Some US presidents use military force to impose the US’ will on other nations. Most prefer traditional diplomacy and negotiation, or ask allies to help them get their way. Former US presidents Jimmy Carter and Barack Obama stressed the importance of moral example in projecting global leadership.
US President Donald Trump does things differently. Since taking office last year, he has repeatedly resorted to draconian economic sanctions and trade tariffs, launching them like missiles at nations and people he does not approve of. Trump did not invent the practice, but it has become his foreign policy weapon of choice.
The US Department of the Treasury last year imposed sanctions on 944 foreign entities and individuals, a record. This year, the total is projected to surpass 1,000.
Illustration: Mountain People
It lists 28 “active sanctions programs” ranging from Belarus and Burundi to Venezuela and Zimbabwe. In February alone, people and businesses in Lebanon, Libya, Colombia, Pakistan, Somalia and the Philippines were targeted.
Sanctions beget more sanctions. Last week, named Chinese and Russian companies were penalized over alleged breaches of previous bans on trade with North Korea.
Whether it is rocket components, illicit booze or smuggled cigarettes, global sheriff Trump is on the case.
What might be termed Trump’s “money wars” are raging across large swathes of the globe, from Canada and Europe to Russia and China.
On current trends, any nation not under economic attack from the US will soon be the exception.
Trump’s most recent target is Turkey, whose currency plunged earlier this month following the sudden imposition of US sanctions and tariffs.
His action, which Turkish President Recep Tayyip Erdoan called “a stab in the back,” followed a new tranche of sanctions on Russia, linked to the Salisbury nerve agent attack on former Russian spy Sergei Skripal and his daugher, Yulia.
Russia’s position is anomalous. It was initially sanctioned after its annexation of Crimea in 2014. By most estimates, it poses the biggest international challenge to US interests and values, but Trump appeared opposed to the US Department of State’s sanctions in the Skripal case. Even so, follow-up sanctions are planned this autumn.
Iran was also targeted in Trump’s money wars. After reneging on the multilateral pact curbing Iran’s nuclear activities, Trump attacked its financial and trading interests. Next up, Iran’s banking system and a potentially ruinous embargo on its oil exports.
In sanctioning foreign states, Trump typically acts without prior notice or any attempt at serious negotiation.
His modus operandi is becoming familiar: shout, threaten, punish. Then comes a supposedly magnanimous offer to talk one-on-one, as happened with North Korea and the EU.
Trump uses real or confected public expressions of personal anger to soften up opponents and rally his electoral base to his latest cause.
Then, like the lifelong capitalist he is, he hits his targets where he thinks it hurts most: in the pocket. After all, foreign wars are expensive and usually end badly. Better to follow the money.
Using this as a weapon makes ultimate sense to Trump. In his experience as a property developer and entrepreneur, money really does make the world go round. For him, the world is simply one big marketplace, where cash is king. He aims to make a deal, not a difference.
Trump’s dollars-and-cents approach reflects the US that raised him. Money, it is said, is second only to God in what was once called a “nation of hustlers.” Then-US president Calvin Coolidge in 1925 famously declared that “the chief business of the American people is business.”
Writing in the American Conservative, David Masciotra recalled the poet Walt Whitman’s likening of the US obsession with commercial conquest and pecuniary gain to a “magician’s serpent that ate up all the other serpents.”
In this analogy, Trump is viper-in-chief.
Given this context, the declared purpose of Trump’s sanctions and tariff war — protecting the US’ bottom line from “unfair” trade competition — is easy to understand. It explains, without justifying, measures taken against the EU, Mexico and Canada.
Paradoxically, it is globalization, which Trump opposes, that has given the US such immense financial reach.
China has been hardest hit. Last month, Washington imposed 25 percent tariffs on US$34 billion of Chinese imports. Another US$16 billion worth is to be imposed this week if scheduled talks make no progress.
However, only 50 years ago, such leverage was non-existent.
Trump’s money wars also have important strategic and political elements. The overall aim is to reinforce US dominance in the global economy.
This extra-territorial over-extending is exemplified by Trump’s threat to punish European companies doing business with Iran.
His pressure tactics are assisted by the US dollar’s position as the world’s reserve currency.
Multinationals do business in dollars and most emerging economies depend on dollar-denominated loans, so when the US Federal Reserve raises interest rates, as it is expected to do again next month, debt servicing and borrowing costs rise.
In Trump’s unscrupulous hands, this is another powerful political tool.
In Turkey’s case, Trump used tariffs to express anger over the detention of a US citizen — who he is now calling a “patriot hostage” — and policies such as Ankara’s intervention in Syria.
The tariffs have little or nothing to do with Turkish exports to the US, which are relatively insignificant.
The measures against Iran are also politically motivated. Trump makes no secret of his hopes for regime change in Tehran, but as in Turkey, the effects of sanctions have hurt ordinary Iranians, not their leaders.
Does the use of sanctions and tariffs as a foreign policy tool actually work?
The White House says its “maximum pressure” campaign succeeded in bringing North Korean leader Kim Jong-un to the negotiating table in June, but while the summit strengthened Kim, Trump’s main aim — denuclearization of the Korean Peninsula — remains as elusive as ever.
In this case and others, sanctions are a substitute for thought-through policy, critics say.
Trump’s sanctions on Iran are likewise in danger of backfiring politically. The measures have principally succeeded in uniting warring hardline and moderate leadership factions in shared defiance of Washington.
Trump’s escalating global economic warfare is producing other unexpected results and unintended consequences. One is the chilling effect on traditional US alliances.
Opinion polls suggest respect for and confidence in US leadership has sharply declined around the world. This holds especially true in western Europe, where NATO and EU allies feel assailed and betrayed.
Diplomats and analysts make a more fundamental point. Sanctions are a blunt tool that, historically speaking, usually do not work well and harm the most vulnerable people.
One oft-quoted example is the suffering in Iraq caused by the 13-year universal sanctions regime erected after then-Iraqi president Saddam Hussein invaded Kuwait in 1990.
For such measures to have a chance of working, they must be enforced multilaterally, ideally with the UN’s legal and moral backing. From this point of view, Trump’s go-it-alone approach is doomed to fail.
Other nations work to undercut what they see as arbitrary US behavior. This is already happening over Iran and North Korea.
Trump’s money wars, coupled with his nationalistic “America First” agenda, are also seen as undermining the multilateral, rules-based global order symbolized by the WTO. Most governments value these structures.
This potentially also hurts people in the US. Trump already faces a backlash from US exporters hit by retaliatory foreign tariffs. He was forced to offer stricken soya bean farmers a US$12 billion federal bailout — ironic for a Republican for whom the private sector is sacrosanct.
The more the US relies on unilateral sanctions and tariffs, the more likely the rest of the world — disregarding possible financial penalties — will refuse to play along.
Those who can afford to, like China and the EU, inevitably retaliate in kind, creating a mutually damaging economic downward spiral. Those who cannot defend themselves, such as smaller, emerging-market economies, will look elsewhere for help.
The resulting tensions divide the US’ friends and unite and strengthen its competitors and foes, while accelerating the search for alternatives to US leadership.
This effect might already be observed in increased Chinese and Russian geopolitical collaboration and enhanced economic alignment through groups such as the eight-nation Shanghai Cooperation Organization.
The converse is also true. The more Trump penalizes Beijing, the more unlikely it is to help with problems like North Korea and Iran. Some predict a new Cold War, with China replacing the Soviet Union.
An insight into just how self-defeating Trump’s economic world war could be was provided by Erdogan’s threat last week to quit NATO and transfer Turkey into Russia’s orbit — a prospect enthusiastically welcomed by Moscow.
Who will be next to jump ship?
Tom Wolfe would have laughed. Trump is behaving like a new master of the universe — the ultimate arbiter of global markets, trading favors and punishments for political gain — but worldwide, his stock is falling.
For the US, Trump’s money wars might yet prove to be very expensive, indeed.
Around the world, US trade tactics have a human cost.
HAKAN EVIN, TURKEY
Hakan Evin is the closest thing to a celebrity in the world of Turkish carpets.
The walls of his shop in Istanbul’s Grand Bazaar are lined with magnificent rugs and kilims, as well as photographs of Evin with a slew of US political figures who were his customers, including US senators John McCain and Lindsey Graham, US Representative John Boehner, former US president George H.W. Bush and first lady Laura Bush, and one with the actor Ben Affleck as he gave him a guided tour of the ancient, labyrinthine market.
That is perhaps why his upbeat, wide smile fades when conversation turns to the US sanctions on Turkey and the diplomatic crisis over the continued detention of US pastor Andrew Brunson.
“I wish we could all just be together,” he said.
Evin could spend hours talking about the intricacies of carpet design and weaving, the silk production methods of decades past that are no longer in use, his teenage years visiting his father’s carpet shop in the bazaar and the inferiority of machine-woven rugs, all over copious amounts of pistachios and apple tea.
His face lights up when he holds up a tiny eyepiece that lets him count how many knots per square centimeter are in an individual rug.
The centerpiece of Evin’s shop is a 1980s Hereke, the most intricate class of Turkish rug, which he estimates took two weavers in the city of Bursa about seven years to craft, using silk made by silkworms feeding on mulberry leaves. It costs US$160,000.
The silver lining of the crisis that has battered the Turkish economy over the past couple of weeks, Evin said, was that it might spur tourists to come, because of the dollar and euro’s strength against the lira.
The nation’s political crises have driven away wealthier patrons from the West and Middle East. Many think Istanbul is unsafe, a perception that is unlikely to change with the latest sanctions, even though there have been no major terrorist attacks since Dec. 31, 2016, Evin said.
“Turkey is safe,” he said. “Our problem is we get scared sometimes, and [people] may not want to invest, because they don’t trust how much the dollar will be tomorrow.”
“That’s why we prefer stability, in jobs and money,” he added.
Already, there are rumors swirling among Istanbul’s carpet weavers and traders that the Trump administration might impose tariffs on Turkish rugs, and Evin is spending more time at his other shop in the bazaar, which sells scarves — a more affordable alternative for budget-conscious tourists.
However, there is little doubt where his heart really lies.
“A carpet seller will tell you when he sells something with imperfections, they will say: ‘Nothing is perfect and the imperfections are due to it being handmade,’” he said. “That’s the classic lie. You have to make it as perfect as possible.”
By Kareem Shaheen in Istanbul and Gokce Saracoglu
BAHAR MOHAMMADI, IRAN
Bahar Mohammadi’s expertise in digital marketing was in high demand following the 2015 landmark nuclear agreement that led to the return of foreign car manufacturers to Iran, where the automotive industry is the nation’s biggest after petrochemicals.
Mohammadi, 36, a graduate of Tehran University, found a job in 2015 in a multinational automobile manufacturer in Tehran, but the reimposition of sanctions following Trump’s decision in May to unilaterally withdraw the US from the nuclear deal has greatly affected the car sector.
Mohammadi has since been laid off.
“Everyone is anxious,” she said. “A lot of people are worried that the price of goods will soon go up, so they’re stockpiling. They can’t afford a lot of things, as salaries are worth less. A lot of people — I see this particularly among my friends — are thinking of leaving the country.”
In June, as it geared up for the return of US sanctions, the Iranian government banned car imports.
US sanctions, reimposed this month, are to be followed by even more stringent measures by Nov. 4, including an embargo on the import of Iranian oil and sanctions on the banking sector.
“Businesses, the quality of life, things such as travel, salary, education or, even more importantly, the health sector have been affected,” Mohammadi said. “Medicine prices have soared — some important medicines are no longer imported.”
Sanctions are compounding Iran’s economic woes. The Iranian rial has gone into a tailspin, halving in value since April, fueling street protests over economic grievances.
The German carmaker Daimler, which last year announced a joint venture in Iran, said this month that it was freezing its business activities in the country. In June, Peugeot of France said it was halting investments. Other car manufacturers, such as Renault, have announced similar policies, either running down their operations or bringing them to a complete halt.
“The main reason the government gave for the ban on imports of cars was that money was getting out of the country,” Mohammadi said. “A lot of experts are losing their jobs — it’s estimated that between 10,000 and 15,000 will lose their job in the car sector alone. They have to start again from scratch.”
By Saeed Kamali Dehghan in London
ARTEM TEMIROV, RUSSIA
Coffee shops dominate Moscow, but it is hard to find one like Chernyy — meaning “black.” The sleek downtown cafe is the retail front for a left-leaning cooperative, a rarity in the Russian capital’s cut-throat restaurant scene.
“We wanted to make something that would bring in money, but would also reflect our ideas about a different way of organizing society,” said founding member Artem Temirov, who sports a close-shaven head and two scarlet flowers in his breast pocket.
The cooperative is particularly vulnerable to price shocks from the exchange rate, because it imports pre-roasted coffee priced in US dollars.
The 8 percent fall in the value of the rouble to the dollar this month, largely on sanctions fears, means a projected coffee budget shortfall of about 50,000 roubles (US$738.27) for the cooperative.
“That’s the salary for an employee — it’s pretty serious for us,” Temirov said.
He and his partners also sell coffee wholesale to other cafes or directly to consumers through a subscription service.
Over a cup of Ethiopian, he whips out a MacBook with a spreadsheet that is programmed to show the monthly budget at different dollar exchange rates.
“Everything more or less worked at 63 [roubles to the dollar],” he said. “But at 67 or 68, we start having serious losses and that means we need to cover our budget in other ways. We can’t buy less coffee and tell our clients: ‘Sorry guys, this month we’re not going to be supplying you.’ They rely on our coffee.”
It is not the first time Temirov has faced uncertainty from the exchange rate. The cooperative barely survived the rouble devaluation in late 2014, when the rate halved just as a large delivery of coffee arrived from abroad.
“It nearly wiped us out,” he said.
A decision was made to remain in business, but it took until May this year to pay off the debts.
How can Chernyy deal with price shocks? The main answer is to decrease risk by holding off on new clients or custom coffee orders.
“Naturally, it slows down our growth,” Temirov said.
The cooperative is bracing for a further decline in the rouble, although a true collapse could change how it does business.
“If the rouble were to rise up to 100 [to the dollar], then I don’t even know what we’d do. We don’t make those kinds of predictions. I don’t know how to do business at that exchange rate,” he said.
“If we’re talking now about which specialty coffee to choose, the one that tastes of sea buckthorn or papaya, then that would simply be too expensive,” he added after tasting some samples. “We would have to raise prices and position ourselves as a cafe for only wealthy people, but that’s not something we really have an interest in doing. We want to work as a city cafe for everyone.”
By Andrew Roth in Moscow
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations