“Much of what Mr Trump says is untrue, or at least unsubstantiated. As our correspondent in Tapachula reports (see article), the migrants in the caravan are mostly ordinary Hondurans who would rather live somewhere peaceful and rich than poor and violent. There is no evidence of Middle Easterners among them, or an unusual number of criminals. Nor is there a shred of evidence that Democrats had anything to do with organising the exodus. Why would they? The idea of a caravan was first popularised by a Honduran activist, and snowballed. It is easy to see why. Life is much better in the United States than in Honduras. And the journey, overland through Guatemala and Mexico, is dangerous. Migrants have often been robbed or beaten up along the way. Travelling in a large group makes that less likely. Small wonder that so many Hondurans, on hearing that the caravan was passing, decided to join it.”
It will be a long time before the caravan comes close to the US border. In the meantime the US troops being deployed will only provide logistical support to the Customs and Border Patrol forces already there. The US military is prohibited from enforcing US domestic law by the doctrine of posse comitatus.
It seems as if the trade war between the US and China will not end anytime soon. There are reports that the US has told China that it will not negotiate until China agrees to stop demanding on technology transfers from US companies if they wish to invest in the Chinese economy. Alex Ward writes in Vox that the Chinese are becoming convinced that President Trump is less concerned with resolving trade disputes than he is in damaging the Chinese economy. The IMF estimates that the trade measures imposed by the US so far on Chinese imports “could curb China’s economic growth by about 2 percent over the next two years. If true, it would be a major blow to China’s economy, which prioritizes continued growth above all else.” But the tariffs have also hurt US companies who rely on imports from China. Business Insider ran an article that outlines a number of companies that are very concerned about the rising costs imposed by the tariffs:
“Auto manufacturers, retailers, and home-goods makers have weighed in on the downsides of the tariffs. Here are a few examples:
3M (consumer-goods manufacturer): “If I fast-forward a little into 2019, we think tariffs will be having a negative impact on our total sourcing cost,” Nick Gangestad, 3M’s chief financial officer, said on Tuesday, adding, “I’ll talk more about this in on November 15, but our view is we have an approximately $100 million headwind from tariffs.”
Tesla (automaker): The company said on Wednesday in its earnings release that the tariffs on Chinese parts could cost $50 million in its fourth quarter alone.
Harley-Davidson (motorcycle manufacturer): “In total, we now expect to incur approximately $43 million to $48 million of increased costs related to tariffs during 2018,” CFO John Olin said on Tuesday.
Ford (automaker): “From Ford’s perspective, the metals tariffs took about $1 billion in profit from us, the irony of which is that we source most of that in the US anyway,” CEO Jim Hackett said earlier this month. “If it goes on any longer, it will do more damage.”
Sleep Number (mattress and bed manufacturer): “The latest tariff rate hikes affect about 5% to 6% of our overall” cost of goods sold, CFO David Callen said on Wednesday. “We are working with our global sourcing providers to mitigate the potential for 40 basis points to 60 basis points of margin rate pressures arising from this fast-changing tariff landscape.”
Polaris (motorcycle, ATV, and vehicle manufacturer): “As I mentioned earlier, these efforts have largely been effective so far, allowing us to hold our 2018 gross tariff impact to the previous communicated $40 million,” CEO Scott Wine said on Monday, adding, “Through recent discussion and analysis, we now believe it is unlikely there will be a short- or medium-term agreement with China on trade issues, and with substantial impact of the 301 list looming, we are considering and taking more aggressive action.”
Our attention on Saudi Arabia recently has been focused on the complicity of the Saudi government in the murder of Jamal Khashoggi. As horrific as that murder is, it should not divert our attention from the tragedy in Yemen for which Saudi Arabia is largely responsible. Saudi Arabia considers the civil war in Yemen to be a strategic challenge from Iran, and the Saudi coalition–including the logistic and intelligence support from the US–fighting the rebels in Yemen has been relentless in its bombing campaign. Experts estimate that about 10,000 civilians have died in the war, and many of those deaths have come about because of the inability of Yemen to import necessary food and medical supplies because of the Saudi embargo. The situation continues to deteriorate and the United Nations believes that about 14 million in Yemen are now on the brink of famine.
John B. Judis gave an interview to the Carnegie Council for Ethics in International Affairs entitled “The Nationalist Revival: Trade, Immigration, and the Revolt Against Globalization”. The podcast runs about 17 minutes and is informative and insightful.
The Pew Research Center has published a report on the differences between younger and older readers on the ability to distinguish between factual and opinion statements in the media. The polling found that younger (ages 18-49) readers are better at making the distinction than older (ages 50+) readers. The difference is significant and likely reflects the deeper experience younger readers have with different media sources of information. The report suggests that
“[t]his stronger ability to classify statements regardless of their ideological appeal may well be tied to the fact that younger adults – especially Millennials – are less likely to strongly identify with either political party. Younger Americans also are more “digitally savvy” than their elders, a characteristic that is also tied to greater success at classifying news statements. But even when accounting for levels of digital savviness and party affiliation, the differences by age persist: Younger adults are still better than their elders at deciphering factual from opinion news statements.”
I would venture that many on the older age group would find this finding counterintuitive. The questions asked were highly politicized which reflect a political bias that younger readers tend to shun.
Turkish President Recep Tayyip Erdogan gave a speech today in which he accused Saudi Arabia of “political murder”. Interestingly, Erdogan raised a number of questions about the murder of Jamal Khashoggi, but he gave no hard evidence of his charge of murder. Many had hoped that the purported audio and video tapes would provide solid answers to many questions, but Erdogan continues his cat-and-mouse game with Saudi Arabia. Bloomberg described the speech as a “damp squib” and made this conjecture:
“In Istanbul, there has been fervid conjecture that Erdogan wants to use the Khashoggi affair to weaken the prince, but that he may yet make a deal with the Saudis that would allow the royal family to save face. It’s easy to see what Turkey could want from Saudi Arabia: A cash injection to revive its flagging economy; a withdrawal of Saudi support for Kurdish militias in Syria (Turkey regards them as terrorists); and an easing of pressure on Qatar, Turkey’s ally. Erdogan’s speech did nothing to end the speculation that he’d be holding out for one or more of these things.
“At more than $2.6 trillion, Italy has the world’s fourth-largest total debt load. At roughly 131 percent of gross domestic product (GDP), it’s more than twice what EU rules allow. If investors get spooked and bond yields spike, as happened to crisis-ridden European economies in 2010–2012, Italy’s debt payments could spiral out of control. That could mean an Italian default, which would hit banks across Europe that hold Italian sovereign bonds. Italian banks, still weak from the last crisis, hold a lot of these bonds. If they continue to lose value, banks could fail, lending could dry up, and economic growth could plummet again—the so-called banking doom loop. And if Italy takes the unprecedented step of leaving the euro currency and returning to the lira, it would cause massive losses to investors across the continent, potentially triggering another financial crisis.
“If the eurozone is threatened, Italy would be too big to rescue. In 2012, the European Central Bank (ECB) stepped in with a dramatic promise to do “whatever it takes” to prevent contagion. The EU and the International Monetary Fund bailed out Greece, Ireland, Portugal, and Cyprus. The largest bailout package, to Greece, topped $300 billion. But with a GDP of nearly $2 trillion, Italy is the bloc’s third-largest economy—there simply aren’t enough funds to bail it out. There are also concerns that the ECB used up all its firepower fighting the last crisis and has few tools left to make cheap credit available or buy up troubled bonds.”
The stories surrounding the death of Jamal Khashoggi continue to swirl, but none of them coalesces into a credible one that exonerates the complicity of the Saudi government. The willingness of the US Administration to tolerate the dissembling of the Saudi government is disheartening. It appears as if nothing will change despite the horrific crime against Khashoggi and the incredible assault on the free press. For example, US Treasury Secretary Mnuchin met with Crown Prince Salman in Saudi Arabia, despite the earlier announcement that Mr. Mnuchin would not attend the investment conference starting tomorrow. There was no announcement of that meeting by the US, but the Saudi government publish a photograph of the meeting. US President Trump continued to stress the need to not jeopardize what he calls the $110 billion arms deal with Saudi Arabia, but the Washington Post has an excellent article on the actual terms of the alleged agreement which are considerably less significant.
“It’s $110 billion. I believe it’s the largest order ever made. It’s 450,000 jobs. It’s the best equipment in the world.”
— President Trump, in remarks to reporters, Oct. 13, 2018
“$110 billion in purchasing. It’s 500,000 jobs, American jobs. Everything’s made here.”
— Trump, in an interview with Trish Regan of Fox Business News, Oct. 16
“Who are we hurting? It’s 500,000 jobs. It’ll be ultimately $110 billion. It’s the biggest order in the history of our country from an outside military.”
— Trump, in an interview with Stuart Varney of Fox Business News, Oct. 17
“I would prefer that we don’t use, as retribution, canceling $110 billion worth of work, which means 600,000 jobs.
— Trump, during a defense roundtable at Luke Air Force Base, Oct. 19
“So now if you’re talking about — that was $110 billion — you know, you’re talking about over a million jobs. You know, I’d rather keep the million jobs, and I’d rather find another solution.”
— Trump, in additional remarks to reporters after the roundtable, Oct. 19
Canada and Germany have announced that they are going to freeze their pending arms deals with Saudi Arabia.
Secretary Mnuchin with Saudi Crown Prince Salman, 22 October 2018
On this day in 1962, US President John F. Kennedy went on national television to accuse the Soviet Union (now Russia) of placing intermediate range nuclear missiles in Cuba, thus provoking the most serious crisis of the Cold War, The Cuban Missile Crisis. It is a crisis that has been analyzed to an incredible degree and remains one of the most complicated case studies in all of world politics. Today, the US made a strong threat to withdraw from one of the most important arms control agreements ever signed, the Intermediate-Range Nuclear Forces Treaty, signed by US President Reagan and Soviet Prime Minister Gorbachev. There is considerable debate over whether both the US and Russia have violated the treaty, but a far more productive approach would have been a decision by the US to put forward an alternative treaty, covering China’s intermediate range missiles as well, up for negotiation. Unilateralism in breaking a treaty very rarely leads to a productive outcome.
The media is reporting that President Trump’s National Security Advisor, John Bolton, is pushing for a US withdrawal from the the 1987 intermediate-range nuclear forces treaty (INF). The treaty prevented a dangerous arms race in Europe which threatened to destabilize nuclear deterrence by introducing smaller weapons with reduced flight time. The fear was that by introducing weapons with more “limited” destructive power and which reduced the time necessary to make strategic decisions, the introduction of these intermediate-range missiles made nuclear war more likely. The New York Times describes the role of the INF:
“The weapons ban — signed in Washington in December 1987 by both men — resulted in the destruction of 2,692 missiles. Washington demolished 846, and Moscow 1,846.
“The American side destroyed missiles it had sent to Western Europe in response to the SS-20, including Pershing II ballistic missiles and ground-launched cruise missiles. The low-flying weapons hug the ground to avoid enemy radars and air defenses.”
The Pew Research Center has published some interesting results from a poll it conducted on how the global publics view the role of China in world affairs. One of the more interesting findings is that a commitment to human rights is inversely correlated to unfavorable perceptions of increased Chinese participation in global affairs. Nevertheless, there is little disagreement over the fact that China has become a much more important actor in the international system. The US is indicating that it is considering sending one of its naval vessels through the Taiwan Strait, a move that the Chinese would regard as an intrusion in its internal affairs. There is a growing movement in Taiwan toward independence; the Chinese regard Taiwan as a rebel province.
Richard Haas has written a short article on the crisis in US-Saudi Arabian relations following the murder of Jamal Khashoggi. He draws a very important distinction between support for Saudi Arabia and support for Crown Prince Salman. That distinction may, in fact, make very little difference, but it is a distinction that must be recognized before any additional steps are taken. It seems unlikely, however, that neither Prince Salman or US President Trump will acknowledge that difference for a number of reasons that are matters of state concern. Personal diplomacy is a very risky business.
Joseph Stiglitz is a Nobel Prize-winning economist who has written extensively on economic inequality in the US and the world. He has just published a very succinct essay in Scientific American which explains the growing inequality in the world as a result of a system that has been shaped by the confluence of political and economic power to favor the rich.
“Since the mid-1970s the rules of the economic game have been rewritten, both globally and nationally, in ways that advantage the rich and disadvantage the rest. And they have been rewritten further in this perverse direction in the U.S. than in other developed countries—even though the rules in the U.S. were already less favorable to workers. From this perspective, increasing inequality is a matter of choice: a consequence of our policies, laws and regulations.
“In the U.S., the market power of large corporations, which was greater than in most other advanced countries to begin with, has increased even more than elsewhere. On the other hand, the market power of workers, which started out less than in most other advanced countries, has fallen further than elsewhere. This is not only because of the shift to a service-sector economy—it is because of the rigged rules of the game, rules set in a political system that is itself rigged through gerrymandering, voter suppression and the influence of money. A vicious spiral has formed: economic inequality translates into political inequality, which leads to rules that favor the wealthy, which in turn reinforces economic inequality.”
The critical question is whether this inequality will lead to underconsumption, a condition in which there is insufficient demand in an economy to sustain economic activity. We do not know where that tipping point is, but we have passed the tipping point for the Great Depression of the 1930s.
Hurriyet, a major Turkish newspaper is reporting that Mashal Saad al-Bostani, a 31-year-old lieutenant of the Saudi Royal Air Forces and one of the 15 Saudi Arabians who entered and left the Saudi Consulate in Istanbul on the day of Jamal Khoshoggi disappearance, has died in a “suspicious car accident” in Riyadh. US Secretary of State Pompeo said in a statement today that he had advised US President Trump to give the Saudi Arabians a few more days to conduct their investigation. It seems highly likely that the US and Saudi Arabia will come up with a plausible, but not credible, story about rogue agents botching an interrogation in hopes that the news cycle will simply move on in time. US Treasury Secretary Mnuchin has announced that he will not attend the financial conference being sponsored by the Saudi Arabians next week. We will see how the Saudis respond to this decision.
There is an increasingly surreal discussion going on about the death of journalist Jamal Khashoggi. He entered the Saudi Consulate in Istanbul 15 days ago and has not been seen since. There are widespread reports of a audio documenting Khashoggi’s torture, dismemberment, and death, but we have little direct confirmation of what the audio reveals. The closest direct description of the audio evidence that I have been able to find was revealed by Middle East Eye:
“It took seven minutes for Jamal Khashoggi to die, a Turkish source who has listened in full to an audio recording of the Saudi journalist’s last moments told Middle East Eye.
“Khashoggi was dragged from the consul-general’s office at the Saudi consulate in Istanbul and onto the table of his study next door, the Turkish source said.
“Horrendous screams were then heard by a witness downstairs, the source said.
“‘The consul himself was taken out of the room. There was no attempt to interrogate him. They had come to kill him,’ the source told MEE.
“The screaming stopped when Khashoggi – who was last seen entering the Saudi consulate on 2 October – was injected with an as yet unknown substance.
“Salah Muhammad al-Tubaigy, who has been identified as the head of forensic evidence in the Saudi general security department, was one of the 15-member squad who arrived in Ankara earlier that day on a private jet.
“Tubaigy began to cut Khashoggi’s body up on a table in the study while he was still alive, the Turkish source said.
“The killing took seven minutes, the source said.
“As he started to dismember the body, Tubaigy put on earphones and listened to music. He advised other members of the squad to do the same.
“’When I do this job, I listen to music. You should do [that] too,’ Tubaigy was recorded as saying, the source told MEE.
“A three-minute version of the audio tape has been given to Turkish newspaper Sabah, but they have yet to release it.”
This description may or may not be accurate. The Turks claim to have the audio evidence but they have yet to release it. That reluctance may be due to a desire by the Turks not to reveal their surveillance of the Saudi Consulate. Or it may be because the Turks are using the tape to force concessions from Saudi Arabia on matters concerning Syria, the Kurds, or the location of gas pipelines from Qatar.
What we do know is that US President Trump sent Secretary of State Mike Pompeo on a fact-finding mission. The photograph of the meeting between Pompeo and Saudi Crown Prince Salman is strikingly dissonant–the smiles belie the seriousness of the matter being discussed.
Moreover, when Pompeo left Turkey, he made this comment about his fact-finding mission to the press: “I don’t want to talk about any of the facts. They [the Saudis] didn’t want to either, in that they want to have the opportunity to complete this investigation in a thorough way.” Deferring to the Saudi self-interrogation of this crime is a pathetic position. Obviously, the US is not really interested at all in finding out the truth. It is also not clear how much financial interests are driving US policy toward Saudi Arabia.
More importantly, it appears as if Pompeo failed to negotiate some sort of rapprochement between Turkey and Saudi Arabia. Instead, it appears as if President Trump’s defense of the Crown Prince has angered Turkish President Erdogan. US-Turkish relations are already fragile, but if the charges against the Crown Prince are proven, Turkey will emerge as a more powerful actor in the Middle East.
The global economy produces about $80 trillion worth of “stuff” every year. That figure measures what the global market counts as economically valuable as determined by the prices at which goods and services are sold. It is not necessarily what each one of us might regard as valuable (there are many things for sale in the market that many of us would never think of buying, and far more things that many of us would never consider selling). But it is a measure of what people are willing to buy and sell, and that economic activity is broken down by states.
The fiscal year just ended for the Federal government and it ended with a $779 billion deficit. That deficit is 17% more than it was last year and the increase is quite dramatic given that the country has a booming economy and is not fighting a major new war. Government spending last year only grew by 3% so the deficit is largely the consequence of much lower tax receipts because of the tax cuts passed by Congress last year. Most strikingly, corporate tax revenues declined by 31% despite large increases in the profitability of companies in the US because the corporate tax was reduced from 35 to 21%: “Corporate profits jumped 15.4% year-over year in the first half of 2018, compared with a rise of just 6.1% in the first half of 2017, before the tax cuts went into effect. That’s the biggest semi-annual jump in profits since 2012.” The tax cuts were passed on the assumption that they would increase economic growth substantially and therefore tax revenues. That assumption does not appear to be valid. At some point, the deficit will become unsustainable, at which point taxes will have to be raised or government spending has to be cut. How that pain will be distributed is a question of great political moment.
It is very difficult to determine US policy in Syria. President Trump made it very clear when he was a candidate that he favored a US pullout from the country. But US commitments to Israel and Saudi Arabia to contain Iran in the region make keeping that promise. President Trump’s National Security Adviser, John Bolton, has been quoted as saying: “We’re not going to leave as long as Iranian troops are outside Iranian borders and that includes Iranian proxies and militias.” Colin P. Clarke and Ariane Tabatabai have written an essay for The Atlantic which outlines the long-term difficulties of the inability to define precisely US goals in Syria.
US President Trump threatened Saudi Arabia with “severe punishment” if the allegations concerning the disappearance of Washington Post journalist, Jamal Khashoggi. National Public Radio relates the Saudi response:
“‘The Kingdom also affirms that if it receives any action, it will respond with greater action,’ Saudi Arabia’s state-run news agency said Sunday, ominously noting that the country plays ‘an influential and vital role in the global economy.’
“Citing an ‘official source,’ the Saudi Press Agency added that Riyadh ‘affirms its total rejection of any threats and attempts to undermine it.’ Rather, if Saudis face ‘political pressures’ such as accusations or sanctions, ‘the outcome of these weak endeavors, like their predecessors, is a demise.'”
There is considerable confusion about the evidence which Turkey purports to have proving that Khashoggi was murdered and dismembered in the Saudi Embassy in Istanbul. That confusion most likely stems from the fact that Turkey does not wish to reveal how it has “bugged” the Saudi Embassy. But several media outlets report that the evidence has been shared with the US. The controversy has threatened a major conference sponsored by Saudi Arabia whose official title is the “Future Investment Initiative” but is often referred to as “Davos in the Desert” which is scheduled for 23-25 October. Many participants have dropped out of the conference and pressure is being applied to many more, including US Treasury Secretary Stephen Mnuchin, to cancel as a protest. The US-Saudi relationship is murky given the private financial interests President Trump has with Saudi citizens which have yet to be fully disclosed.
One of the most important parties in German Chancellor Angela Merkel’s ruling coalition is the Christian Social Union (CSU) which has ruled in the southern German state of Bavaria for many years. For the first time since the 1950s, the CSU appears to have lost its majority in the Bavarian Parliament. The CSU lost support on the issue of migration, and the pro-immigration party, the Greens, gained significant support. But the right-wing party, Alternative for Germany, earned 11% of the vote and will therefore have seats in the Bavarian Parliament. The loss raises serious questions about Merkel’s already fragile coalition, and an increasingly polarized German electorate with gains on both the right and the left. A weaker German government is not good news for the beleaguered European Union.
The US and the Taliban have been meeting face-to-face for several years in Qatar to discuss a possible end to the conflict in Afghanistan. The meetings have not yielded substantive results, but there are reports that the two sides are discussing a possible pull-out of the roughly 14,000 US troops in the country. The talks are only preliminary and it is difficult to see how they will move forward, but the mere fact that the topic is being entertained as a topic is a new position for the US. The Taliban controls more territory than it did at the time of the US invasion in 2001, but it cannot control any of the major cities for any period of time. But the people of Afghanistan have made it clear that they want the fighting to end.
Ben Rhodes is a former deputy national-security adviser to Barack Obama and he has written an excellent backgrounder on the US-Saudi Arabian relationship for The Atlantic. The Trump Administration has elevated Saudi Arabia as perhaps its second-most important ally in the Middle East–second only to Israel. Saudi Arabia has emerged as an important supporter of the still-yet-to-be-released Middle East peace program which will undoubtedly ask the Palestinians to make incredible concessions to Israel. The Trump Administration hopes that Saudi Arabia can help to dampen the Arab rage that would follow from such a deal. The US is also depending upon Saudi Arabia to serve as a bulwark against the expansion of Iranian influence in the region, even though Saudi Arabia and its Gulf allies are significantly weaker than Iran. The price of the US support, however, has been high. It has been forced to accept Saudi war crimes in the Yemeni civil war, to say nothing about the persecution of dissidents in Saudi Arabia, to back Saudi Arabia in its dispute with a far closer US ally, Canada, and to back a massively ineffective embargo against Qatar, which hosts one of the largest US naval bases in the world. The most recent outrage over the possible murder of a journalist, Jamal Khashoggi, suggests that Saudi Arabia believes that the US will do nothing to oppose whatever actions it conducts in the region. In short, the US appears to be the junior partner in this alliance.
The Bharatiya Janata Party (BJP) came to power 4 years ago in India, and it has been consolidating its power very systemically. Its appeal is largely based on its emphasis on India as a Hindu nation, largely displacing the formerly dominant Indian Congress Party whose platform emphasized secular nationalism. Under the leadership of Prime Minister Narendra Modi the party has engineered a number of electoral victories, although it has also suffered some setbacks. Interestingly, however, it is beginning to appear as if Hindu nationalism has also set off other nationalisms within India, mitigating the power of a single idea of Hinduism. What has happened in India since 2014 mirrors much of what has been going on in the rest of the world. But the real question now is how nuanced the idea of nation can become–it can be a truly fragmenting ideology.
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