US Elections: Democratic Hopefuls on Foreign Policy
The United States is slipping gradually into election mode. The incumbent President Donald Trump has already declared his intention to run again. His only rival for the Republican nomination is ex-governor Bill Weld whose run is seen as a mark of protest rather than a genuine campaign. The Democratic Party, on the other hand, has over 20 candidates. In June, the Democrats squared off against each other in two televised debates. The polls so far indicate that five candidates have pulled ahead of the others -Joe Biden, Bernie Sanders, Elizabeth Warren, Kamala Harris and Pete Buttigieg in descending order of their support. The others are polling less than three per cent.
These five have already outlined their initial views on foreign policy. The Democratic candidates cover the full ideological spectrum when it comes to how the US should interact with the wider world. Avowed “Democratic Socialist” Bernie Sanders projects his domestic leftwing populism on the world, sharing Trump’s aversion to overseas military involvement and wariness about free trade agreements. But he also talks about a global popular movement that would overthrow the existing economic order with its entrenched elites and multinational firms. He curiously sees authoritarianism as a consequence of global inequality. Warren also comes from the left but is more reformist than revolutionary.
Trump spent much of his time carrying out a pet desire of holding a military-themed US Independence Day celebration. Military parades or fly-pasts are not a customary part of July 4th celebrations in the US. Trump’s insistence on bringing tanks and having warplanes fly overhead faced considerable criticism in the US. Unfortunately for the US president the event was affected by heavy rain.
China Moves to Defy US on Iranian Sanctions
China, itself under layers of United States tariffs and sanctions, is quietly defying US strictures against buying oil from Iran. The Trump administration, recognizing it has already reduced its leverage with China, was weighing imposing more tariffs as punishment or pre-emptively granting Beijing a waiver from sanctions and focusing on limiting Iran’s export volumes. If the US goes down the second path it would constitute a major step down by the US and open the door for other countries, including India, to ask for similar waivers.
Kpler, a firm that tracks oil tankers, reported Iran delivered its second oil consignment to China in late June. Iran managed to transfer 545,000 barrels of crude to different oil tankers each day last month. While this was just over half of what it used to export, it still constituted a major breach of the US sanctions. A smaller amount, about 34,000 barrels, is presently on its way to Turkey, another regime with a domestic interest in defying the US. “The rest of the Iranian oil loaded on tankers last month is either pinned down in the Iranian territorial waters or in Fujairah port, United Arab Emirates, in the Persian Gulf,” Kpler said. Iran has developed an array of techniques, including turning off its ships’ GPS systems, to find means around the sanctions.
The US-Iran confrontation is headed for an impasse. Iran announced in early July it had begun enriching uranium to above the limits set by the Iran-US nuclear deal though well below weapons-grade levels. The US issued sanctions against senior Iranian leaders but avoided doing so against the Iranian foreign minister as that would scuttle any chance of negotiations. Europe tried to offer enticements to keep Iran within the terms of the nuclear deal, setting up a special financial entity to allow European companies to continue to do business with Tehran. But the Iranian foreign minister called the efforts insufficient, especially since the entity would still not allow Iran to continue to export oil. Later, Iran shot down a US drone that it claimed had trespassed into its airspace. Washington claimed the drone was in international airspace. Trump reportedly personally called off a retaliatory strike at the last minute.
The crisis is having minimal impact on global oil prices thanks to record US shale production and market expectations of weak global demand. The G-20 summit made almost no reference to Iran’s threat to shut down the Strait of Hormuz. Despite the Organization of the Petroleum Exporting Countries having cut production and Venezuelan and Iranian exports being slashed, oil price futures have remained in the $ 60 to $ 70 barrel range and global stocks have remained high.
The sanctions have taken a toll of Iran’s economy. The IMF predicted in spring that the Iranian economy would shrink about 6 per cent. But the costs are insufficient to make Iran change its nuclear policies or dismantle its regional network of Shia militia — the key demands of the US and Arab countries like Saudi Arabia. Iran’s economic problems are partly of its own making. Most of its oil wells are mature and in the second half of their lives. Its oil production is naturally depleting 8 to 11 per cent a year. Iran’s volatile regulatory environment and sanctions have meant few international investors have developed new fields. The country has also failed to build domestic refineries. As only about 40 refineries in the world are designed to handle Iranian crude, the country is overly susceptible to sanctions. Reportedly this is why Tehran, while agreeing to China investment in the South Pars Phase II field in return for 17.5 per cent of the production for nine years, has also demanded China increase its production in its existing fields in West Kharoun by a half million barrels or more.
Digest of Major World News
Hong Kong. Authorities in Hong Kong carried out the first arrests following weeks of protests in the island-state against a law that would allow for the extradition of residents to mainland China. The protests at their peak had nearly two million people out on the streets and led the Hong Kong Legislative Council to suspend the new law. In early July, however, a fringe group of protestors vandalized the council building and led to the arrests of nearly a dozen people. Beijing is expected to continue to curb Hong Kong’s civil liberties, but perhaps in a more subtle manner. The demonstrators developed a number of techniques, such as avoiding digital payments and using burner phones, to avoid the surveillance systems of the police.
G-20 Summit. This year’s G-20 summit was held in Osaka, Japan, from June 28-29. The summit was notable for producing little substantial about how to handle a slowing global economy or tackling climate change, largely because of US resistance to language on trade and carbon. Most international attention was on the meeting between US President Donald Trump and Chinese leader Xi Jinping. The two agreed to put a hold on their bilateral trade war and Trump even announced US companies would be allowed to sell 5G components to embattled Chinese telecom manufacturer Huawei. However, the latter concession was refuted by the US administration. The summit represented the first interaction with Western leaders by Prime Minister Narendra Modi after his re-election and he held a number of bilaterals, including with Trump. The media focussed on the presence of Ivanka Trump, the US president’s daughter, among the G-20 leaders.
Seaweed. The world’s largest recorded seaweed bloom was found stretching from the Caribbean to the coast of West Africa. The bloom was 8800 kilometre long seaweed bloom that weighed 20 million tonnes. The unusual formation was ascribed to increased pollution in the world’s oceans and, possibly, the changing global climate. Scientists said such strange developments would become increasingly normal because of man-made changes to the natural ecosystem.