The Phaserl


Obama’s Blunder; Trump’s Gambit

by Jim Rickards, DailyReckoning:

President Obama has conducted the most deleterious foreign policy of any U.S. president since Woodrow Wilson. This is not due just to a dead ambassador on the streets of Benghazi, a phony red line in Syria which led to 400,000 dead, two million wounded, and two million refugees, losing Egypt to Islamic radicals, or empowering a terrorist regime in Iran. Those developments alone are enough to rank Obama among the worst foreign policy presidents. Obama’s most egregious error is far worse – his inability to grasp the balance-of-power dynamics among the U.S., Russia and China. Yet, Obama’s blunder is Trump’s opening to rescue U.S. foreign policy from grave weakness, and restore U.S. leadership to the world.

There are three primary powers in the world – the U.S., Russia, and China. All other nations are secondary allies, or tertiary powers. In a three-power system, the object of foreign policy for a primary power is to align with one of others to the detriment of the third. A great power that does not pursue this policy becomes the victim of an alliance between the remaining two. Such an alliance need not be permanent; it can shift, as was the case with Nixon’s opening to China, which put Russia on the defensive and led eventually to the downfall of the Soviet Union.

This dynamic is not difficult to grasp. Adults playing the board game Risk know that while the game begins with six players, it quickly evolves to three survivors. At that point, it is imperative for two of the players to align and destroy the third by systematically attacking it, and refraining from attacking each other. The victim is quickly wiped from the board.

Of course, geopolitics is more complex than Risk. Players are rarely removed from the board; they are just temporarily advantaged or disadvantaged in pursuing their national goals. But, the three-power dynamics of two-against-one are fundamentally the same. Bismarck knew this. Kissinger knows it today. Obama does not.

Obama subscribed to a post-national globalist ideology, which finds no correlative in the real world outside of faculty lounges and Georgetown salons. In Obama’s worldview, nation states are a problem, not a solution. Global goals on issues like climate change, trade, the OECD’s world tax program, and the IMFs world money program require global institutions. Nation states are temporary impediments until global governance can be built through non-democratic transnational institutions.

Meanwhile, Russia and China never lost sight of their national interests. While their leaders dutifully attend the same multilateral venues as Obama, such as the G20, IMF, and regional summits, they persistently put Russia and China first. For Russia and China, the world is a dangerous place in which national interest is advanced ruthlessly; not Obama’s Kumbaya-laced globalist fantasy of one world order.

This hard-edged realism by Russia and China combined with a lack of realism by Obama has led to the worst possible outcome for the United States. Russia and China have become deeply intertwined and are building a durable alternative to the post-war dollar-based system dominated by the U.S.

These Russia-China initiatives include deepening cooperation through the BRICS, the Shanghai Cooperation Organisation, the Asia Infrastructure and Investment Bank, the New Silk Road, and joint efforts in weapons systems and space.

Most threatening is that in the past ten years, Russia increased its gold reserves 203%, and China increased its gold reserves an estimated 570%. Such gold accumulations have no purpose other than to lay the foundation for a non-dollar based international monetary system. No great power has prevailed long without a great currency. When confidence in the dollar fails, U.S. power will fail with it.

Obama blundered because he allowed Russia and China to pursue the two-against-one dynamic leaving the U.S. as the odd man out. Fortunately it is not too late to reverse this dynamic. Signs from the new Trump administration are encouraging. Trump’s early actions and appointments suggest he understands the precarious position of the U.S., and is already moving to change the status quo.

Russia is a more natural ally of the U.S. than China. Russia is a parliamentary system, albeit with autocratic overtones; China is a Communist dictatorship. Russia has empowered the Orthodox Church in recent decades, while China is officially atheistic. Russia is encouraging population growth while China’s one child policy and sex-selective abortions resulted in the deaths of over twenty million girls. These cultural aspects – elections, Christianity, and family formation – provide Russia with a natural affinity to western nations. Russia is also superior to China militarily despite recent Chinese advances. That makes Russia the more desirable ally in any two-against-one scenario.

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