If we ever needed a reminder, we now have one. As Paul Kennedy emphasised in his best seller, Great Powers depend upon economic strength for their political influence.
As the United States takes aim at China to force it to play fair in trade according to World Trade Organisation standards, it threatens massive tariffs of 25% on Chinese imports which, even given the recent devaluation of the Chinese currency, will have a crippling effect on an economy weakened already by a debt level unseen anywhere else in the world and without the high rates of real (as against Chinese fictional) rates of economic growth in the United States. There is a cost to this that soy bean producers in the mid-West can tell you about. But China’s trade dependence on the United States is far greater than US trade dependence on China. So in this game of chicken, one would expect China to swerve out of the way first to avert a headlong collision.
This brings us to one of China’s friends, President Putin’s Russia, which is burdened by economic sanctions imposed by the United States and its allies in NATO for snatching the Crimea, invading Eastern Ukraine with mercenaries and running cyber warfare in the US presidential elections (which Foreign Minister Lavrov still seems not to have understood – no doubt because no one inside Moscow has admitted to him they actually did it.)
The Russians recently cashed in on their sizeable holdings in US treasury bills but to no noticeable effect on the market because in relative terms they did not add up to much. Only a steeply rising oil price can help them out of their difficulties and the United States can always pump more oil. Russia’s newly acquired friends, along with Syria on its sick-bed, namely Iran and Turkey, are both in the gunsights of the Trump administration. The stubborn refusal to release an American priest in Turkey is about to bring down on it financial sanctions and at a time when the Turkish currency is dropping like a stone due to the mess that President Erdogan has inadvertently made of the Turkish economy. Meanwhile the United States has reimposed sanctions on Iran, another country suffering from severe economic dislocation. With friends like these, who needs enemies?
All in all the lesson for the faux democracies is that if they insist on continuing membership of the awkward squad, they need to ensure spontaneous economic growth that is sustainable so that the state is relatively impervious to external financial pressure. But then, as I think the Russian saying goes, if my grandmother were my grandfather, I wouldn’t be here. The combination of bureaucratic centralisation, economic mismanagement and blatantly aggressive behaviour, whether military or mercantilist, is fatal given the massive economic clout President Trump now wields. Unless, of course, he blinks. Or the Democrats win and dish up something with which to impeach him.