Coffs Coast Business, Politics

West’s divisions on show at the G7

It’s hardly surprising Donald Trump’s loose language and even looser thought processes have dominated the G7 meeting.

By Jennifer Hewitt

It certainly shows Emmanuel Macron was smart to have dropped any notion of the usual post-summit communique. This would just have given the US President another chance to focus on any disagreement or perceived slight – big or little.

Justin Trudeau, Scott Morrison and Donald Trump in Biarritz. AAP

The illusion of unity among the West’s leading economies is more threadbare than it has been in decades. Yet no country wants to risk an obvious blow-up either given the rapidly diminishing confidence in the market that political risks can still be managed.

Trump’s version of showmanship is a blunt weapon in a world of global diplomacy used to careful parsing of wording for nuance and significance. It seems hard for the media and instant analysis to break the habit no matter how determined Trump is to break the mould.

So the US President happily agreeing he had “second thoughts” about ramping up the trade war with the announcement of increased tariffs against China led to immediate news flashes around an anxious world desperately looking for possible compromise.

The catch was Trump’s line that he has second thoughts about everything was largely ignored until the White House press secretary corrected the “misinterpretation”. Donald Trump only had second thoughts because he regretted not making the tariffs higher, she insisted.

So it’s even harder to see what the meeting could produce other than more dismay among his fellow leaders and more consternation in global markets that there is no obvious exit ramp from Trump’s path of confrontation with China. Nor any discernible strategy for being able to declare a truce, let alone victory.

Trump seems deaf to pleas from any other members of the G7 – France, Germany, the UK, Japan, Italy and Canada – insisting against all evidence that “they respect the trade war”.

“Nobody has told me that, and nobody would tell me that,” he declared from Biarritz, impervious to any political pressure from his allies.

No indeed. It’s pretty clear nobody at this G7 knows how to handle this US President – let alone persuade him. So Trump has been able to insist everyone is getting along “great” – at least until they dare to criticise him.

British Prime Minister Boris Johnson may be – for now – Trump’s favourite other G7 leader but Johnson remains cautious about provoking the ire of this erratic and extremely thin-skinned American leader.

Instead, Johnson merely referred ironically to “the faint, sheeplike note” which he says means Britain is “in favour of trade peace on the whole, and dialling it down if we can”.

Boris Johnson in Biarittz

Wow. That’s sure telling Trump. Clearly, riling this American President is not considered the answer for a British PM who needs to be able to sell the prospect of a trade deal with the US as an antidote to fears about the impact of Brexit promised by October 31.

Trump did deliver by talking up “ a very big trade deal” to come between the US an UK even while Johnson alluded to “tough talks ahead” and cautioned any deal would take some time to negotiate. The best option, apparently, is to keep all the political balls in the air for as long as possible.

Trump also wants to demonstrate the US can still negotiate good trade deals – on America’s terms – to counter growing concern among American consumers and businesses about the cost of the tariffs imposed on China. So he promoted the notion of an imminent deal with Japan focused on agriculture, manufacturing and digital trade with Japanese Prime Minister Shinzo Abe saying he hoped this could be signed next month.

But having a partner like Trump means nothing can ever be really agreed on – in part due to his habit of always having “second thoughts” about friends as well as enemies. So Abe’s concerns about North Korean missile tests were dismissed as if they were irrelevant.

Scott Morrison will be well aware of the political pitfalls awaiting his trip to Washington next month given it looks likely to coincide with the spiralling escalation of tensions rather than any resolution.

The Prime Minister – one of several other non-G7 leaders invited by Macron as observers – is also extremely cautious despite expressing hope China and the US can sort it out sooner rather than later. But he argued the US had “legitimate interests”and it was not possible to “brush these issues aside forever”.

“It’s not for us to dictate to them any more than it is to China what they should be concluding,” he said after a brief meeting with the President. “It’s just more broadly in everyone’s interests that they proceed to a conclusion.”

Hmm. Just what that conclusion will be, of course, is precisely the uncertainty that has global markets on edge and a bevy of central bankers warning that cutting interest rates can’t solve the economic impact of an increasingly damaging trade dispute.

The massive falls on the ASX on Monday followed Wall Street’s apprehension over the intensity of Trump’s rhetoric on trade and his attacks on the Federal Reserve for not “fixing” the problem for the US economy.

The alarm is likely to spread without any circuit breaker.

But a US President whose instinct is always to threaten massive retaliation against anything he perceives as contrary to America First is showing no signs of second thoughts about that issue. It looks more as if America’s isolation from other leading economies on show at Biarritz is only becoming more intractable and the President more prone to pick fights internationally as much as domestically.

Xi Jinping (pictured above) is not the only leader – in business as much as politics – thinking about how to manage the consequences of such division.

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First published at The Australian Financial Review – Tuesday 27 August 2019. Retrieved via Outline. See: https://outline.com/fE4NsW

One Comment

  1. If only we could become One People, One World. So much could be achieved through constructive, transparent, co-operative effort. Over the last half century, the FAIR PLAY and DIGNITY OF PERSONHOOD principles have been eroded and a new slave force has come into existence. William Wilberforce must be rolling in his grave. People in the engine rooms of the world drive the economy, yet wealth is concentrated in a “few” and the division between rich and poor is growing at a rapid rate. My view, we are living with a dysfunctional global financial system which needs radical review but there is a lack of vision and foresight and, now, well into the 21st century, the world remains “patriarchal” hence the adoption of a philosophy of confrontation/warmongering rather than friendship/peacemaking. The latter, not the former, equals progress. We must all do what we can to swing the pendulum so that we bequeath a legacy of worth to future generations. Janne C Lindrum

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