President Trump’s domestic “revolution” on behalf of “forgotten” Americans requires a complementary foreign policy of reduced warfare and a weaker dollar, explains ex-British diplomat Alastair Crooke.

By Alastair Crooke

Pat Buchanan – perhaps the U.S. politician with the greatest feel (as a thrice-times U.S. presidential candidate himself) for what President Trump is trying to achieve – tells us compellingly, just why Trump is now the US President:

[Simply,] …“He [Trump], read the nation and the world, better than his rivals. He saw the surging power of American nationalism at home, and of ethno-nationalism in Europe. And he embraced Brexit. While our bipartisan establishment worships diversity, Trump saw Middle America recoiling from the demographic change brought about by Third World invasions. And he promised to curb them.

“While our corporatists burn incense at the shrine of the global economy, Trump went to visit the working-class casualties. And those forgotten Americans in Pennsylvania, Ohio, Michigan and Wisconsin, responded. And while Bush II and President Obama plunged us into Afghanistan, Iraq, Libya, Yemen, Syria, Trump saw that his countrymen wanted to be rid of the endless wars, and start putting America first. [And] He offered a new foreign policy … Putin’s Russia is not ‘our number one geopolitical foe.’”

That’s it. That’s Trump’s domestic, and his foreign policy, in one.

What we all presently are obsessed with, is the bellicosity and hysteria to which Trump and his agenda has given rise: Is détente with Russia now effectively dead, as a consequence of the new Russo-phobic McCathyism? Or, is that which we are witnessing nothing more than “a mere tantrum by a clutch of ‘spooks’ whose jobs are under threat … along with the liberal press having a ‘parallel tantrum’: [not believing] that they lost the election to Donald Trump” – as one American commentator told MK Bhadrakumar? Or, are we seeing a brittle American Establishment splitting apart, in a more profound way?

We do not know the answer. The notion of removing Trump from office seems somewhat far-fetched (see here). Certainly, America is deeply divided: Trump plainly evokes strong, emotional reactions. Three-fourths of Americans react to him strongly – either positively or negatively.

The Pew Research Center’s latest survey shows that only eight percent of Democrats and Democratic-leaning independents approve Trump’s job performance, which is the lowest rating for any new president from the opposing party in more than three decades. But interestingly, Pew also finds that 84 percent of Republicans and Republican-leaners, regard Trump’s initial job performance as president “favorably.”

A Divided Administration

But then, Gilbert Doctorow relates, as the new Administration got underway, “came a stunning about-face in the early roll-out of Donald Trump’s new foreign policy, which looked a lot like Barack Obama’s old foreign policy. We heard presidential press secretary Sean Spicer say Trump ‘expected the Russian government to … return Crimea’ to Ukraine.

“Then we heard Defense Secretary James Mattis in Brussels (NATO headquarters), Secretary of State Rex Tillerson in Bonn (G20 Foreign Ministers meeting) and Vice President Pence in Munich (Security Conference) collectively pledge unswerving loyalty to the NATO alliance, insist that any new talks with Russia must be conducted from ‘a position of strength,’ and vow to hold Russia accountable for the full implementation of the Minsk Accords, meaning all sanctions stay in place pending that achievement which the Ukrainian government has consistently blocked, while blaming Moscow.

“Amid these signals of surrender from the Trump Administration – suggesting continuation of the disastrous foreign policy of the last 25 years – the newly revived enemies of détente on Capitol Hill added more anti-Russian sanctions and threats. In response to alleged violations by the Kremlin of the Treaty on Intermediate and Short-range Missiles (INF) dating back to 1987, Sen. Tom Cotton, R-Arkansas, introduced a bill enabling the re-installation of American nuclear-tipped cruise missiles in Europe. If enacted, this would undo the main achievements of disarmament from the Reagan years, and bring us back to a full-blown Cold War.”

This has unnerved Trump supporters; apparently disappointed some in Moscow; and also failed to reassure anxious Europeans at the Munich Security Conference. They are puzzling over which Administration faction to believe more correctly reflects future U.S. policy: the Pence/Mattis/Haley ‘wing’, that Europeans would like to hope is dominant; or, the Trump/Bannon/Miller triumvirate, which Steve Bannon hints views the European Union as a flawed construct, and who foresees conducting future relations with Europe, on a bilateral basis.

Which of these two, reflects America’s likely path, more accurately? Has the Establishment now succeeded in walking-back Trump’s agenda? Who now speaks for the President?

The answer is not hard to fathom: return to Pat Buchanan’s clear explanation of how Trump became President: “He saw the surging power of American nationalism at home, and of ethno-nationalism in Europe. And he embraced Brexit. While our bipartisan establishment worships diversity, Trump saw Middle America recoiling from the demographic change, brought about by Third World invasions. And he promised to curb them.”

Obviously, it is the Trump-Bannon wing. Were Trump to abandon his reading of the nation and of the Europeans that brought him to the Presidency, he might as well throw in the towel now. He will not be re-elected.

Weakening the Dollar

And Mr. Trump is showing no signs of reversing (for all the mixed messaging that has emanated from his diverse team). So, back to basics. What then is his foreign policy? Simply this: If President Trump wishes to keep his 84 percent (Republican) approval rating – and stay elected – there is only one way that he can do that: he must continue to carry “the working-class casualties and those forgotten Americans” (as Buchanan called them) of the Midwest, Michigan, Indiana, Ohio, Wisconsin and Pennsylvania.

And the only way to do that is to bring back manufacturing jobs to this (white), Middle America, (hurting) constituency. And the only way you can bring those jobs back, is with a weak dollar. A strong dollar would be deadly to Trump’s project.

Today, the dollar is too strong to allow any real return of manufacturing to the U.S. Trump needs to staunch any propensity for the dollar to rise. And, in his very first interview upon taking office (with the Wall Street Journal), Trump’s main point, was that he wanted the U.S. dollar “down.”

Here it is, then: Trump’s main foreign policy objective is the return of jobs to Middle America – and that means, in practical terms, avoiding a strong dollar. Secondly, the ultimate point of détente with Russia – apart from Trump’s reading that Middle America is experiencing war fatigue – is that détente can release a “peace dividend” which would be vital for the task of rebuilding America’s frayed infrastructure. (His tax proposals ultimately will have to be revenue neutral if Trump is to avoid an ugly row with his Tea Party supporters, who are aggressively fiscal conservative.)

Again, détente with Russia is a domestic need, required to attend to the re-building of the frayed structures of the communities who voted him into office. It is not anchored in any particular foreign policy ideology, but merely in a sense of peoples’ fatigue.

Of course, wanting a weaker dollar and wanting détente with Russia, does not mean that Trump will get either; he will continue to face stiff internal resistance and filibustering. But these two aims, as it were, may be seen to constitute the overriding prism by which Trump views his foreign policy aims, in the longer term.

In the shorter term – perhaps – what we are seeing now, is a tactical pause, dictated by the malicious leaks from within the system, and by the unrelenting “war” being waged by the mainstream media – a pause to allow Trump to get on with sorting out his Administration – purging the leaks, putting in place his people, and contending with certain of the mainstream media.

It seems the purge is slowly happening (it must be a huge process, and be imposing a heavy demand on time). It is however, simply not very realistic for Trump to pursue an accord with either Russia or China while he is under siege, and when his very survival is being widely questioned. And, as is now widely known, Trump believes in negotiating from a position of strength, and not weakness. Pence and Mattis may well have been dispatched to Europe to apply some anaesthetizing balm, while the difficulties of the first month are being resolved.

So, how might this “foreign policy” be conducted in practice? Well, if Trump were to impose protectionist measures on other states (China, say), this would likely result in their currencies depreciating, as a consequence. A 30 percent tax might result in a 30 percent currency devaluation. We have seen something of the sort happening with the peso, in the case of Mexico. And, ipso facto, if the Mexican or Chinese currency weakens, the dollar appreciates (thus weakening U.S. capacity to compete).

There are two possible routes ahead: one is for Trump to negotiate bilaterally with (say) Germany, Japan, China and others, to warn them that either they revalue their currencies (or, at minimum, hold their foreign exchange value stable), or else to suffer the consequences of a U.S.-imposed protectionism, which would badly damage the health of their economies.

Or, Trump can revert to the Reagan tactic of the mid-1980s, when the then the U.S. President pulled together all the main global central banks and finance ministers in Paris, to instruct that the dollar was not to be allowed to rise in value any further (after its rapid appreciation in the early 1980s). This was known as the “Plaza Accord.”

Going with ‘Bilateralism’

It seems that Trump will pursue the first course (bilateralism), as he has already made it clear that he wants to negotiate on a fuller field than just the stability of foreign exchange values. Specific trade deals, and inward investment into the U.S., will be on the agenda – as well as his declared aim of leveraging U.S. defense provision as a bilaterally negotiated quid pro quo, in return further economic benefit to the U.S. – rather than having the U.S. defense umbrella being provided as a highly subsidized “good.”

The implications of this bilateral approach are significant. It does not imply, per se, that Trump should want to split Russia from China. Trump, by his own logic, would not want, ultimately, to resort to protectionism against China (other than as a negotiating ploy). Imposing punitive tariffs on China would likely lead to a strengthening of the dollar, and risk a devaluation of the yuan – even possibly a maxi-devaluation of the yuan. Rather, he wants a deal. One that would bring additional jobs and Chinese infrastructure investment to America.

The notion that America needs to divide Russia from China (or Iran) for strategic reasons (though one probably embraced by some of his team) is essentially “old think.” It belongs to the neoconservative era, which held that America must remain as a global defense and financial hegemon. And therefore must contain and weaken any contending rising power.

Russia will not, in any case, break with China. But in the Trumpian logic, why should that matter, so long as Trump has achieved satisfactory commercial deals with each? (Kissinger though, may try to persuade Trump otherwise.)

Again, pursuing the war on radical Islam (for which Trump has called for proposals from the Pentagon) would not necessarily call for decisive military U.S. interventions in the Middle East, on this logic. A change in policy, and in ethos, by a reformed CIA – away from using radical Islam as “a tool” by which to pursue its “interests” (as it has from Afghanistan in the 1980s to Syria in recent years), would in and of itself, bring about a profound change. It would quickly percolate through to European intelligence services – and more slowly – marinate Gulf thinking.

Changing the ‘Group Think’

Pat Lang, a former senior U.S. Defense Intelligence officer, notes how a small shift in bureaucratic “group think” from one paradigm to another can bring crucial change, simply by virtue of approaching a problem from a different direction:

“1. General Dunford, USMC, the uniformed head of the US armed forces, is meeting the week at Baku in Azarbaijan with General Gerasimov, the head of the Russian General Staff.

“2. My sources tell me that US and Russian air forces are increasingly coordinating and de-conflicting their air actions in Syria and Iraq. This can clearly be seen in USAF and US Navy air attacks on ‘moderate’ (in fact jihadi forces) in Idlib Province. These obviously have been coordinated with Russian air defenses.

“3. The CIA has stopped providing assistance to aforesaid ‘moderate’ jihadi and FSA forces in Syria. They would not have done that without instructions from outside and above CIA.

All of that tells me that sanity reigns in the Trump Administration no matter what lunatics like Schumer, Waters and McCain may do, think or say.” (emphasis added).

What then are the major risks to the Trump “paradigm”? They are not negligible. Any increase in international tension usually will lead to a flight to the “safety” of the U.S. dollar – thus to a “strengthening” of the dollar. (One good reason why Trump may stick with rhetoric against Iran, rather than action).

Secondly, although Trump has been trying to “talk down” the value of the U.S. dollar, most of his policies (de-offshoring of corporate cash, de-regulation and tax cuts) are seen as inflationary – and therefore are pushing the dollar upwards. So, too, are pronouncements by the Federal Reserve about the prospects for an interest rate hike next month. It is not clear that Trump will be able to keep the dollar weak, against a general sense that interest rates are heading upwards. David Stockman’s inflation index for the U.S., which uses more realistic values for energy, food, shelter and medical insurance than the official CPI index, is now rising at better than a 4 percent annual rate.

And thirdly, China may yet undo Trump’s plans. As one well-versed economic commentator notes:

“I strongly contend that a more than one-half Trillion ($) one-month Chinese Credit expansion in early 2017 will exert divergent inflationary impacts to those from early 2016…

“Inflationary biases evolve significantly over time…Liquidity will tend to further inflate the already inflating asset class(s); ‘hot money’ will chase the hottest speculative Bubble. Inflationary surges in Credit growth can, as well, have profoundly different impacts depending on inflationary expectations, economic structure and the nature of financial flows.

“I would argue that Chinese officials today face a more daunting task of containing mounting financial leverage and imbalances than just a few months ago. The clock continues to tick, with rising odds that Beijing will be forced to take the types of forceful measures that risk an accident.”

These inflationary risks threaten Trump, more than the unlikely prospect of impeachment. He has been consistent in warning that whomsoever won this Presidential election, would, sooner or later, face a financial crisis – and then possibly a concomitant social crisis. Like most revolutions, Trump’s revolution cannot afford to stand still: if it cannot, or does not, go forward, it will go backwards. We will return to the past. Trump, no doubt, grasps this.

Alastair Crooke is a former British diplomat who was a senior figure in British intelligence and in European Union diplomacy. He is the founder and director of the Conflicts Forum.