Rex Tillerson as Secretary of State

 

Remember how Hillary Clinton tried to orient America’s foreign policy towards economics? Remember how she explained that economic growth of countries should be more of a driver in America’s relationships? That was one key reason for her celebrated pivot to Asia away from the quagmire of the Middle East. It wasn’t a novel idea but it was a smart one. It didn’t go anywhere because she, like so many other American foreign policy leaders, got stuck in the Middle East swamp. 

Not only did American foreign policy get stuck again in the Middle East, it also got into another familiar quagmire in Eastern Europe against Russia. President Obama, almost reflexively, imposed draconian economic sanctions on Russia hoping that severe economic pain would force Russia to obey the US. If intense economic sanctions forced Iran to the bargaining table, they would force Russia as well, they thought.

President Obama & the American foreign policy establishment forgot that countries react very differently to existential challenges than they do to non-existential challenges. Iran’s nuclear program was not an existential requirement and so Iran was willing to negotiate. A non-belligerent & non-antagonist Ukraine is Russia’ existential requirement. It was in & due to Ukraine that Russia defeated both Napoleon & Hitler. And Ukraine is the birthplace of Russian culture. 

1.The Existential Economic Factor in Foreign Policy

Hillary Clinton was correct but myopic. She never understood that if  a single factor governs the economy of a country, that factor ends up being an existential requirement for that country. And all of America’s foreign policy messes today seem to revolve around one common existential economic factor.

That is Oil. A stable & reasonable price of Oil is today an existential requirement of Russia as well as Saudi Arabia, GCC countries & Iran – the same countries in which American foreign policy is stuck. So stuck that America has very little bandwidth left to address other issues.  

As usual, ham handed & overly emotional US foreign policy has backfired. Instead of isolating & breaking Russia, American sanctions & low oil price forced Putin to become deeply involved in the Middle East. He intervened militarily in the Syrian civil war and saved Assad. The entire Middle East now recognizes Putin’s Russia as as winner & a player to be reckoned with in the Middle East.

This added stature enabled Putin to play the diplomatic middleman in arranging the recent Oil deal that led to a 10% rally in the price of oil. It is nearly impossible for Saudi Arabia & Iran to talk with each other, let alone come to a joint decrease in oil production. It was Putin who personally intervened & got leaders of both Saudi Arabia & Iran to come to sensible terms. This deal, if it holds, will go a long way to in arresting the decline in revenues of both Russia & the Middle East and in ameliorating the budget crisis that has engulfed both Saudi Arabia and Russia. 

While America has little bandwidth for Asia, Putin is working with Japan to come to a deal about the Kuril Islands, a holdover issue from World War II. Russian oil can provide Japan a stable source of energy that is not dependent on vagaries of the Middle East & not subject to tortuous sea route across naval choke points that could be closed by China. And Japan is a natural & neighborly buyer of oil for Russia. And it was Putin who worked directly with Narendra Modi to buy the Indian refineries of debt-ridden Essar. By beating out Saudi Arabia for this deal, Putin’s Russia has become a major player in India’s & Indian Ocean’s energy sector.  

Look at American foreign policy and you will see that both Hillary Clinton & John Kerry have acted as if they had no clue about any of this. John Kerry has been extremely energetic but on peripheral issues. That has gained him & America nothing but contempt. President Obama hasn’t shown any awareness or understanding of this new focus of foreign policy either.  

Kudos to President Elect Trump for understanding this new critical factor. He also realized that America had fallen way behind. He needed a player with a proven track record and a long relationship based on respect & trust with leaders in the global energy arena. Mr. Trump got what he needed in Rex Tillerson, a man whose nomination instantly got America back to the center of today’s foreign policy game. 

We all have to hand it to President Elect Trump. No one else would have had the vision, the intelligence & the courage to pick such a perfect but out of the box Secretary of State. Mr. Trump also understands another central factor of America’s economy that very few politicians do, the fact that America is now a two-sided energy player.

The American consumer needs & wants low gas prices. Renaissance of American manufacturing needs low gas prices. But a huge chunk of America needs & wants higher oil prices. The economy of the long belt from Oklahoma to North Dakota is as dependent on higher stable oil prices as OPEC & Russia are. And the energy sector is a huge generator & preserver of jobs in this long belt. And jobs are the central plank in Mr. Trump’s platform.

President Elect Trump understands this & that is why he has nominated three-time Texas Governor Rick Perry to be his Energy Secretary. The combination of Rex Tillerson & Rick Perry is dynamite & unifies America’s domestic interests with America’s foreign policy interests. When was the last time you could say that? And the Tillerson-Perry team clearly signals to both Russia & the Middle East that America is as much a player in their game as any of them and has congruent interests with them. Nothing makes foreign policy easier than congruence in interests. 

2. Trump vs. Obama re Russia 

President Obama has & has expressed contempt for Russia & for Putin. As recently as in yesterday’s press conference, President Obama called Russia “a smaller, weaker country than the US”. It is a factually true, irrelevant &, frankly, stupid statement. An old cliche reminds us that it is not the size of the dog in the fight but the size of the fight in the dog. And no one doubts the size of the fight in Putin &, more importantly in Russia, when they feel their backs are against the wall.

The fact that Russia is smaller & weaker should make it easier to get Russia on America’s side than forcing them into the opposing side. The entire world, especially the Middle East, has become adept in using the US-Russia rivalry to their advantage. That, in itself, is a factor that keeps America stuck in the Middle Eastern swamp. And that is to Russia’s advantage because an America embroiled in the Middle East cannot bring its force to bear down on Russia.

Think back 100 years to 1916 when Britain & France were competing for influence in Middle East. When faced with fighting a war against Germany, their common enemy, Britain & France came to a secret agreement or understanding to divide the Middle East into their own spheres of influence. This Sykes-Picot arrangement did lead to stability at least for Britain & France and enabled both to water down nascent Arabian Nationalism. 

We think President Trump is thinking along these lines. He understands that America will not be able to get out of the Middle East without an understanding with Russia. They both agree that ISIS &, more generally, Islamic Jihadi uprising is their common enemy and it would be much smarter to fight jointly. Recall Mr. Trump’s comments during the campaign that USA should kill ISIS in Iraq & Russia should kill it in Syria. Of course, that would require a deal between Saudi Arabia-GCC and Iran, something that would require joint deal making from Trump’s America & Putin’s Russia. 

But if such a deal could be worked out, it would fulfill President Elect Trump’s big goal. He says in every speech that America has spent $6 trillion in the Middle East without any success & that money would have transformed America’s infrastructure had it been spent at home. But such a deal cannot be worked out without the presence of a trusted & respected negotiator from America. See why President Elect Trump chose Rex Tillerson, the man who is respected & trusted as a veteran deal maker by all the countries involved?

3. America-Russia-China

ISIS & Islamic Jihadism is just one common enemy of both America & Russia. The bigger long term adversary for both is China. Russia is too small & weak to challenge America across the board. China is the only country that can be a military, economic & geostrategic adverserial challenger to America. Losing the Pacific to China would be a devastating & semi-existential blow to America. 

Remember how hard it was to defeat Japan? It might have taken years and a million American casualties to force Japanese surrender by conventional means. That is why President Truman used atom bombs on Japan. Remember the Korean war with China? General MacArthur told President Truman that it would be impossible to win that war without nuclear weapons. President Truman fired MacArthur and then listened to him by agreeing to the partition of Korea between South & North. Some 36,000 US troops still protect South Korea today. 

Can you imagine how hard would it be to defeat China if we had to? And if it came to that, would you want Russia to be on our side or China”s? In a three-player game, the most important goal of the biggest player is to get the weakest player on its side. Think back to World War II. America & allies faced two bad regimes. Hitler’s Germany & Stalin’s Russia. The war was won by US getting the weakest player, Stalin’s Russia, on its side in a two front war against Germany. Remember 20 million Russian soldiers died in that war and, till the end, about 75% of the German Army was deployed against the advancing Red Soviet army. Even then, it was hard for America & Allies to win the Western front. Nixon’s America played the same game in 1971 by prying a nascent but weak China away from the embrace of the Soviet Union.

President Obama did the opposite of what Presidents Roosevelt & Nixon did. He forced Russia to ally itself with China in a joint alliance against America. This, in our opinion, has been the absolutely stupidest decision of the Obama Administration, a decision taken more by emotional hate of Putin the man. That hate is widely shared in both wings of America’s foreign policy establishment, the NeoCons & NeoLibs. 

This bipartisan hate of Putin enabled President Obama to impose sanctions against Russia, a stupid & arrogant move that has backfired disastrously. It has damaged European economic confidence, hurt the European economy and drove Russia into opposing America in the Middle East and supporting China. 

Fortunately, President Elect Trump sees the dangerous stupidity of uniting Russia & China against America. He knows that Russia-China are more adversaries than friends and China poses a far greater danger for Russia than America ever could. We think President Elect Trump is determined to move Russia out of China’s dangerous embrace. That cannot happen without trust & mutual understanding of what is being agreed to. When you understand this, you get why he selected Rex Tillerson as his Secretary of State. 

4. The Negotiator 

President Elect Trump is a veteran deal maker. And he has a big, smart, & innovative agenda. He understands that deep knowledge of the opponent is a major strength in any negotiation. A negotiator who is respected & trusted by your opponent is likely to get the best deal for you. And who better to do that for Trump’s America than Rex Tillerson who has a deep & extensive knowledge of all the leaders & is respected & trusted by them?

What a brilliant, innovative & courageous pick by President Elect Trump? Kudos to him. 

 

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