Democrats for having lost an election that they should have won”.   Strongman Trump also stated that part of the reason he fired Comey was because he was a “showboat grandstander”, obviously not only had Comey’s investigation irked the President, he committed the sin of stealing the spotlight from Trump.   Interestingly, the day after Comey was sacked, Trump received Russia’s gloating foreign minister at the Whitehouse who was accompanied by Russia’s TASS news agency reporter who took pictures of the “very successful” event.  US news outlets were not allowed to cover the event.

The alarming thing though about this administration is the threat to the US’s core principles and institutions.  Trump has attacked the judiciary for blocking the Muslim ban.  He has attacked the mainstream media for reporting the problems of his administration and recently suggested that he may put a stop to regular briefings of the media.  He has fermented opposition to Republicans in congress who have opposed him or not followed his dictats. And he has told numerous lies, often unnecessarily over even the most insignificant things starting from day one when he stated that his inauguration attracted the largest crowd ever.  His Republican base agrees and applauds him.  Republicans in congress largely agree but many are cowed through their fear that going against a spiteful president will get them out of office.

The American public and particularly Democratic and independent voters are not convinced and the Donald has consistently had the lowest polling of any president since polling started.  Privately many Republican congressmen also have misgivings.  They and the majority of Democrats and independents are worried about the mercurial president; that his biggest success, the new healthcare bill is inferior to Obamacare it replaced; that the allegation of Russian interference in the presidential election might have some validity; that Trump’s military adventures might be prohibitively expensive; that Trump’s plan to defund the state department by a third of its current budget will lose the US friends and make it unduly reliant on the military; that the presidents opposition to mainstream climate change thinking and a withdrawal from the Paris climate agreement will be detrimental to US’s interests.  Republican congressmen are worried that the unpopularity of this rogue Republican and his policies may cause them to lose their majorities in the senate and house of representative in forthcoming elections.

Analysts are on the whole not impressed and many are critical and alarmed. Chris Whipple, author of The Gatekeeper, a newly published history of White House chiefs of staff stated that “the Comey firing is just the most dramatic example of a White House that is completely dysfunctional, the most chaotic in modern history”.  In an event organised by The Brookings Institute, participants were scathing about the administration.  Susan Hennessey, fellow in Governance Studies and managing editor of Lawfare noted that Trump’s reliance on family and informal advisers has resulted in “national security by instinct instead of expertise”.  Leon Wieseltier, the Isaiah Berlin Senior Fellow in Culture and Policy described the administration as “incomprehensibly ignorant, with a serious narcissistic personality disorder, and a problem of impulse control”.  Benjamin Wittes, a senior fellow in Governance Studies and editor-in-chief of Lawfare, observed that “This is not a president who is functioning in the normal way that we expect presidents to function”. Wittes observed that the president’s flip-flops on issues such as whether or not China is a currency manipulator means that “he’s created an environment in which the words of the president of the United States don’t mean anything at all”. Dr Kamarck, senior fellow and director of the Center for Effective Public Management stated that “we have elected the least experienced person ever to hold the office of the presidency”.

It is only three and half month into the Trump presidency and within that time he has demonstrated that he is unfit for the task.  It shows though that the US system is dysfunctional.  Trump somehow won over the Republican Party even though he clearly did not represent the views of its mainstream, particularly its recent economic platform.  The college voting system (Trump lost the popular vote) allowed a man who did not have a coherent policy framework, no experience of government, lied consistently, invited America’s arch rival Russia to work on his behalf and paid little or no tax for twenty years to become its leader.  In a recent speech Obama said the electorate deserves who they elect.  America may be stuck with this man who will deprive them of their healthcare and fill the swamp with alligators as he implements a tax policy that will give away billions to the rich.  At the same time he will continue to wreak havoc on the poor, the environment and the American and world economies.  But then there could be another scenario. Americans may wake up and punish the Republicans in forthcoming elections to congress and give Democrats majorities creating serious problems for Trump as the Republican controlled congress did to Obama.  There may even be a starker outcome.  Dr Allan Lichtman, who has correctly predicted presidential elections for the last 40 years, has stated that Trump could be impeached.  In a recent interview he cited conflicts of interest, including the fact that since his inauguration Trump’s company has received approval for 38 ventures from the Chinese government.  Since Trump has not divested himself from his business, he will benefit directly from these potentially lucrative ventures.

The election of Trump has raised serious issue relating to the legitimacy of his victory as well as his and America’s agenda in the 21st century. Hilary Clinton won the popular vote by almost thee million.  Most of this discrepancy was in coastal states like California and New York.  In a recent study it was revealed that Mrs Clinton’s voters, largely in metropolitan areas, had significantly higher per capita output that Trump voters.  This effectively disenfranchisation of the more economically dynamic section of the country has serious implications for the political agenda and priorities.  This is reflected in the Trump mantra, that is, an emphasis on yesterday’s issues and conservative social and cultural agenda, immigration control, gun ownership, coal, religion and a strong military.  The more dynamic section of the population would rather focus on science and technology, climate change, clean energy and the digital sphere. As long as this anomaly continues it will act as a deterrent in electing a president that fully reflects the will of the people, give social conservative undue political leverage and prevent the country from stepping up to the challenges of the 21st century..

What does the Trump presidency mean for the rest of the world?  Firstly, it is difficult to say given Trump’s ignorance of issues, countries and regions and the fact that he has no defined guiding principles and strategy. His budget proposal and stated policy is to move away from global organisations such as the UN.  He may try to weaken commitments to and/or take the US out of the Paris climate agreement since he and his Environment Secretary do not believe in the science of climate change.  Trump has shown an admiration for other likeminded strongmen, with warm words for leaders of Russia, Egypt, Turkey, Philippines and even North Korea.  Previous administrations, including Obama’s encouragement and/or pressure on countries to adhere to democratic principles are out; under Trump despots of all kinds are preferred.

In Europe, while he has reversed his position on NATO I suspect that he still hankers for a rapprochement with Moscow if congress will let him.  His campaign rhetoric and recent meetings with Russian officials suggests that this is his wish.  Trump supported Le Pen who was hostile to the EU in the French election and welcomed Brexit.  Europe must therefore be wary of Trump.  In the Middle East and Afghanistan in contrast to candidate Trump, we should expect to see a more forceful posture and indeed his recent budget wish list for the military confirms this.  After a couple of day’s education by the Chinese leader, no doubt sweetened by commercial openings for the Trump brand, he has repudiated his hostility to China and we should expect closer relationship with that country.  That and the election of a new leader in South Korea who has a preference for diplomacy should complicate matters in the peninsular. Other countries in the region which have had recent tensions with China should not expect a robust defence of their positions from President Trump.  Africa and South America have not featured in Trump world but they should not expect much support and leaders would not fear any US pressure to implement democratic policies or improve civil liberties.

The Tump presidency could be a boon for other countries.  These countries would have opportunities to develop deeper regional relationships and climate change technologies and markets as the US abandons this space.  China is already taking the opportunity to develop closer ties with other Asian countries in the trade bloc it has been trying to develop. Japan and other countries that were involved with TPP that Trump pulled out of are also in talks about reviving the agreement without the US.  It should encourage Africa to develop the huge potential in trade links within the continent and China will no doubt enhance its dominant role in trade and investment in the continent.

As I go to press Trump is embroiled in yet another drama that has characterised this dysfunctional president and his chaotic administration, giving sensitive information on ISIS to the Russians, without the permission of the source. As usual the Whitehouse’s handling of the issue has been chaotic, with different accounts from administration officials.  Congress and even loyal Republican senators and representatives are livid with his action. It threatens America’s relationship with its allies.  Trump acted as a child showing off a new toy to his buddy, Lavrov, the Russian foreign secretary.  America must wish it had the grown up “no drama” Obama back in office.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO) http://www.oxfordmemo.co.uk

 

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Take America and the world down again

 

J Boima Rogers – January 2017

Donald Trump in the White House, the most powerful position in the world is an alarming prospect.  His proposals and actions since his election are unprecedented and frightening.  Never before have we seen a president-elect trying to assume power even before taking the oath of office and doing so in a manner that is totally unfit for the job. He has already failed his key supporters, White working class voters and his party.  This is to be expected from the most unqualified president-elect who has appointed an equally unqualified cabinet.  His election poses serious challenges but stakeholders must not give up hope though, the struggle must continue.

Trump’s cabinet appointments indicate that he has repudiated his key campaign slogan and core support base.  Rather than draining the swamp, he has filled it with alligators, billionaires and millionaires, the very people who symbolise the huge income divide in the country and were largely to blame for shifting jobs abroad as owners, major shareholders and financiers of companies that moved abroad.  He has appointed executives from the financial services sector, who were responsible for the great recession to key positions in his cabinet.  He has, along with the Republicans in congress made the dismantling of Obamacare the top priority.  This policy is likely to adversely affect his core support base much harder than his millionaire cronies.  Trump, a rogue Republican, has turned his party’s long term and recent policies upside down.  The party noted for its hawkish stand has a standard bearer who has embraced the US’s major adversary, Russia, which attacked the country by manipulating the US’s democratic process.  The most recent reports are that Trump may be beholden to the Russians because they have material that they could use to blackmail him.  The Republican party which has always advocated free trade and the primacy of market forces now has a leader who is taking a strongly protectionist stand.  The party of small government, which in the last eight years has fought tooth and nail against the budget deficit, to the extent of closing the federal government has a president that will increase the deficit very significantly.

President elect Trump is the most unqualified candidate to be elected to this powerful position.  He has no political experience and his primary claim of competence, his business acumen is seriously flawed.  He did not build his business “empire” from scratch; rather he inherited it from his father.  The fact that he was been declared bankrupt four times means he has a very chequered track record.  Since he has not paid federal tax for the last twenty years, while no doubt making use of the government’s infrastructure and services, he is a billionaire on welfare.   Finally it must be noted that having a business background is not necessarily a qualification for his new role as I demonstrated in a previous paper looking at the record of US administrations.  It should be noted that Silvio Berlusconi the former Italian prime minister, with a far more impressive business background than Trump, and similar in many respects to the president elect, left that country as the most uncompetitive among the major economies in the European Union.  Trump is seen by a majority of Americans (71% in a recent survey) as a strong leader but he is actually only a bully, picking on people who lack his power.  He is thin skinned, impulsive and lacks the strategic focus required for this position.  In a brilliant paper by Dr Michael F Oppenheimer, Clinical Professor of Global Affairs at NYU, he noted that “whatever attitudes he expresses about policy are skin deep, an incoherent, impulsive-driven miscellany of ethno-nationalism, isolationism, an infatuation with authoritarian rulers who he views as partners.”  Dr Oppenheimer contrasts this with Obama’s “informed pragmatism and instinctive caution”, attributes that that are required for this powerful position.

Trump’s cabinet, made up of political inexperienced, ideologues and incompetent managers poses serious challenges.  Nobel Laureate Economist. Joseph Stiglitz has noted that “America’s bog of legal corruption is likely to reach a depth not seen since President Warren G Harding’s administration in the 1920s”.    Four key positions are of particular importance should alarm the US and the rest of the world.  His Treasure Secretary, former Goldman Sachs Executive, Seven Mnuchin does not have the skills necessary for the role – Stiglitz notes that his key skill is tax avoidance, not constructing a well-designed tax system – and given his background his emphasis is likely to be removal of the controls imposed on the financial sector, the lack of which caused the recent great recession. His economic plan, cutting taxes, overhauling regulations, encouraging energy production and pursuing an America-first trade policy, is unlikely to generate the 3.5- 4 percent growth rate, described in a recent paper by Isabel V Sawhill of Economic Studies and Eleanor Krause as “fanciful”, citing a series of forecasts by reputable organisations including the Congressional Budget Office .  To achieve Trump’s growth rate, the authors noted that US productivity would need to be trebled. To address the rigidity in socio-economic mobility, a key driver of Trump’s populism, namely, stagnant income levels of middle class voters over the last three decades, the economy should grow by 6% a year.  The authors cited the study by Raj Chetty and colleagues who state that equally distributed growth would be more effective in improving the average person’s life chances than a simple increase in GDP growth.

The Environmental Protection Agency (EPA) is a climate change sceptic who has spent a career fighting EPA regulations.  He is likely to make as his priority striking down Obama’s environmental legislation and taking the US out of the recent Climate agreement.  His Secretary of State, Rex Tillerson, a diplomatic and foreign policy novice, who opposed sanctions against Russia and was awarded a medal by Putin, is likely to seek close relationship with that brutal and authoritarian regime.  The most frightening prospect for the world is Trump’s choice of National Security Adviser (NSA), Michael Flynn, who according to Dr Oppenheimer shares Trump’s thin skin and inventiveness with facts. Dr Oppenheimer noted that Flynn’s “preoccupation with Islamic extremism, his intolerance of dissent, and his managerial ineptitude makes him uniquely unsuited to head the NSA”.  Since we know that Trump does not bother himself with reading intelligence briefings and has started off with an acrimonious relationship with the intelligence community, Flynn is likely to have unprecedented influence on the president elect.  Dr Oppenheimer believes this appointment is a recipe for policy errors by an administration that will confront complex challenges and inevitable shocks.  It should also be noted that Trump and his NSA appointee’s views are at variance with the incoming Chairman of the Joint Chief of Staff who stated in a senate hearing that “Russia presents the greatest threat” to US national security.

The US and the world are in for some turbulence and the signs so far are pretty gloomy.  Obama rescued his country from the great recession, with the US performing better than other developed economies in terms of the speed in getting out of the recession, economic growth rate and  job creation.  He implemented a health care system that all developed countries take for granted. He rebuilt relationships with allies that had been seriously frayed under Bush, negotiated a historic agreement with Iran and mended relationship with Cuba.  Working with other world leaders, he negotiated an agreement that most scientists say is crucial to address climate change.  He worked with allies to impose sanctions on Russia for that country’s invasion of Ukraine.

Trump, in his statements and appointments will unravel many of these achievements and introduce major risks.  His economic plans and cabinet choice will not achieve his stated economic growth rate and there are serious risks involved in his protectionist agenda.  EU leaders are worried by the fact that he has lauded Brexit, suggested that more countries should follow Britain and met with fringe and extremist politicians like Nigel Farage and Marie Le Pen who oppose the EU project.  NATO members are worried about his embrace of Putin who he regards as “smart”.  In a recent interview he stated that NATO was “obsolete”.  His obsession and that of his NSA Adviser with Islamic extremists, support for the Russia’s actions in Syria and his Ambassador to Israel are likely to embolden Islamist extremists and help them in their recruitment.  IS must be very happy with these developments, because he has appointed an Israeli Ambassador who provided financial support to Israeli settlements in the West Bank and Trump’s statement that he will move the US Embassy to Jerusalem.  Breaking with US tradition and policy of the last fifty years he spoke to Taiwan’s leader soon after his victory and has questioned the one China policy.  He is likely to anger Latin America with his position on Mexico and opposition to the US-Cuba rapprochement.

Trump’s election poses serious challenges to his party, the Democratic Party, the media, civil society and the US.  The Republican Party needs to reassess its position in terms of its ideology and how it chooses its leader.  In particular, how a candidate with views that contradict its core values can end up becoming its standard bearer.  Democrats need to reassess how they can lose a natural base, White working class voters, to a candidate that has failed them even before taking office. They need to take a hard line, like the Republicans did when Obama was elected, use guerrilla strategies and tactics to obstruct every move by this administration.  One symbolic move could be to stand up and say “you lie” as the Republican Congressman did to Obama, in this case there will be much justification.  They must seek electoral reform so that the Electoral College votes are in line with the population.   The media was complicit in Trump’s victory.  Trump the serial liar was able to set the agenda, not with serious policy statements, rather by tweeting and using his showman skills.  The media should highlight lies, focus on real policy issues and ignore gimmicks.  Opponents of Trump should continue to dig and I am sure that they will find grounds for his impeachment.

The US must review its policy on interference by foreign actors in its elections.  Seventeen of the US intelligence agencies have concluded that the Russians took actions to assist Trump and he invited them to do so.  The US electoral system for candidate Trump was flawed because the winner lost by a very significant margin, assisted by a hostile country.

In considering Trump’s administration we should remember the last Republican President, George W Bush, who gave us the Afghanistan and Iraq wars and the great recession. The Iraqi war gave birth to IS.  Trump is far more toxic and he has a buddy, who helped him get the job, Putin.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

 

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Nationalism Trumps Liberalism and Globalisation

 

J Boima Rogers – December 2016

 

The victory of Donald Trump was like an earthquake which signalled the electorate’s misgivings about liberalism and globalisation. Voters have instead embraced nationalism/ identity politics. Trump, with no political experience, credible plan, minimal political infrastructure, abusive to women, ethnic minorities and Muslims, who all the pundits had dismissed won.  His opponent with detailed and credible plans, support of the establishment, including many Republicans, with an impressive political infrastructure, lost.   It should be noted that Trump had considerable support from the FBI Director who reopened a spurious case against Clinton late in the campaign and, he lost the popular vote.  A number of themes seem to be at play that in some ways are frightening.  Voters rejected what the liberal elite consider to be a rational choice and applied different standards to Trump – for example he made far more incorrect statements than Clinton which they ignored.  However the decisions taken by voters which may not appear to have any logic, makes sense to a significant proportion of the electorate and just as Hitler came to power appealing to some of the darkest and primordial instincts of his supporters.   The Liberal establishment is largely to blame, partly because it failed to communicate and connect with the electorate and/or has just not understood or appreciated the angst and difficulties that globalisation has caused.  Trump is not an isolated case; the nationalist movement has taken root in the UK, Eastern Europe, Russia, China, the Arab world and Africa.  How did it happen?  What is the way forward?  Do nationalist sentiments have any positive attributes?

The rise of nationalism

Trump swept to power on the White vote, primarily the White working class but also a significant majority of almost all sections of that demographic.  The deindustrialisation of America caused by globalisation has hurt the White working class disproportionally as skilled jobs have been shipped abroad.  The damage caused by this trend was compounded by the fear that Whites feel about losing the ascendancy they have always enjoyed.  In Britain the loss of sovereignty and jobs to the EU and other EU nationals respectively were the deciding factors in Brexit.  In Eastern Europe there are fears of immigrants coming from Syria and other conflict zones. Russia has been flexing its muscle in the Ukraine and other former Eastern European satellites because of its loss of influence and power in that region, economic stagnation and, Putin’s desire to let the world know that it is still a power to be reckoned with.  China is flexing its muscles, laying claim to large swaths of the China Sea. China has largely abandoned its communist ideology and embraced capitalism, giving rise to a new focus, namely, nationalism.  In the Arab world the religious turmoil has a nationalist flavour in the form of a pan-Arab Muslim “caliphate” espoused by the so-called ISIS, with the Sunnis at the helm.  In Africa’s largest country, Nigeria a new, unique leader elected last year has been pushing that country to rely more on its own resources and to wean the country of its dependency on imports, to the consternation of “free trade” ideologues.

Irony verging on the perverse

The nationalist fervour is full of ironies verging on the perverse.  Trump’s hotels were built with Chinese steel, he used foreign workers, many of the products used in various enterprises are produced outside the US and he has significant investments and used finance from the Middle East and China, areas he has castigated.

The White working class may not be aware that Trump’s policies could actually hurt them.  The central plank of his economic platform, tax cuts have not only proved ineffective – Bush tried them but his administration experienced anaemic economic growth – but will exacerbate the huge income inequality, with high income earners getting a disproportionate share of the tax cuts. The hefty increase in import duties on Chinese imports will raise the price of consumer goods.  If he abolishes Obamacare, as promised in the campaign, many of them will lose health insurance and/or the significant subsidies the system gives to low and middle income families.  On the whole therefore low income families will gain very little or even be worse off economically.

Many of grandees of the Republican Party, the billionaires that bankroll the party, are largely to blame for the deindustrialisation of the US, having shifted production abroad to benefit from cheap labour to maximise profits.  Indeed the previous Republican presidential candidate, Mitt Romney had taken a leading role in this when he took over companies with US production and shifted operations abroad.  The American public has become addicted to cheap imported goods and many of their unions’ pension funds have been party to the country’s deindustrialisation by investing in companies that shifted production abroad to maximise returns.  He has appointed a Treasure Secretary who, as head of a major financial institution was responsible for reckless lending policies that largely caused the great recession.  The corporate class who sent American jobs abroad will be rewarded with huge tax cuts.  The people who caused the financial crash will be rewarded with a place at the top table and a repeal of the safety measures to prevent such a crash, the Dodd-Frank legislation.

Trump’s policies will result in a huge increase in the US budget deficit.  A central mantra of the Republican Party’s opposition to Obama, led by the Tea party movement, has been its opposition to budget deficits.  And whereas Obama’s stimulus spending which did not receive a single Republican vote in Congress, that most Economists attribute to the US weathering the great recession better than most other developed economies, most of  Trump’s deficit will go to tax cuts for the rich and defence spending.  Early in Obama’s administration, against strong opposition from the Republicans in Congress he gave crucial support to the automotive sector which was on the verge of collapse.  It is therefore rather odd that this party now has a President who would have gutted America’s industrial landscape significantly had Obama not prevailed.

It should be noted that Trump’s slogan, making America great again is hollow given his party’s record in power.  Bush, the last Republican president inherited a budget surplus from Democratic Clinton that he quickly turned into a deficit, yes through tax cuts.  Whereas Clinton had overseen record job creation and economic growth, Bush gave us the great recession and it was Democrat Obama, presiding over America’s longest running period of job creation that made America great again, a feat envied by many other developed countries.

Trump the nationalist is the grandson of a German immigrant and the son of a Scottish immigrant and his current and previous wife were East Europeans immigrants.  The fear of immigrants among working class Whites goes against the history of the USA.  Indeed mass immigration in recent history started in Europe which saw millions of its citizens flee poverty, political repression and religious intolerance to the Americas, Australia, New Zealand, Africa and Asia.  The fear by White Americans of being swamped by immigrants therefore ignores the basic fact, that most of them came from Europe and displaced the American Indians – there were no passport controls then.  This fear is rather the fact that most of these new immigrants are not White and the share of the non-White population is growing faster. Europe is opposed to refugees but its population is stagnant and/or in decline – that is probably one of the main reasons why Angela Merkel took in a million refugees from Syria. In Eastern Europe some of the countries with the strongest opposition to refugees such as Poland and Hungary have had hundreds of thousands of their citizens moving to the UK, Germany and other EU states for work.  Russia is claiming additional territory when its population is in decline.  China is at loggerhead with Vietnam, a country that it strongly supported during and after the Vietnam War.  It is in territorial disputes with many other south East Asian countries and yet it wants to draw them into its orbit.

End of History

A quarter of a century ago Francis Fukuyama’s End of History predicted a symbiotic link between capitalism, democracy and liberalism as the way forward.   Capitalism and globalisation have brought huge benefits to the world, in particular, there has seen a huge increase in trade flows, economic growth and more open markets.   However that symbiotic link has not evolved as the author envisaged, at least not in a systematic way. China, the star performer economically since Fukuyama’s prognosis has embraced capitalism with fervour but the communist party has maintained its strong grip politically.  In the same period Russia moved away from the chaos ushered in when it embraced democracy and capitalism to Putin’s authoritarianism and nationalism. Two darlings of western powers that have seen radical transformation in their economies, Singapore and Malaysia have exhibited authoritarian streaks with the same parties maintaining power since independence.

Taking a longer term historical perspective, it should be noted that Hitler came to power amidst the chaos of the democratic Weimar republic, promising and delivering order and prosperity.  Mussolini performed the same feat in Italy, where for the first time “the trains ran on time”. Alarmingly, like Trump, both fascist leaders spoke in the same language and adopted the same policies, namely, they promised to make their countries great again and invested in infrastructure and defence.    Interestingly, the Fukuyama’s prognosis has had reasonable fertile ground in South America, Asia and Africa.  These regions still face enormous challenges because economic growth rates are still inadequate relative to high population growth and ethnic and religious issues have been far more important than Fukuyama envisaged.  In such an environment, democracy and liberalism are often not particularly relevant to every-day life which is partly given rise to ISIS.

The way forward

What is the way forward?  Trump and his ilk in Europe cannot be dismissed and they have tapped into real and perceived concerns.  However their solutions are on the whole inappropriate, wrong and miss out on the solutions.  The concerns about trade liberalisation which has seen American and European industries flounder and caused misery in the form of unemployment, low and stagnant wages and anaemic economic growth rates need to be addressed.  In terms of trade policies, the ideal solution is for trade agreements to incorporate issues like freedom to form and manage trade unions, flexible currency exchange rates, elimination of state subsidies and sustainable production methods. Access to markets and tariffs could be based on these “metrics” which would ensure a more level playing field. Incorporating all of these “metrics” into trade agreements is highly unlikely partly because some are difficult to quantify and will face huge resistance from many developing countries. The more feasible option, taking the nationalistic approach is for companies, governments and consumers in Europe and America to promote their industries by highlighting the fact that goods produced locally provide jobs and have lower carbon footprints, under conditions that allow freedom to form unions and use sustainable and environmentally friendly methods.  It remains to be seen whether major corporations will be willing to take this route given the pressure to maximise shareholder returns.  Governments may also breach WTO and other trade agreements relating to state aids. Consumers, addicted to cheap imported goods may also not go along.

The most feasible approach is for America and Europe to improve their competitiveness by investing more in their physical and soft infrastructure.  While much of the emphasis has been on physical infrastructure such as roads and railroads, there should be much more investment in soft infrastructure, namely, research and development and education, particularly in science technology, engineering and maths (STEM). As the UK’s CBI noted recently, investment areas such as education offer countries much higher returns.  The Brookings Institute has also noted in papers published that losses in US manufacturing are largely because of improved technology that has made the country very efficient. It also advocated more emphasis on retraining workers who have lost jobs as a result of globalisation.  They should consider adopting the German model in terms of technical education and collaboration between the unions, corporations and the state that has seen that country weather the great recessions much better that other countries, retain and improve the skills of its workers and avoid the huge income disparities associated with many other developed countries.

China needs to act as the super power it has become, as an engine of world economic growth, much as the US has and continues to do.  It must open its market, not just for raw materials but also manufactured goods.  It needs to intensify efforts to produce goods for the Chinese market and eliminate subsidies that have seen huge exports of products such as steel that have decimated industries in other countries.  Economic theory suggests a significant appreciation of the Renminbi after that country’s spectacular economic growth and that process must be allowed to take place making the country more attractive to exporters from other countries. It must allow and respect international arbitration on its claims in the South China Sea.  These measures will be good for the Chinese people as well as other countries around the world.

The world must continue to resist Russia’s aggressive behaviour to its neighbours and pressurise that country to amend its actions in Syria.  Its nationalistic posture in Eastern Europe and its unilateral action in Syria must be curbed through sanctions and diplomatic means.  Hopefully, the friendly relationship between Trump and Putin should result in a less adversary action by Putin.

Nationalism cannot be dismissed by politicians but they need to set the record straight. They need to point out that immigration does have some positive economic benefits and particularly in the face of stagnant and/or declining population in much of the developed world.  This has been validated in a recent report by the Office for Budget Responsibility in Britain.  That report downgraded Britain’s growth forecast largely because it factored in lower immigration as a result of the Brexit vote.  Unfortunately this is not the agenda of purveyors of populism, as a recent BBC report of an event by Trump supporters show.  The event showed the group celebrating the Trump victory because it heralded a victory for White supremacy.

Conflicts are the primary source of the wave of immigrants, notably Syria, Iraq, Afghanistan and Libya.  Europe and America have played key roles in either initiating these conflicts and/or fanning their flames.  A concerted effort must be made to end such conflicts and others around the world.   Regime change must be avoided and all efforts made to assist fragile states through political and economic means.

Trade makes society as a whole better off, in economic parlance, it expands the social welfare function but in so doing results in winners and losers. In addition, for real gains to be made to society as a whole markets must be efficient in production and trade.  Market imperfections such as state support for production in specific sectors or currency manipulation means that the expansion in the social welfare function is illusory not real.  The issues for politicians are therefore how to compensate the losers, ensuring that markets are efficient and if not what corrective actions are needed. Political masters then, not corporate overlords, have to make these decisions.   Unfortunately for Americans, particularly for the White working class who have been seriously conned, there is a very thin divide between the corporate elite and the new political masters as The Donald, rather than “draining the swamp” as promised, has filled it with appointments of millionaires and billionaires to key positions, the winners. He has adopted policies that are not only unlikely to expand the social welfare function but will also exacerbate the huge income divide. Yes he will invest in the physical infrastructure but he has not come up with any proposal on soft infrastructure that would be even more productive, such as research, education and retaining.

The Donald and others of his ilk in Europe have tapped into the angst but they need policies that are quite different from what they currently espouse. The Donald does not do policy, rather he tweets and makes grand gestures, ignoring the big picture.  A perfect example of this was the recent announcement that he had saved a thousand jobs in in Indiana from moving to Mexico.  He ignored the fact that the same company will actually move 1,400 jobs to Mexico anyway.  And he ignored the fact that the jobs saved are minuscule compared to the millions created under Obama, including 178,000 job gains in the latest US jobs report.

Does nationalism have a place, yes it does?  Does globalisation have a future, yes it does?  America and Europe need to use nationalism to encourage their consumers to buy domestically produced goods.  The European Union project needs to adopt pragmatic policies that do not ride roughshod over the national characters of its member states.  Nationalism is particularly relevant in fragile states in Africa, Asia and South America where it is often a useful glue to pull together disparate ethnic and religious communities.

 

J Boima Rogers is Principal Consultant at Media and Event Management Oxford, www.oxfordmemo.co.uk. He is currently working on a book on this topic.

 

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Maximise Your Leverage Buhari

 

J Boima Rogers – July 2016

 

It is a little over a year ago when I suggested an agenda for President Buhari to address the needs of Nigeria, highlighting the Boko Haram menace, corruption and the infrastructure.  The President has delivered and/or made significant attempts to do so.  There are still major challenges, notably, the problems in the Delta, electricity power generation, the economy and public perception.  These challenges are largely exogenous factors and/or new developments, that is, they have been caused by forces outside his control and/or have come about since he came to power.  There are severe limitations on how he can manage the major external factor, the world oil price but his stated objectives and budget seek to ameliorate the effects of low and volatile world oil prices and he is doing his best to grapple with new issues.  The president needs to make maximum use of his leverage and convince the electorate that the country is moving in the right direction.

The president has made impressive gains against the Boko Haram problem in a very short time, degrading them significantly and limiting the geographical spread of their operations.  In a recent report by Global Terrorism Index, it was reported that 60006 people died in 270 attacks in 2015.  In the first three months of 2016 the number of deaths was 422 in 36 attacks.  If we extrapolate the 2016 figure total deaths from terrorism in 2016 should be less than a third of those in the previous year and this simple arithmetic underestimates the progress being made since deaths from terrorism have been declining dramatically since March 2016.  In fact going by this rapidly declining trend we would expect deaths from terrorism in 2016 to be a tiny fraction of what they were in 2015.  Buhari has done in one year what Jonathan could not do all the years he was in power.  Buhari achieved this feat in his typical efficient and effective fashion, getting rid of the ineffectual and corrupt army chiefs, shifting army command to the epicentre of the crisis, working with neighbouring countries to set up the Multinational Joint Military Task Force and eroding civilian support for the group, largely, by demonstrating his resolute decision making prowess.  This success has been welcomed by Nigerians and acknowledged by foreign observers with the Fund for Peace, publishers of the Fragile State Index recording significant gains in the country’s Security Apparatus Index and substantial reduction in the level of growth of negative indicators in the Fund’s five year and ten year trends.

Buhari’s effort at addressing corruption has been partly through measures adopted but also through his reputation.  In the case of the latter, there are many reports of officials making restitutions of funds even before receiving official summons.  He replaced the heads of revenue generating agencies, including the head of the Nigerian National Petroleum Corporation. He has directed relevant agencies to vigorously pursue corrupt officials to get them to pay back what they looted and be prosecuted for such offences.  He has badgered foreign governments to repatriate stolen funds with some success.  In his first budget, one of which’s stated objective was to minimise inefficiencies, he created the Efficiency Unit.  The unit will monitor personnel and pensions, conduct continuous audits and extend the integrated payroll information system.  The Treasury Single Account (TSA) system aims to increase transparency and improve remittance of collection of revenues.  This TSA system has seen a very significant reduction in the number of accounts maintained by government departments which officials used to defraud the state.

Buhari’s effort at addressing the country’s infrastructure deficiencies was to more than double the expenditure on capital spending from 15% to more than 30% in his first budget.  He has been engaged in discussions with foreign governments, notably China to secure funds for infrastructure projects.

While his efforts at addressing issues noted above are laudable the country has serious challenges, largely relating to the situation he was faced with when he came to power but also because of new issues that have developed.  With regards to measures noted above, Boko haram while severely degraded has not been totally eliminated.  The fight against corruption is still very much work in progress and the country still ranks quite high in the corruption and fragile state indexes that is, it is still categorized as very corrupt and fragile.  While the president has indicated that he is keen to rehabilitate and expand the country’s infrastructure, it is yet not clear whether he will get the relevant funding.  He also has yet to come up with a detailed blueprint and action plan for the sector.

With regards to other challenges the economy is the most pressing and which Buhari has yet to make a significant positive impact but this is largely due to developments outside his control, primarily the collapse of the price of oil. The world oil price has dropped dramatically, from US$112 per barrel in mid-2014 when Buhari was campaigning to be president, to less than a quarter of that level at its lowest point in 2016.  The collapse in that price has been compounded by major disruptions in oil production because of the activities of Delta region activists who are protesting that they are not getting a fair share of oil revenues derived from their region.  The country’s power generation dropped to a very low level of 2000 megawatts, at its lowest level, less than half that under the previous regime.  Consequently the economic growth rate, according to World Bank estimates dropped from 6.3% in 2014 to 2.7% in 2015.  The National Bureau of Statistics reported that the economy contracted by .36% in the first quarter of 2016. These economic difficulties have been noted by powerful financial institutions who have taken actions that could compound the country’s problems.  J P Morgan Chase and Barclays have excluded Nigeria from emerging market bond indexes.  Other financial institutions could follow making it difficult for the country to secure funds in international markets and make its borrowing costs prohibitively high.

The president faces significant opposition from stakeholders who have lost out because of his policies or who will if he is to achieve his stated objective of transforming the country into a major production centre for agricultural and manufactured goods rather than merely an importer.   The fuel shortages were no doubt caused by importers angry at the abolition of their subsidies.  Importers who had made use of preferential favourable foreign exchange rates, often to buy luxury items or goods that Nigeria could and should produce locally and now have to buy foreign exchange at higher market rates since the Naira was fully floated are also unhappy.

Buhari would need to adapt and rise to challenges, many of which have roots in the actions of his predecessors.  With regards to his economic woes, there is little he can do in the short term on the collapse of world oil prices.  It however strengthens his move to diversify the economy.  The flotation of the Naira will help domestic producers who had suffered when importers had access to foreign exchange at very favourably subsidised rates. Policies to assist agricultural producers announced in the budget, improvements in the physical and soft infrastructure would create a conducive environment for investment by local and foreign investors in all sectors.  Diversification of the economy in the medium to long term would minimise the effects of depressed and volatile world oil prices.  The low power generation is largely the result of President Jonathan’s crony privatisation which broke up the state power generation company and handed it to operators who do not have the expertise and track record.  There was no due diligence when the privatisation process took place and the main qualification of the new owners was how connected they were to Jonathan and his party.  Buhari would need to review the privatisation process and performance of these companies and where necessary revoke ownership and get more qualified operators to take over.   He needs to negotiate in good faith with the Delta region to maintain and develop oil production and delivery.  He needs to counter the opposition of importers with a major public relations campaign, highlighting the fact that he is only being fair to everybody, removing subsidised foreign exchange from importers who were only reaping vast profits.  The previous system including the partial flotation was also costly to manage and rather arbitrary in foreign exchange allocation.  He should note that Nigeria has the potential to produce many of these imported items, creating jobs, reducing economic shocks from reliance on only one commodity, oil and, achieving equity as wealth is siphoned from a few importers to farmers, local manufacturers and consumers.   And floating the Naira is indeed levelling the playing field for all operators.

The country needs to make the maximum use of its leverage, namely, population, oil and geo-political status.  In his attempt at diversifying the economy he needs to use Nigeria’s major leverage as China did thirty years ago when it opened up its economy, namely, the size of its market of 171 million people – major foreign brands were salivating when they suddenly realised that they could sell to one billion Chinese consumers.  Like China did, Nigeria should encourage and entice foreign companies to build factories in Nigeria to service their customers.   Companies who have large market shares should be targeted.

In the oil sector the country should use its leverage for refining and power generation. Major corporations, who are presently involved in oil production, many of whom have refining and power generation facilities in other countries, should be encouraged and enticed to invest in refining and power generation in Nigeria.  This can only happen if the country can create a conducive investment climate.  Preferential treatment should be given to companies that invest in such facilities. To encourage and entice investment in these areas the country would need to review rules on ownership, notably, the level of foreign control and, profit repatriation. It should ensure that its investment codes and judiciary system are transparent and consistent.  Improvements in the physical infrastructure would help and the country needs to ensure that its educational infrastructure can produce workers with the relevant technical skills.

Nigeria needs to leverage its geo-political status, namely its size, in discussions with major powers.    Nigeria is the giant of Africa and it is in the interest of major powers, Africa and the world that it is stable and has a growing economy.  These points should help in the government’s efforts to repatriate funds looted by corrupt politicians and government officials that have been stashed away in foreign banks, business and properties.  Major powers could also encourage investments by their companies in Nigeria.  The president should highlight his unique position, a leader who came to power in a fair election and wants to be a good and effective partner.   Buhari needs to make the most of reports by observers in major capitals for example the article in the reputable Brookings Institute in Washington which stated that “The 2016 Nigerian budget provides a useful template for African countries.  This is the leadership we expect from the country.”  It should highlight the fact that his government has demonstrated that it is a serious partner in terms good governance, corruption, terrorism and other areas and should be accorded all the support from major powers..

What then is the way forward for Africa’s sleeping giant?  Firstly, Buhari is still the best deal in town, with regards to his sincerity, determination and policies.  Ironically the main challenge for him is democracy.  The Nigerian patient needs major surgery which can be painful and the patient needs time to heal.  Will the patient have the tenacity and patience?  Will s/he succumb to the false and discredited statements of selfish and corrupt stakeholders who have lost out?   Mr Buhari’s time is limited and he will soon be facing his masters and mistresses, the electorate who will evaluate his record and decide if he should be given time to continue work on his difficult job.  Will he get it, who knows, democracy is a strange business and the electorate has often taken perverse decisions.    So Mr Buhari you have a tough call, keep up the good work but you also need to be a super sales man. Interestingly when I first heard the President in Oxford I doubted whether he had the right sales pitch, no doubt he will prove me wrong again.

 

J Boima Rogers is the Principal Consultant at Media and Event Management Oxford MEMO. www.oxfordmemo.co.uk

 

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US Presidential Election and what it means for the world

 

J Boima Rogers – March 2016

We are once more facing the election of the next US President and it is as fascinating and entertaining as always.  There are two reasons why this election is very important not just for US citizens who actually have the vote but also for billions of us around the world.  The US is a major and in many cases, the dominant force with regards to its military, economy, currency, source and destination of investment, technology, popular culture and political leverage.  The world is also much more connected than ever before and so developments in one part, particularly in a country such as the US, have a direct and significant effect on all corners of the globe.  We outside the US are watching bemused but also concerned about the candidates and their policies.  The concerns do not only relate to foreign but also domestic policies which often have effects on the rest of the world.  As of now the field is still quite crowded particularly in the Republican Party. Of particular interest are the Republican front runners who are advocating policies that may see a dramatic change in how the US deals with the rest of the world.  This note will look closely at what a Donald Trump Presidency will mean for those of us without the vote.  Can we do anything to influence the campaign, no and yes.

At the moment although the election is still wide open we are seeing certain trends emerging. While Hilary Clinton is leading the Democratic pack significantly a Bernie Sanders nomination is still a possibility.  His recent win in Michigan demonstrates the challenge Hilary Clinton faces. This is a state where the demographics and Sanders voting record, namely, his opposition to the auto bail out, in a state with a significant auto industry, would have suggested a win for Mrs Clinton. Another point in favour of Sanders is that the Primaries are very much a tribal affair in which candidates do their utmost to appeal to the party faithful by highlighting their credentials with regards to party principles.  Members of the incumbent administration, which Hilary Clinton served for most of Obama’s two terms, are particularly vulnerable because they would have had to compromise on pledges made in campaigns if they are to get bills through Congress. This was very much the case with the Obama administration which faced one of the stiffest opposition any Democratic President has ever faced from his Republican opponents who controlled the House of Representatives after his first two years and the Senate in much of his second term. Mr Sanders does not have this baggage and can therefore position himself as a true unblemished elder of the tribe. If Sanders were to win the Democratic nomination then we will definitely see a Republican President because the US as a whole is just not ready for the type of policies Sanders proposing.

If Hilary Clinton wins the Democratic Primary, Trump will face a more formidable opponent with a significant and wide cross section of the White vote and the overwhelming majority of the non-White electorate who Trump does not appeal to or has insulted.  Given the fact that Trump appeals almost exclusively to White voters he needs over 70 of that segment to win. Hilary Clinton will only need to take a third of that vote to win the election and she is much better placed than Sanders with regards to Blue Collar and southern White voters.

The Republican nomination is still a crowded field but Donald Trump and Ted Cruz appear to be pulling ahead of the pack, something that is alarming the Republican establishment.  Pledges of support and glowing tributes from Governor Christie and Dr Carson, former candidates, are a huge boost to Mr Trump.  A Republican win will see a significant change in US policies and in particular, if either of the two front runners wins, this shift will be seismic because both of them are on the fringes of the party, with Cruz at the centre of Tea Party revolt and Trump as a right wing maverick populist.

Donald Trump at the Whitehouse will be a game changer not just for the US but for the rest of the world.  While his rise has been described as a policy free campaign, there have been snippets, which as is typical with the man, have been very effective soundbites from this entertainer.  A review of some of these policies shows how concerned the world should be.

As would be expected from a Republican candidate he has stated that he will implement huge tax cuts, two thirds of which will go to the top richest 20% of the population.  That reputable organisation and the Conservative Committee for Responsible Budget (CCRB) have both indicated that this will see a huge increase in the budget deficit, largely as, in keeping with his populist credentials, he has indicated that he will leave the Medicare and Social Security budgets untouched.  According to CCRB his policies will add between US$11.7 and 15.1 trillion to the national debt, doubling it if the top range is attained. He could of course remedy the situation by a steep reduction in current spending, by more than three quarters.  If, in keeping with his populist image he does not reduce current spending and instead decides to borrow from the market, it will result in pressures that will keep interest rates high around the world as America sucks in funds from abroad, depriving other countries of such funds and increasing their borrowing costs.  This will be very damaging for low and middle income countries. These tax cuts will not translate into significant increases in consumer spending the key driver of US economic growth, as the rich will tend to keep the savings, a trend that was demonstrated when applied by President Bush.  Another policy of his is to ramp up duties on Chinese imports by 45% and other countries that cheat in trade as he puts it. If this were to happen, the Chinese and other countries that Trump will target are likely to do the same on US exports.  Both policies will seriously impair world trade and economic growth at a time when the world economic outlook ranges from anaemic to bleak.

Trump’s foreign policies are disconcerting.  Starting with America’s allies, he wants Japan, South Korea, Germany and Saudi Arabia to pay for US protection.  In Europe with Russia’s aggressive moves in the East this will be of great concern; interestingly, he is an admirer of Putin who he considers to be a strong leader.  In the Middle East this is likely to unravel the coalition against ISIL that the Saudi’s are part of.  In the Far East this will encourage China to accelerate its aggressive behaviour towards its neighbours in territorial and other disputes.  He will build a huge wall on the Mexican border that the Mexicans would be asked to fund, institute mass deportation and tear up the NAAFTA free trade agreement with that country.  He will reinstate waterboarding torture and “a hell of a lot worse than waterboarding”.  He will tear up the recent Iran agreement that world powers worked so hard to negotiate to prevent that country from developing nuclear weapons.  He has declared that he is “totally pro- Israel”. And, he will ban on all Muslims from entering the US.  These policies are likely to exersabate the turmoil in the Middle East, encourage recruitment and embolden ISIL and other terrorists around the world.  He will increase the US nuclear arsenal, triggering an arms race with Russia, China and other nuclear powers.

A Trump win is bad news for the environment because has stated that he is opposed to the recent climate deal that world leaders painstakingly negotiated. He would like to see increased use of coal in the US, unravelling much of Obama’s efforts to steer the US towards cleaner energy.

Trump’s success has been viewed with alarm by his party and other observers in the US and abroad, prompting former Republican Presidential candidate Mitt Romney to denounce him.  A letter signed by sixty prominent Republicans stated that he “swings from isolationism to military adventurism within the space of one sentence”.  Thomas Wight, a scholar at the Brookings Institute has noted that Trump’s world view “ makes a great leap backward in history, embracing antiquated notions of power that haven’t been present since before the second world war.”  But Glenn Greenwald noted in a brilliant paper in The Intercept that Trump’s policies are not anathema to the US mainstream but are indeed an uncomfortable reflection of mainstream thinking and policies.  The attitude towards the use of torture for example, has not been repudiated by mainstream Republicans.

The Republican Party created a climate that has given rise to its two leading candidates.  In particular, they completely rejected all overtures that Obama made to the party to develop policies based purely on the needs and benefits of the country and the world.  Recent reports have shown that Republican lawmakers were instructed from day one to oppose everything that the President proposed irrespective of their merits.

Can Trump be trumped? At this stage anything is possible but as things stand the Trump bandwagon is growing and a Trump Presidency is a very likely possibility.  If Hilary Clinton wins the Democratic nomination she will have a very good chance. The Republican establishment would love to see somebody who is more of a mainstream type.  Unfortunately for them the only other candidate that is offering any significant challenge to Trump, Ted Cruz, is another arch-conservative maverick that they are uncomfortable with.

What can the non-US public without the vote but who will be affected by the decision of the US electorate do?  In short, not much, because not only do we not have the vote but efforts to influence the elections could rally support to Trump.  However we can have some influence even though it will be a minor role.  The foreign media can highlight the pitfalls, inconsistencies and consequences of Trump’s policies which will be picked up by US citizens in and outside the country.  Practically the whole world has relatives in America and we should highlight these issues to our US relatives. Many companies have subsidiaries in the US who can alert their employees to the dangers to the US and world economy as well as provide funding to candidates.  And we should hope that reason and logic will prevail among the US electorate to make them realise that electing a rational President is in the whole world’s interest.

 

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO) www.oxfordmemo.co.uk

 

 

 

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A New Approach in an Imperfect World

A new approach in an imperfect world

J Boima Rogers September 2015

The current Syrian quagmire which has spilled over to Europe in the form of the refugee crisis gives grounds for a review of relationships between the power brokers, the “Western” alliance of the US and Western Europe regarding the  kind of support,  engagement, neutrality, opposition and wars with the rest of the world.  The west has highlighted political and economic principles as a major factor in engaging the rest of the world, notably, promoting the democratic process and open economies.  Measures have been taken to realise the latter, enshrined in treaties like the World Trade Organisation (WTO) and other multilateral and bilateral agreements.  It is the political front, freedom of association, free and fair elections an impartial judiciary that holds the greatest challenge.  The west must accept a non- optimal democratic scenario in countries that in many ways owe their problems when Europe arranged the world map in the form of nation states that in many ways had no bearing on how the inhabitants in those countries had lived, relate to neighbouring tribes, ethnic and religious groups and states.  The ubiquitous straight lines that mark the borders of many countries in Asia and Africa show how European powers siting in London, Paris, Lisbon, Madrid and Berlin made decisions on the boundaries of their colonies and spheres of interest.

Western intervention in Afghanistan, Iraq, Libya and Syria demonstrates a naivety, in particular, in understanding that the glue in these nation states often lack the democratic optimal because for the often diverse public and the fact that democracy is a low rank next to family, ethnicity, religion and sect.  When the leadership structures in these countries are broken, the west cannot game plan the outcomes.  In Afghanistan, the Russians before and Americans subsequently could not foresee the chasm that pervades the country, which has been in a state of war for over forty years.  Iraq, whose sharply divided religious, national, ethnic and tribal loyalties had been held in check by a brutal but effective party and dictator has imploded.  The American could not foresee the pent up religious antagonism and lack of political infrastructure which the Bath party had obliterated for half a century.  The Americans could not see that without that infrastructure the centuries old divisions, notably the Sunni/Shia divide would be the determining factor.  In Libya, the Dictator who had again brutally defined and implemented the nation state concept with his highly heterogeneous people was removed.  Again there was no game plan on what/who would succeed, in a country with no political infrastructure in the western sense.  Syria which has been imploding for the last four years has caught the west napping, without a realistic or effective strategy.

The actions of the West have come to bite them in various ways, notably, in the lives of soldiers killed, long term injuries, financial and now the wave of refugees flooding Europe. But there are other areas that require the west to take the non-optimal approach, in particular, with its allies or poster boys/girls.  These include Rwanda where Paul kagame who has been in power for two decades, is reported to want to stand for a third term.    In Asia Singapore recently re-elected a party that has been in power for over fifty years, as has the party in neighbouring Malaysia.  The West has accepted the non-optimal democratic structure in these countries because of impressive gains in the economy, infrastructure and political stability – indeed the administrations in these countries claim, with much justification, that they stay in power because they deliver what matters, namely, dramatic improvements in living standards.  Egypt is another case where the administration which came to power in a questionable way, is battling religious extremists and struggling to keep its position as the west’s ally and regional power.

The West needs to reappraise its policies and the four war-torn countries noted above should teach it lessons to guide future approach.  Firstly, Iraq and Libya were huge mistakes that must not be repeated.  The approach must be engagement with non-violent incentives and penalties, soft power and the record suggests that this works.  Gadhafi had been trying to make up, paying billions in fines and reparations to victims and positively engaging the west.  Iraq could have been persuaded and penalised to stop invading other countries and Saddam never had the bomb anyway.  The recent Iran deal is good example of how soft power works.   While there was a case for intervention in Afghanistan because of the havoc and destruction of the World Trade Centre, it should have been short, to teach the perpetrators a lesson and capture the prime suspect;  the Americans were very close to getting Bin Landen but let him slip away very early in the campaign.  In the case of Syria, the west has no option other than to engage the Assad regime.  A less optimal approach may get him to promise elections, holding him into account with non-violent incentives and penalties and possibly allow for the Assad family to go into peaceful exile.   The west may not have to provide military assistance to Assad as the Russians are doing so but it must not oppose the Russians.  Indeed, as the Obama administration appears to be acknowledging, the west should coordinate its approach with Russia.

The non-optimal approach should avoid the military course and interventions wherever possible.  A careful analysis of alternative scenarios will ensure that the west adopt a real politic position.  Egypt should be nudged but as a friend.  A similar approach should be taken for Rwanda, Singapore and Malaysia.  These non-optimal democratic “allies”, with the exception of Egypt, have delivered very significant benefits to their people.  All have demonstrated that sound, efficient and open economies result in impressive economic growth and development and political stability.  They should be supported and other countries should be encouraged to adopt that approach.   Yes there is still ISIL and other religious extremist but it must be noted that Gadhafi and Assad had kept lids on such extremists so in a way, regime change has come to bite the west far more than had those despots had been left alone.

The west must acknowledge, accept and even support countries that have developed cohesive nation states, avoided conflict, and delivered economic growth, even with doses of repression.  It should obviously oppose and work against repression and violence but make use of soft power.  The new approach should see the west adopt policies and relationships with less developed countries based on a composite set of criteria.  I would like to stress that as a democrat I believe in free and fair elections, impartial judiciary with the relevant political and economic infrastructure.  Indeed the ideal should still be democracy and the west must continue to promote this, but brute force is rarely the solution.  I do not believe that political democracy can or should be used as the only arbiter of the west’s relationship with the rest of the world.  The guiding principles should be peace, co-existence and acceptance that non-optimal democracy for probably the majority of people in the world is the only deal in town.  Soft power should be used to achieve this with the west nudging countries towards the democratic process.  Regime change is rarely the panacea and indeed it can be the worse option in many countries where the concept of the nation state is still in transition.

 

J Boima Rogers is the Principal Consultant at Media and Event Management Oxford (MEMO), http://www.oxfordmemo.co.uk.

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