Diplomacy Trump-style: Nothing more complicated than a tweet.

The Age reports: US President-elect Donald Trump and US chief diplomat John Kerry have taken explosively different tacks on Israel, further fuelling a war of words over the country’s future.

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John Kerry will see his diplomatic legacy dismantled under Trump

Trump tweeted that he could no longer allow Israel to be treated with disdain and urged Israel to “stay strong” until he takes office on January 20.

Now after a remarkable confrontation with Israel, the Security Council has passed a resolution condemning Israeli settlements as a flagrant violation of international law.

Politics in the Middle East as a minefield for Western politicians. The situation requires nuanced responses to the eons of mistrust, double-dealing and rabid nationalism.  During the Obama administration, John Kerry endeavoured to bring such an approach. His one major accomplishment, the Iran nuclear deal, is roundly condemned by the Trump.

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With Trump’s support, Netanyahu, not a man given to compromise, will further harden his line on Israeli settlements.

Ramat Shlomo

It would appear that the building of Israeli settlements is a permanent barrier to the “two state” solution to the Israeli-Palestinian dispute. Trump appears to be adopting a position that will make the removal of the Israeli settlements in Palestine impossible and with it a solution to a problem that is festered now for over 60 years.

Republican presidential candidate, businessman Donald Trump speaks during the Fox Business Network Republican presidential debate at the North Charleston Coliseum, Thursday, Jan. 14, 2016, in North Charleston, S.C. (AP Photo/Chuck Burton)

Trump appears to be determined to demolish everything that previous administrations have established. The problem is going to be whether he can re-establish the diplomatic, economic and social structures he is destroying if his policy responses are always going to be limited to 140  characters in a Twitter post.

 

Welcome to life on Planet Trump

Family Trump Inc is clearly planning to cash in bigly on Donald P. G.’s presidency (or should that be precedency?)

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 The Trump family: a lot of mouths to feed

Time reports: A new Texas nonprofit led by Donald Trump’s grown sons is offering access to the freshly-minted president during inauguration weekend — all in exchange for million-dollar donations to unnamed “conservation” charities, according to interviews and documents reviewed by the Center for Public Integrity.

(L-R) Eric Trump, Donald Trump Jr., and Ivanka Trump attend the ground breaking of the Trump International Hotel at the Old Post Office Building in Washington July 23, 2014. The $200 million transformation of the Old Post Office Building into a Trump hotel is scheduled for completion in 2016. REUTERS/Gary Cameron (UNITED STATES - Tags: BUSINESS POLITICS REAL ESTATE) - RTR3ZUF0

Eric Trump and  Donald Trump Jr. – two fine young men

 The way that charitable trusts operate in the US is that they don’t need to disclose who donors are or who they donate the money to.  More importantly, they don’t need to disclose the fees paid to directors.

Offering photo opportunities with President and Trump memorabilia is to for many US systems their 15 minutes of fame (banana not included).

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Last week, Ivanka pulled out of an auction for invitations to a coffee date with her. Too tacky, apparently.

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 Move over Kim Kardashian

Things like this are relatively small beer, but they are an indication that the new president  and his family will have their eyes firmly fixed on the main chance.

It may be a while before the voters of the midwest realise that Trump’s election is not going to benefit them economically and wake up to the fact that they have been conned.

My bet is that it will be around the time of the mid-term Congressional elections.

One man’s Currency Manipulation is another man’s Quantitative Easing

One of Donald Trump’s more frightening election campaign promises was to declare China a currency manipulator and instigate punitive tariffs against Chinese imports to America.

Now, I’m not an economist (my Masters degree in Economics at the University of New England was awarded by mistake) but to me, this particular threat is perhaps one of the most scary that he has made.

One of the more bizarre aspects about Donald Trump is that he does not understand all actions have equal and opposite reactions. In Systems Theory, we called this feedback. The Trumpster does not believe in feedback. He believes that he can do what he likes and there will be no consequences.

Unfortunately, the result of the US presidential elections will only have reinforced this view.

Nonetheless, instigating tariffs against Chinese imports will produce a reaction from China and, knowing the Chinese, probably a disproportionately strong reaction. It will also create reactions all round the world, the consequences of which Trump probably does not understand and much less considered.

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 Donald Trump indicates his understanding of international trade and economics

 In recent years, the US Administration and Federal Reserve have engaged in what is known as  “Quantitative Easing”  which is a monetary policy that effectively devalues country’s currency against that of its trading partners.

An article Quantitative Easing vs. Currency ManipulationInvestopedia on Facebook  explains the difference (or lack thereof).

If making exports more competitive through a devaluation of the currency is evidence of currency manipulation, then you could level a similar criticism against the United States for lowering the federal funds rate and the subsequent quantitative easing programs following the 2008 global financial crisis. Both tactics put downward pressure on the dollar and consequently the exchange rate, making U.S. exports more attractive against international competitors.

The effect is to make the quantitative easer’s exports less expensive while making their trading partners more expensive. Effectively, it means that  large, economically powerful countries like the US can solve their financial problems by making other people pay for them.

This is what China and the US have both been doing. There is a difference in that the Chinese yuan is not floated like the $US and the $A. Many market analysts believe that the Chinese actions are simply bringing the currency back closer to true market value. Levelling the playing field if you like.

Nonetheless and regardless of what you call it, both Quantitative Easing and Currency Manipulation are monetary policies that both China and the US have used and certainly will use in future.

Ranting against the Chinese may go down well with the domestic electorate  but it demonstrates a fundamental lack of understanding about international economics and trade.

A lot has been written about President-elect Trump’s character failings. The worry is that  they pale  into insignificance against his ignorance of economics, fiscal and monetary policy.

Who is doing the heavy lifting in Iraq?

Obviously, the United States is playing the major role but from the table published in The Age, Australia appears to be making a contribution that is entirely disproportionate to the threat posed within our region.

The FA -18 super Hornet is not well equipped to do humanitarian aid drops. Perhaps we sent the wrong plane

The FA -18 super Hornet is not well equipped to do humanitarian aid drops. Perhaps we sent the wrong plane

The table does not mention the Australian commitment of eight FA 18 super Hornets but does mention “humanitarian aid drops”

What should be of great concern to Australians is that, without knowing exactly what our contribution to the airstrikes will involve, Australia is contributing approximately 30% of the fighting capability at what Tony Abbott estimates will be around $1 billion per year. We can certainly expect this to increase because the commitment is going to be subject to incremental increases as the war on the ground intensifies.

The US top military commander, General Martin Dempsey, opened the door to a deeper combat role on the ground for coalition forces, and former chief of army Peter Leahy said the Abbott government should be ready to consider expanding ground operations if military commanders said it was needed.

The now-retired senior defence insider, who spoke on the condition of anonymity, said it was an accepted fact within the Australian Defence Force that special forces troops were being deployed because they are the ADF’s most lethal force.

“You don’t send in the SAS to run seminars and give white-board presentations back at headquarters,” the former top tactician said.

“These guys are our most highly trained killers, and that’s what they will be doing.”

He said the claim that they will be used purely as “advisers” to the Iraqi security forces and the Kurdish Peshmerga was “pretty absurd”.

What we’re seeing here is very carefully orchestrated campaign of “media creep” where the commentary of selected individuals associated with the military prepares the public for announcements for increased military engagement.

The Australian government would be well advised to make its ongoing commitment to this conflict to be dependent upon other nations, particularly those in the region, doing some of the heavy lifting.

Like Saudi Arabia. They’ve got an extremely large air force, over 600 combat-ready fighters.

Some of Saudi Arabia's airforce. The planes in this photo equal Australia's total strike power

Some of Saudi Arabia’s airforce. The planes in this photo equal Australia’s total strike power

Australia by comparison has 100 combat ready fighters, 24 of which are FA-!8 Super Hornets.

Australian GDP is 1.561 trillion USD twice that of Saudi Arabia (745.3 billion USD). Yet Saudi Arabia has an air force that is six times the size of Australia’s and to date they’ve committed none of it to the conflict in the Middle East.

Looking at the list of countries that are participating, one significant absentee is Indonesia which has a population of 200 million and the largest Muslim population in the world. When I was in Indonesia a few years ago I was reassured that “only about 1% of the population is radical Muslim.” That’s 2 million people if this estimate is correct. So why isn’t Indonesia concerned about the threat posed by ISIS? It’s interesting that a country that has been plagued by sectarian violence (seven terrorist attacks since 2010) is sitting on its hands.

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Democracy’s fragile flowers

Many of the fledgeling democracy are struggling. The democratic experiments in Egypt, Thailand, Iraq, Syria and Ukraine are faltering, to say nothing of the travesty that exists in countries such as Zimbabwe and Russia. Because there appears to be some commonality in these situations, it suggests that there is a widespread pattern of such failure and that the democratic system itself is fundamentally incapable of dealing with a situation it faces.

In many of the countries where democracy is failing there are strong divisions along ethnic, national or religious grounds. Traditionally, one group has monopolised government and suppressed opposition. The democratic elections may completely reverse this power balance but the process of monopoly and suppression often continues. When this happens, it is likely to be followed by civil disobedience that frequently escalates into armed uprising aimed at overthrowing the democratically elected government. The problem appears to be that large sections of the community believe they have the right to forcibly overthrow a government they do not like, despite having taken part in democratic process to elect that government. What appears to be poorly understood is that participation in a democracy carries the responsibility of abiding by the decision of the majority regardless of how much you disagree with the government.

In many countries, the electoral process is deeply flawed and can give rise to debate over, and dissension from, the electoral outcome. When this factor is combined with ethnic, national or religious divisions, the results can be extremely destabilising.

The difficulty with this method of influencing the political process is that intransigent on both sides escalates the conflict to a point of no compromise. Either the opposition is successful and the government is deposed or the government prevails and the opposition is crushed. Neither outcome is the basis for ongoing democratic government. Once the pattern of revolution and revolt is established as the means for changing government, it becomes very difficult to revert to the ballot box.

The final confounding element is where one sectional interest has the support of a powerful international neighbour that supports a particular ethnic, national or religious group. This powerful ally may be moved to intervene in the politics across the border.

The situation in Ukraine is an explosive combination of all of these particular factors.

Large sections of the community were disappointed at the decision of deposed Ukrainian president Viktor Yanukovych not to join the EU. Street demonstrations escalated to armed conflict between protesters and the government. This led to the opposition taking control of the parliament. The opposition is naive to believe that having effectively overthrown the democratically elected government through armed force, it is likely to be able to hold onto government using the democratic process.

Enter Vladimir Putin who has played his political cards with consummate skill. He claims Russia has been “invited” to provide military support for the deposed democratically elected government and also claims that Russia is defending the rights of ethnic Russians living in the Ukraine. What’s not to like about the guy? A regular peoples’ hero! The fact that the Russians have their major European naval base on the Crimean Peninsula is entirely beside the point.

Ukraine is an example of what a delicate balancing act a functioning democracy is. Governments govern with the consent of the people but the people must consent to being governed for the electoral term. There is no second bite of the cherry after an election; you have to wait until the end of the electoral cycle. The other side of this equation is that an elected government does not have a mandate to implement policies that unduly advantage its support base or unduly disadvantage those who supported the opposition.

A government elected with 52% of the popular vote must still govern in the interests of the other 48%. Failure to do this on a massive scale can lead to civil unrest and as the events in the Ukraine have shown, it is very difficult to climb back up this particularly slippery slope.