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Iran: No Plan B

The extraordinary thing is that there is no Plan B. If Donald Trump’s re-imposition of American sanctions on Iran does not cause President Hassan Rouhani’s government to buckle at once (which is almost unimaginable), there is nothing else he can do short of going to war with the country. And he couldn’t even win that war.

Iran is entirely within its rights in condemning Trump’s action. All the other signatories to the deal that hobbled Iran’s nuclear programme – Britain, France, Germany, Russia and China – agree that Tehran is in full compliance with its terms, as do the United Nations, the International Atomic Energy Agency, and US Secretary of Defence Jim Mattis.

All of Trump’s complaints about the deal are about things it was never intended to cover, and it does not contain those things because Iran would never agree to terms that effectively gave the United States control over its foreign policy. If Trump wants to try to negotiate that kind of deal anyway, it is not necessary to terminate the nuclear treaty in order to do so.

But it’s a mistake to apply rational analysis to Trump’s action, because this was an emotional decision, not a rational one. It is part of his obsession with expunging every single achievement of the Obama administration: healthcare, the opening to Cuba, the Trans-Pacific Partnership trade deal, the Paris climate treaty, and now the Iran nuclear deal.

You can, however, apply rational analysis to every other player’s reaction to Trump’s tantrum, starting with President Rouhani. He will try very hard to keep the deal alive because his own political fate depends on it. If he cannot succeed, the Revolutionary Guard and other hard-line nationalists will gain the upper hand domestically and his entire reform policy will be paralysed.

Rouhani probably only has a few weeks to get public commitments to continue trading with Iran from the other parties to the deal, and that will require them to defy the United States. Trump’s declaration on Monday only requires American banks and companies to stop trading with Iran within 180 days, but the US may also apply so-called ‘secondary sanctions’ against foreign companies that trade with Iran.

America’s Trade War with China

The United States could probably extract major concessions from China in a carefully managed confrontation on trading issues, because the Chinese don’t want a trade war with their best export customer. But the US can’t win the trade war that Donald Trump is planning to wage, and it kicks off on Friday.

That’s when the first chunk of Trump’s new tariffs on Chinese exports to the United States – a 25% import tax on $50 billion of Chinese goods – actually goes into effect, and Beijing retaliates with similar tariffs on $50 billion of American exports to China. That’s just a drop in the bucket in terms of the size of either economy, but it’s also just the opening salvo in the war.

Trump has already said that Chinese retaliation would be ‘unfair’, and that if China goes ahead he will slap a 10% levy on an additional $200bn of Chinese goods. (He subsequently reduced that amount to $100 billion, but who knows?) And China has already said that it would respond with measures of a “corresponding number and quality” if the US goes ahead with that.

This is where the real tit-for-tat escalation starts, and it’s hard to see how it can be stopped. Trump is trapped by his own pugnacious rhetoric, and China’s President Xi Jinping is trapped in two ways.

One is that Trump has already imposed big new tariffs on exports to the United States by the European Union and by America’s closest neighbours, Canada and Mexico. They have all responded by imposing similar tariffs on American exports of equal value.

Xi can hardly do less, even if China’s real interests might be better served by not responding in kind to the new US tariffs. He would not wish to be seen as weaker than Justin Trudeau.

On 21 June in Beijing, according to the Wall Street Journal, President Xi Jinping met a group of chief executives of American and European multinationals and assured them that China would definitely strike back at US trade tariffs. “In the West, you have the notion that if somebody hits you on the left cheek, you turn the other cheek,” Xi reportedly said. “In our culture, we push back.”

The other factor weighing on Xi’s decisions is that Beijing is starting to see American trade policy as part of a deliberate attempt to stop China’s emergence as a great industrial and technological power and a real peer rival to the United States. After all, there are undoubtedly people in Washington who would like to do exactly that.

Trump himself does not think in geo-strategic terms, but the Chinese may well see his actions on trade as inspired by those who do. If they come to that conclusion, their willingness to go all the way in a trade war may be greater than the financial experts think it is.

China’s exports to the United States amount to about 40% of its total exports, whereas only 5 percent of US exports go to China, so an all-out trade war between the two countries would obviously hurt China more. President Xi, however, is far more able to ignore the resultant job losses and higher prices than Trump is – especially because the Americans who were hurting worst would be his own political ‘base’.

Or, alternatively, China’s heavily indebted economy may turn out to be even more fragile than it looks – in which case a trade war could drive the country into a deep recession (with unpredictable political consequences at home), and drag the whole world economy down with it. That wouldn’t be much fun either.

There’s a reason that trade wars went out of fashion after the Second World War, and it wasn’t just because international trade tends to enhance prosperity overall. Back when trade wars were the normal way of doing business internationally, in the 16th-19th centuries, the European powers spent almost half their time at war.

The first great era of free trade, ca. 1870-1914, was also the ‘Long Peace’, when no European great power fought any other for almost half a century. That peace was destroyed by the First World War (so free trade does not prevent all wars), but the trade wars of the 1930s certainly deepened the Great Depression and facilitated the rise of fascism and a second world war.

And then came the Second Long Peace, from 1945 to the present, when once again free trade (or at least free-ish trade) reigns and the great powers never fight one another directly.

I’m not saying that Trump’s assault on free trade is going to lead us back down the path to great-power war again. Many other factors go into making such a catastrophe possible. But he may be putting one of the key factors back into place.
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To shorten to 725 words, omit paragraph 7. (“On 21…back”)

Universal Health Care

Nothing is perfect, and that definitely includes health care. On the 70th anniversary of the first full-coverage national health care system that is ‘free at the point of delivery’, Britain’s National Health Service, English people have been marching in the streets demanding better funding for the NHS, and Donald Trump naturally got the wrong end of the stick again.

Back in February, as part of his war against Barack Obama’s attempt to improve the coverage of the rudimentary US health care system (‘Obamacare’), Trump claimed that the marchers were protesting because the British system is “going broke and not working.”

It’s tough trying to defend the existing US system when every other developed country provides universal health coverage for its citizens, but Trump battled bravely onwards, later tweeting that the Democrats in the United States “want to greatly raise taxes for really bad and non-personal medical care.” Like the British allegedly suffer under the NHS.

In fact, the English National Health Service (Scotland and Northern Ireland have separate but similar systems) is, in former Conservative cabinet member Nigel Lawson’s words, “the closest thing the English have to a religion.” It is almost universally loved, and the protests were about government under-funding of the NHS.

Even the Conservative government that has strictly limited funding increases for the NHS over the past seven years, despite rising demand due to an ageing population, has now been forced to yield to popular demands. Prime Minister Theresa May announced last week that the NHS would get a funding increase of 3.4% per year over the next four years, giving it an extra $27 billion annually by 2023.

But are the English right to love their health-care system – and are the French and Germans and Russians and Japanese and the people of almost every other developed country right to revere their own similar systems? The United States may be the odd country out, but it does spend far more on health care than anybody else.

The United States spends 16% of its entire Gross Domestic Product on health care, almost twice as much as the average (8.2% for Japan, 8.4% for the UK, 8.5% for Australia, 10.4% for Germany). In theory, that ought to mean that Americans are healthier than everybody else and live longer. In practice, it’s just the opposite.

The United States is the only developed country where the average life-span is less than 80. In fact, it’s barely 78 years in the US, whereas everywhere else it’s in 80-82 range. The US also has the highest ‘preventable death’ rate of any developed country, and the highest infant mortality rate by a very wide margin. Americans spend more on health, and get less back, than anybody else.

They also spend far more of their time worrying about health care. The principal cause of personal bankruptcies in the United States is ‘catastrophic’ health emergencies, and all but the very rich have to devote much time to finding affordable medical insurance. Elsewhere in the developed world, nobody really thinks about that. The care will be there when you need it, and nobody goes bankrupt.

The model that was pioneered by Britain’s NHS on July 5, 1948 has been so successful that it is now spreading into many developing countries as well. India is still a poor country, but its National Health Policy 2017 goals include a commitment to “progressively achieve Universal Health Coverage.” China is working to provide affordable basic healthcare to all residents by 2020. And so on.

Attitudes change over time. In the 1930s nobody thought that there was some sort of basic human right to health care. The well-off paid for their own, and the rest depended on charity (which wasn’t very dependable). What changed that attitude was the Second World War, a time of great national solidarity and sacrifice in every country.

It was the worst war in history, but it produced a generation who believed that the people who had shared in the sacrifice (in both the countries that won and those that lost) must not be left behind in the peace that followed. The will was there to do new and great things, and they did them.

It is no coincidence that the same year of 1948 saw the signing of the Universal Declaration of Human Rights, which said (among other things) that “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.”

The world had turned, and what had been a privilege became a right. One that is still widely abused or neglected, of course, but it has nevertheless spread across the entire planet in the past 70 years. Why did the United States miss out?

The answer is probably a free-market ideology so strong that it enabled the insurance companies and the medical profession (which opposed the idea of a national health system in every country, at least initially) to win the political battle in the US and strangle the idea in its cradle. It keeps coming back even there, but for the moment Americans must go on paying the costs of their ideology.
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To shorten to 725 words, omit paragraphs 5 and 9. (“Even…2023”; and “They…bankrupt”)

The Singapore Summit

If the Singapore meeting between Donald Trump and Kim Jong-un had been a zero-sum game, then Trump definitely lost. But maybe it wasn’t.

Kim got a meeting with Trump on terms of strict equality right down to the number of flags on display, which is a huge boost for his regime’s claim to legitimacy. He persuaded Trump to end America’s annual joint military exercises with South Korea (and even got Trump to call them ‘war games’ and say they were ‘provocative’, which no US spokesperson has ever done before).

And he got Trump to accept North Korea’s deliberately vague language about the “denuclearisation of the Korean peninsula”, with no specific reference to North Korea’s nuclear weapons, let alone any talk of dismantling them. In fact, the agreement they signed talked about “re-affirming” North Korea’s denuclearisation pledge, so obviously no progress there.

This is several light-years distant from Secretary of State Mike Pompeo’s pre-summit definition of the US goal as “permanent, verifiable, irreversible dismantling of North Korea’s weapons of mass destruction,” which must happen “without delay.”

There’s no cause for surprise here. Trump is not a great deal-maker; he’s a man who is accomplished at playing the role of a great deal-maker. The reality is more like the contract he signed with Tony Schwartz, who ghost-wrote ‘The Art of the Deal’, the book that made him famous: 50% of the advance, 50% of royalties, and equal billing on the cover. Schwartz was as surprised and pleased then as Kim undoubtedly is now.

If Trump had had a little more time in Singapore, he could have bought a T-shirt saying ‘My president went to Singapore and all I got was this lousy T-shirt’ and taken it home to give to the American people.

He would have needed a bigger apology-gift for the South Korean government, which was blindsided by Trump’s spur-of-the-moment promise to stop the joint military exercises. “We need to find out the exact meaning or intention behind his comments at this point,” Seoul said in an unmistakably sulky tone of voice. (Seoul’s mistake is to assume that Trump himself knew his “exact meaning or intention.”)

But this was not really a negotiation. It was a show, staged for the benefit of the two main participants, and they both got what they came for. They were bound to get it, since they had the power to define the meeting as either a success or a failure. Naturally, they said it was a success – but that doesn’t mean it was actually a failure.

All this zero-sum game nonsense is irrelevant to what is really happening here, or at least could happen in the months to come: the gradual acceptance by the United States that North Korea is irreversibly a nuclear weapons power, although a small one, and the negotiation of some basic rules for this new relationship between two nuclear powers of radically different size.

Diplomatic and military experts have been saying for years that there is no way that North Korea will ever give up its nuclear weapons. The whole country lived on short rations for a generation to get them, and Kim is well aware of what happened to dictators who didn’t have nukes, like Iraq’s Saddam Hussein and Libya’s Muammar Gaddafi.

The experts are right, but they do not see this situation as necessarily a cause for panic. After all, more evenly matched pairs of nuclear powers, like India and Pakistan, or the United States and Russia, have managed to avoid nuclear war for decades. Nuclear deterrence, as Bernard Brodie pointed out more than 70 years ago, works even when there is a huge disparity in the number of weapons possessed by the two sides.

If North Korea has even a marginal ability to destroy one US city with a nuclear weapon, the United States is effectively deterred from using nuclear weapons against it. (Except if the US could count on destroying every one of Kim’s nuclear-tipped missiles in a surprise first strike – but that’s why North Korea will move them around or dig them in deep.)

North Korea is and will remain totally deterred from attacking the United States, because it would be utterly destroyed in a massive American counter-strike. So the deterrence is mutual and relatively stable, barring huge technological surprises or crazy or suicidal leaders.

That is the destination the US-North Korean relationship is heading for, because it is the only one that reality permits. Kim is almost certainly seeking it quite consciously, although it’s unlikely that Trump has ever thought of it in these terms. Indeed, there is some evidence that he is not even clear on the basic concept of deterrence.

No matter. That’s what Trump is heading for, and by the time he gets there he will undoubtedly think that it was his goal all along. There will be more meetings, probably including a Kim visit to the White House, and the two countries will move, slowly and crabwise, towards the mutual deterrence that will define their future relationship.
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To shorten to 700 words, omit paragraphs 5 and 7. (“There’s…now”; and “He would…intention”)

Gwynne Dyer’s new book is ‘Growing Pains: The Future of Democracy (and Work)’.