Internecine and Existential Struggles in a Transformed World

The Blue State has it all. And now therefore, it owns any future ‘breakages’ too.

The Blue State has it all. And now therefore, it owns any future ‘breakages’ too. Trump has gone, and ‘coincidentally’ with his departure, a blueprint emerged that same day, (which reportedly has been circulating ‘on both sides of the aisle for some months’) which implicitly advocates for a ‘reset’: a return to the pre-Trump days – essentially a turning back of the clock to a time before Trump dumped the TPP and started the trade confrontation with China.

Whether this particular manifesto ‘flies’ or not is not at issue (something like it, is almost certainly will). What this contrived ‘leak’ underscores however, is just how entrenched amongst the élites is the fixation with ‘turning back the clock’ to the point at which the Obama-Biden team left office.

The issue it raises rather, is whether in this bitterness towards ‘all things Trump’, these forces have noticed (and assimilated) the radical change in world beyond the U.S. over the last four years. Tony Blair, one of the manifesto architects, clearly hasn’t: whilst he says that he understands why people are sceptical, or even furious at the globalist élite, he adds: “But they’re (the élites) not so bad: In reality, the system they’re advocating is simply ‘common sense’”.

Yet, so much has changed during the last four years, notably in the external world, but domestically in the U.S., too. The point here is less about whether Trump’s policies failed (some foreign initiatives certainly did), or whether globalism is simply ‘rational’, it is whether the emotional animus towards Trumpism has so clouded the vision of the incoming team that they simply assume that they can freeze time at the point when those old policies (which were never very successful earlier) were extant, and they will prove somehow more successful now, four years on.

The American polity has fractured. After thirty-years’ involvement in conflicts in polarised societies, I have witnessed directly that the condition, primus inter pares, for any political ‘coming together’, is the acknowledgement, on both sides, that whilst ‘one party’ may adamantly refuse the narrative of the ‘other’; may additionally view it as historically untrue; and reject it utterly as a vision for the future, that until both accept that the others’ narrative (whether ‘true’ or not) is authentic to their community, politics simply is not possible. There is no ‘coming together’. (It took four years to reach this point between the sides in Northern Ireland – when both could say, I disagree completely, but I now accept that constitutes ‘their truth’).

The Blue State is taking the opposite path: It wants to crush utterly the narratives of Libertarianism and of Red’s desire to recover the Republican ethos, by claiming that truth, facts and science itself belong to the Blues alone. Biden’s entry therefore, will likely be as disruptive as was the last era. This route will likely fracture the GOP, and possibly in due course, the Democrats too – as its ‘progressive wing’ deems the Trumpist ‘other’ to be so morally flawed, contemptible and illegitimate, that just picking-up where Obama left-off, constitutes a wholly inadequate response.

Team Harris-Biden suggest that their first priorities are four: the ‘intersecting and compounding’ crises of Covid, economic recovery, climate change and social/racial justice. And any one of these domestic priorities would constitute a major challenge, but confronting them as an inter-penetrating quad may leave Biden-Harris little space in which to attend to foreign policy. For, in this latter sphere, very little remains as it was four years ago, and that fact alone would demand careful reconsideration. Will it get it?

Even domestically, much has changed (and Trump should not be blamed for these key shifts that essentially hark back to the Greenspan era). The structure of the U.S. economy now is unrecognisably different to the myth of U.S. capitalism: Asset markets have been severed from their true returns, and soar away – unconstrained from any anchor in cash earnings; price discovery, via market interaction, no longer exists; markets are not free, but Treasury managed; enterprise capitalism has morphed into monopolistic oligarchism; innovation and small businesses have been crushed; fewer Americans work for younger companies; inequality is rampant; money printing and debt are no longer limited by any prudent considerations – but rather as an exciting MMT ‘opportunity’ ahead; and interest rates no longer act as the mechanism by which capital is directed to its most effective and productive, use. Big changes, all.

The U.S. Central Bank no longer controls this Leviathan (lest its actions spark a dangerous market tantrum). Its energies rather, are wholly devoted to ensuring that interest rates stay zero-bound (as the mountain of U.S. debt cannot be sustained, were rates to rise, in real terms). Painted into a corner (there is no pushing back of the clock’s hands here), the best Yellen can do now is to pursue this make-believe economic model à outrance – to take it to its furthest limit, and hope to supress yields, even as the Treasury issues evermore debt paper.

The era of the Biden ‘reflation’ is in full swing already. Commodities are on fire; agricultural prices have risen 42 percent since touching bottom in April; industrial metals have risen 54 percent – both are higher than they were before the pandemic began.

It is in the area of foreign policy, however, that the notion of Team Biden picking up the reins of the earlier Obama-Biden approach is the most determined – and the most rigid (i.e. as in ramping up again efforts to oust President Assad). Yet, it is here, amongst those key strands, that so much has changed. Changes so great that they should call into question whether pursuing ‘continuity’ of the Obama approach is valid at all. Here are just the principal examples:

Whatever the Biden camp view of Trump, the reality is that he did shift the foreign policy conversation in three key distinct areas. He and his team did change – in a radical way – Americans’ perspectives on China. Trump did also set the narrative of an Iran being bludgeoned (rather than engaged, as per North Korea) into an accord. And he entrenched the narrative of unqualified U.S. support for Israel as a Jewish state, with Palestinians left to gather any crumbs, as best they might, when dinner was concluded.

Even if some (or all) of these initiatives have turned out badly, they nonetheless are ‘facts on the ground’ which have changed the world. Trump’s narrative on China will not be rolled-back (and there is little sign of any Biden desire to do so – beyond some window dressing on the tariff war): “Trump was right about China”, a Biden aide recently said.

The truth is that Trump lost the China ‘trade war’. Even pre-Covid, China showed resilience against Trump’s tariff salvos; but once the pandemic was controlled, the demand for medical equipment and computers for home working actually boosted its trade surplus with the U.S. Since 2016, America’s trade deficit with China has grown, (not diminished): Her export shipments are up (Asia is taking more), and the U.S. share in those exports has declined. Today the U.S. deficit with China stands at a record.

There is little to be done that might change this. Chinese growth has returned, and China remains the global manufacturing workshop. It is the EU’s biggest market (displacing the U.S. to second place).

This leaves Biden holding the bag of war on China’s tech lead. But for this to be effective (i.e. not hurt America more than China), America would need allies to join with it in isolating China. But precisely during the transition lull in Washington, the EU rushed to agree a major trade accord with China. This EU move (which angered the Administration) moreover, reflects a key shift in European attitudes (albeit one that is not without controversy).

The European Council on Foreign Relations (ECFR) surveyed 15,000 people from 11 countries: It found that six out of 10 thought China would become more powerful than the U.S. within the next 10 years: “Our survey showed that Europeans’ attitudes towards the United States have undergone a massive change. Majorities in key member states now think the U.S. political system is broken – and that China will be more powerful than the U.S. within a decade; and that Europeans cannot rely on the U.S. to defend them,” the report said. Such a poll result truly speaks to metamorphosis, rather than just ‘change’.

Russia unsurprisingly expects little more than retribution from the U.S. Deep State (who still blames Moscow for Clinton’s failed Presidential attempt), and sure-enough, already it finds itself subject to a probing, regime-change sortie: Alexei Navalny has been re-created as a ‘celebrity figure’ in the West, with European governments vying to stand behind him; he has been returned to Russia now, to test whether or not, with this backing and his new celebrity status, he might be ‘stood up’ as the mobiliser of the Russian ‘street’ versus Putin. (Washington and London have long obsessed with the thesis of fragility in Moscow.)

Again, Russia has transformed over the last years: Its’ military has been revamped – and quietly, its deterrence has been re-imagined in a new way. The biggest paradox of all however, is that whilst as the U.S. has shifted into an experimental MMT economy, Russia has done the opposite. It has gone economically ‘prudent’. It is one of the few to have kept its economic variables functional. It is not encumbered by debt or deficits, and it invests in productive capacity. Before long, we will see western capital flight into the stability of the Russian economy. President Putin will not be bothered by Navalny, nor the return of Bill Burns (the former U.S. Ambassador to Russia).

Yet, the fullest inversion and transformation of the status quo ante has occurred in Iran – an issue which will – ‘ready or not’ – come knocking on Biden’s door, on 21 February, after which Iran will expel the IAEA inspectors. Biden says he hopes for a deal with Iran. The framework to any such deal, however, has become much, much more complicated, since the Obama era.

Then, a deal was constructed around the nuclear issue alone, (and its pivot was the shift by Obama to accept the verified Iranian in-country, enrichment of uranium at a limit of 3.6%). At that time, the threat of Iranian ‘break-out’ to a weapon was paramount to U.S. thinking. Now, nuclear weapons are still the agenda – but have become a subsidiary issue: Over recent years, whilst the whole western focus was centred on the nuclear ‘Big One’, Iran quietly, was substituting vastly more deterrence towards Israel, and the U.S. Earlier, though the nuclear issue topped the agenda, even senior Israeli security officials never truly believed that nuclear weapons would be used against them – the Middle East simply was too small.

The new paradigm, created in stealth, is that Israel now finds itself surrounded by smart, ground hugging, cruise missiles and attack drones – in large numbers – from Gaza, to Lebanon and Syria; and from Iraq, Iran and Yemen. This new paradigm is real, and has the capacity to devastate Israel – and it is one for which Israel has no (or very limited) response.

Recently, Netanyahu wrote a letter to Deputy PM Gantz, saying henceforth that he was assuming sole command of Israeli policy toward Iran. Gantz and officials were outraged. And Israeli officials subsequently leaked that behind that letter was Netanyahu’s concern that some in Israel were forming a favourable view towards a Biden initiative for re-joining the JCPOA. In fact, what the security officials have been saying behind Netanyahu’s back is that what they need is a deep discussion with the Biden team – in secret (and with no leaks). Of course. They need to discuss this new Iranian deterrence paradigm with the U.S., before the latter hurtles into negotiations on a ‘new’ JCPOA.

Why? Because the U.S. returning to JCPOA, does nothing to change the strategic situation of an Israel surrounded by smart missiles. How to deal with this change? Netanyahu, for electoral reasons, wants to continue with his ‘old line’: That he will salami-slice, and chase the Iranians out of Lebanon, Gaza, Iraq, etcetera. The problem is that this policy is a lie.

Netanyahu’s “massive” attacks on Iranian infrastructure are mostly PR, and are carefully mounted to avoid war (empty warehouses are hit, more often than not). Netanyahu is afraid to start a region-wide war. Effectively, Israel needs a radical new approach. It has reached the crux: The questions now, are whether Israel is so painted into a corner of its own making (the initial demonisation of Iran was done to pave the way for the Labour Party to change policy, and to reconcile with its Arab ‘near-abroad’) that any solution is politically impossible. Secondly, whether any new approach would be politically saleable in the U.S. (given the preponderance of hawkish, pro-Israel lobbies) – and, finally, whether a new paradigm could be sold to a transformed Iran, that now holds the upper hand when it comes to peace or war in the Middle East.

The world is truly a transformed space today, and with an America consumed by bitter internecine, and existential struggles, one might ask, what could possibly go wrong?

Internecine and Existential Struggles in a Transformed World