Fortnightly Review & Analysis - USA, Russia & EU (Vol 2 Issue III & IV)

February, 2017


Donald Trump’s first month in office proved to be a tumultuous one in many ways. He has had to battle the courts over a controversial immigration order, wage war with the media and intelligence community, spark a diplomatic crises with friends and foes alike, and has lost his national security adviser, Michael Flynn, amid controversy - all in a whirlwind four weeks.

While critics have painted the first month as chaotic and dysfunctional, in his usual blasé manner the US President insists the "administration is running like a fine-tuned machine". Many cabinet posts have been filled after bitter confirmation hearings, appointments to key positions have been slow. There are no officials yet in key Department and important posts remain vacant. The administration remains in disarray – and there are divided views amongst Trump’s core team of advisors.

Just over a month ago, Donald Trump had thundered into the White House with a bold declaration. “We will no longer accept politicians who are all talk and no action, constantly complaining, but never doing anything about it,” he said. Instead, he contended, “Now arrives the hour of action.” Trump promised to steamroll the Washington status quo, disrupting both Republicans and Democrats. He said he would replace the elite consensus of both parties with a new, populist-nationalist philosophy, and get the Congress to submit on key issues.

One month on, while Trump has certainly succeeded in kicking up a frenzy of news and controversy, that seems to surround him at all times, but when it comes to taming Washington, the results are decidedly mixed. Instead, it is the Republican Party—in the form of Congress and conservative institutions—that seems mostly to be in charge, and Trump who is being tamed. On the big-ticket items he vowed to force through—health-care and tax reform—he has found himself at the mercy of the usual slow-moving, politically balky congressional processes. And on economic policy, it is not at all clear the GOP will go along with Trump’s calls for building infrastructure and preserving entitlements, particularly if these priorities come at the cost of balanced budgets.

There has been no real shift in trade policy either. Trump’s campaign-trail opposition to major trade deals was a significant departure from conservative dogma. One of his first actions was to pull the United States out of the Trans-Pacific Partnership. But that was a purely symbolic action, as Congress had never ratified the deal and members of both parties had reservations about it. Trump has not pulled the U.S. out of the North American Free Trade Agreement or imposed tariffs on imports. When he briefly floated a 20 percent Mexican-import tax, Republicans swiftly condemned it, and his administration quickly disowned the idea. Congressional Republicans have been working on a border-adjustment tax proposal that they say would accomplish something similar, but Trump has yet to get firmly behind it—and it, too, appears to be on the rocks due to opposition from business.
Trump’s hard line against immigration did not break ice with the GOP’s business wing. His administration has intimidated the undocumented with deportations and raids that have created a climate of fear. But the actual number of deportations is small. Despite promising in no uncertain terms to temporarily ban all Muslim immigrants, an Trump instead ordered a rushed and ham-handed banon travelers from certain Muslim countries. When the ban was shot down by the courts, Trump rescinded it, and the refined ban that was supposed to replace it has been delayed, in part because his own intelligence community

won’t supply evidence for it. Meanwhile, Trump’s new national-security adviser, H.R. McMaster, dislikes the term “radical Islamic terrorism.”

Meanwhile, much of Trump’s attention has been consumed with controversial tweets, complaints about his treatment by the press, and executive orders that do little to move policy. Beyond all that bluster, nothing seems to have changes or moved in Washington.

European Union (EU) and ‘BREXIT’

A policy brief, The Euro 60 billion Brexit Bill: how to Disentangle Britain from the EU Budget, published this month by the Brussels based Centre for European Reform, warns that both the EU and Great Britain have unrealistic expectations about the Brexit financial settlement, thereby setting the stage for a dangerous, prolonged and damaging stand-off.

The publication explains that the bill covers Britain’s potential obligations in three main areas: legally binding budget commitments that will be paid after Britain leaves; pension promises to EU officials; and contingent liabilities that would only require payments in certain circumstances. By the author’s calculations, the best Brexit bill for the UK would be € 23.5 billion, while the worst case scenario would be € 58.5 billion. The EU-27 are confident Britain will pay up because the costs of walking away without a deal will be prohibitive. Some EU-27 negotiators want Britain to agree to honour its financial obligations before talks on a transition agreement and long-term trade deal can get underway.

Theresa May is open to Britain paying limited contributions, but she has ruled out paying “huge sums” to the EU after Brexit. Britain’s domestic politics make it impossible for her to pay the EU €60 billion, whatever the fall-out from a collapse of the negotiations. It is a question of her political survival.