Tackling Hard Issues as an Economic Rebalancing Takes Place

02.10.17
Business /10 Feb 2017
02.10.17

Tackling Hard Issues as an Economic Rebalancing Takes Place

President Donald J. Trump has taken a different approach to formulating US relations with Russia. Unlike his predecessors, Trump has eschewed criticism of President Vladimir Putin. This has sounded alarm bells in Washington DC, with Democrats and Republicans alike. Dems charge that Putin is responsible for unprecedented human rights abuses, war crimes and land grabs, but Trump has not been sold on the transgressions of Russia’s leader. The media constantly reports the ‘warm relationship’ between the two men, although there is no hard evidence to suggest as much.

Back in Moscow, President Vladimir Putin is gearing up for an eventful four years of more favorable US/Russian relations. Unfortunately, President Donald Trump is an amateur in terms of international diplomacy and presidential politics. He is testing the murky waters where geopolitical tensions are rampant. Long-standing policies are being upended as his unilateral perspective on global affairs is brought into play.

The Trump Doctrine is built on an America First Policy. President Trump has been an outspoken critic of the Iran nuclear deal, and already he has slapped a new series of sanctions on key Iranian officials, and companies. Iran has violated Security Council resolutions by test firing ballistic missiles capable of carrying nuclear warheads. The international community threw a tantrum, but Trump acted.

Many in the United States are blithely unaware of why Russia is a force to be reckoned with. For starters, Russia has the world’s largest arsenal of nuclear warheads and a military of huge proportions. Russia is governed by autocratic leadership in Vladimir Putin, and the Russian people place pride and patriotism above the petty squabbling of democratic systems of governance. The US and Russia have had icy relations since the Cold War, and that remains in effect today. The intentional isolation of Russia by the global community is a policy that will not bear fruit in the long-term. Russia is a massive country with vast resources and incredible reach. It is strategically positioned with Asia and Europe close by. Russia is also increasing its influence in the Middle East where it is seen as a power player between Europe and the US on the one side and rogue nations such as Iran and Syria on the other.

Russian support for Syrian President Bashar al-Assad is notable, and this is at odds with US policy. Russian dominance in the world cannot be underestimated. It has a highly capable military and a diplomatic corps that rivals the best of them. Russia is also making tremendous strides online and in outer space. For all its flaws, Russia is operating on the forefront of innovation, military and technology. Trump recognizes that Russia is a proud country and the people crave respect. Russia wants to maintain its footing as a major world power – a superpower, and it will not be treated with disrespect. The Trump White House will want to engage Russia in a way that fosters healthy rivalry between the world’s superpowers, prevents an unhealthy relationship and maximizes economic benefit for both sides. Of course, international norms and standards must be adhered to as a means of maintaining a global order where peace and stability reign supreme.

During the US presidential election, Russia was steadily growing its economy. Russia has chalked up substantial trade agreements with the European Union, Japan, and China, fearing that trade relations with the US may not come to fruition. The Russians are also locked in negotiations with the United Kingdom. All of this is pointing towards a Russia intent on bolstering its economic strength in the global economy. The head of Russia’s central bank, Elvira Nabiullina, is in the process of boosting monetary policy in Russia, while Janet Yellen is attempting to raise interest rates at least 3 times in 2017.

Russia is seeking increased capital inflows in 2017, and with icy relations between the US and China, Russia could benefit immeasurably. Already, currency trading trends indicate a significant shift towards RUB/CNY trading, despite the USD status as the world’s reserve currency. Russia and China met in Lima, Peru on 19 November 2016 to wrap up an APEC (Asia-Pacific Economic Cooperation) agreement. Barely a few months later, Trump canceled US membership in the Trans-Pacific Partnership (TPP). While China focuses its attention on Taiwan in the South China Sea, Trump is focusing on rebuilding relations with Russia. Whether or not this comes to pass is anyone’s guess.

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