Donald and Vlad, Allies in the Name of Business

People may still wonder why President-elect [now President] Donald Trump is so enthusiastic about cooperating with Vladimir Putin. After all, the United States has little financial interest in the Russian economy. Trade and investment with Russia are modest compared to that with China, for example.

However, Trump has been focusing on Russia for a long time. This attention is part of his viewpoint that America is in decline because other countries took advantage of the fact that Washington assumed the mantle of guardian of the international order after World War II. It is the first time that an American president has questioned the liberal order that the U.S. has built over the last 70 years. The Brookings Institution has recorded some of Trump’s ideas about foreign policy that were already clear a few decades ago. Among these, we find criticism of security alliances, such as NATO. Since 1987, he has gone as far as demanding huge payments in exchange for America’s protection. There is also Trump’s opposition to all free trade agreements since World War II, as well as the preference for authoritarian leaders, especially Russian ones. The latter manifested itself in 1990, when he visited Mikhail Gorbachev’s Russia and was disappointed.

Some of the picks for the cabinet especially indicate a leaning toward an alliance with Putin’s Russia, like secretary of state nominee Rex Tillerson, a former Exxon CEO who has been conducting business with Russia since the ’90s and spoke out against Western sanctions against Moscow after the invasion of Crimea. It is no coincidence that Putin has stated that in the 21st century, “old alliances, such as EU and NATO, will matter less than new trade relations” between Moscow and Western companies.

One of the goals behind Tillerson’s appointment concerns the relaunch of the oil industry. Exxon itself has interests in Russia’s shale oil and in the Arctic exploration (which was already planned in 2011-2013) that can go forward after the sanctions are lifted (something that Trump himself has recently confirmed). By choosing Tillerson, Trump also aims to overthrow the alliance policy Obama established in Europe, since it involved working closely with Chancellor Angela Merkel to keep a united front and maintain sanctions against Moscow.

The appointment of Peter Navarro as head of the new National Trade Council is just as indicative of Trump’s intentions regarding foreign policy. Navarro is an economist known for authoring books about the “economic war” against China.

In order to win the Cold War, Nixon and Kissinger separated Moscow from Beijing by thawing relations with Mao’s China with the intent of weakening the Soviet Union’s international role. Trump is not going to limit himself to reversing that strategy; he is about to turn 40 years of U.S. foreign policy on its head. This change was made possible by the present state of relations between Russia and China. These are two state economies that are apparently worried about America’s power, but which are actually deeply mistrustful of each other. One of the reasons lies with Russia’s humiliating descent from its important history of expansion and influence in Asia to being a mere provider of commodities for Beijing.

In the meantime, after a two-year recession, Moscow’s economy seems to have entered a more positive phase of slight growth. Because of oil’s higher prices and the expectation that the Trump administration will eventually eliminate the sanctions, foreign investors are bringing their capital back to Russia. However, one of the main obstacles to investment by foreign companies is the uncertainty when it comes to property law.

Despite some differences, this is the common thread to several authoritarian countries allied with Moscow, e.g., Turkey and Egypt. Those who are considered hostile to the regime are stripped of their property rights and their assets are raided. Trump himself employs the following strategies to bring American workplaces back home: On the one hand, he threatens to impose tariffs against Beijing, and on the other hand, he uses coercion and flattery to persuade U.S. business to move back to America. He is shifting the Republican Party’s traditional economic policy from elements such as tax reduction and the removal of federal regulation to mercantilist principles concerning trade, manufacturing and exchange that involve, among other things, interventions with U.S. industries to influence their choices and the actions of their managers.