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Wednesday, 03 June 2020

Cold wars subsiding

Conflicts can be politically useful if you can defuse them, especially before running for re-election

Abdel Moneim Said , Tuesday 21 Jan 2020
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The term “cold war” is curious because it connotes all the tensions of warfare, but without its concrete consequences. Since World War II, battles in which not a single bullet was fired epitomised relations between the USSR and the US: the two sides brandished all sorts of weapons but knew just how far they could go. Today, it looks like the end of the cold war in the British royal house between Queen Elizabeth and her grandson Harry and his wife Meghan has heralded the wane of other cold wars. 

When Prince Harry and his wife decided to relinquish certain royal duties, they effectively declared war against the outworn traditions of Buckingham Palace. They did not want to endure the experiences of Princess Diana. Their decision to take their baby, Archie, with them to Canada seemed like a form of calculated escalation in their campaign. The queen responded not with a counter-escalation but by summoning her grandson to a private meeting the substance of which remained private but the evident consequence of which was a solution all could live with.

The royal family had no desire to relive the abdication crisis of the 1930s when King Edward VIII married an American divorcee, or the 1960s crisis of Princess Margaret and her photographer husband, or the experience of the “People’s Princess” that was Lady Diana. So, the latest crisis, a kind of cold war that threatened to shake the status and prestige of the British monarchy when the queen would no longer be able to wear the crown, had to be resolved quickly and in a way that would bring a happy ending. As no international power wanted to revive the crisis ridden decades of cold war between Moscow and Washington, the cold trade war between Washington and Beijing lasted less than four years. Not surprisingly, therefore, the crisis between the queen and her grandson lasted less than four weeks. 

Something of this sort has occurred in the Middle East. The latest US-Iran storm ended after the two sides tacitly agreed to close off the avenues to mutual strikes. Almost simultaneously, the military confrontation between the Libyan National Army (LNA) and the militias fighting for the Tripoli-based Government of National Accord (GNA) came to a halt. In both the Gulf and Libya, tensions subsided, allowing the key players to reassess their calculations free from the pressures of looming conflict or forthcoming negotiations. Moreover, on the very day that Washington signed the first stage trade agreement with Beijing, bringing that cold war to a close, it was announced that Cairo, Khartoum and Addis Ababa had reached an agreement over the essential points in their negotiations over the Grand Ethiopian Renaissance Dam (GERD) and that the final text of the agreement will be announced 28 January. 

Thanks to the foregoing developments, by the midpoint of the first month of 2020, the world could finally breathe a bit easier. The parties that had drawn so close to the precipice had receded from the brink, and the clouds of war, both cold and hot, receded. The world is better off than it was when the year started and the British royal family has once again merrily settled into the ways of life commensurate to the age we live.

The most complicated of the foregoing developments was the US-China agreement which marked a breakthrough in a trade war that was fraught with much of the trepidation that preceded World War II when international powers entered a fierce race of protectionist customs tax hikes which historians believe was one of the causes of the war. In the aftermath, therefore, the international community not only created the United Nations but, along with it, institutions designed to sustain the economic health of its member states in order to allay aggressive tendencies. Following the creation of the World Trade Organisation (WTO), the US worked to bring all other countries under its umbrella, especially China and Russia. The idea was that this would generate a degree of mutual dependency that would stave off the evils of war and conflict. 

Oddly, this did not keep President Donald Trump from heaping curses on the WTO and mutual dependency. This was not because he felt the US could not compete commercially with China but rather because China took advantage of the benefits granted to developing countries and fiddled with its currency rates in order to acquire an edge in world markets and attract international firms. This triggered a trade war and, as mutual accusations and recriminations escalated, a political cold war which, in turn, was translated into a series of tit-for-tat targeted customs duties and tax hikes. Naturally, such a development between the two largest world markets and in their bilateral trade can send tremors across international trade and global economic growth. So, when these two economic giants removed their coats and prepared to tangle, all other countries in the world caught a cold. 

It is hard to know what happened in the trade war or how it evolved into a cold war, but what appears certain is that the mutual dependency between the two economies was of a sufficient magnitude to furnish the necessary antibiotics. These involved sorting their mutual differences into stages, making possible to handle them clearly and frankly, to compensate the injured party, and to defer the more complicated and intractable problems to a later stage. The first stage agreement that was signed 15 January provided that China would purchase $200 billion in US products, including $50 billion worth of agricultural products.

Trump wanted to kill two birds with one stone: to reduce the US trade deficit with China and to make a come on to US farmers in the form of a major bribe a few months ahead of the presidential elections. Trump was not going to leave anything to chance, even if all the signs and stars point to a second term as president, and even if the Republicans hold the majority in the Senate making the result of his impeachment trial a foregone conclusion. 

True, there remain many pending issues to be resolved between Beijing and Washington. Among them are the questions of intellectual property rights, the role of state-owned companies in China and the benefits they receive from the state — all thorny issues that are best handled slowly and with care and by a president who no longer has to deal with the problem of re-election. But what we know already is that the agreement has yielded immediate positive results worldwide, to which testify the rise in international stock markets, including the US stock exchange. With this, plus the state of the US economy and Washington’s handling of the crises in the Middle East, Trump’s rivals won’t stand a chance in the next election.

*The writer is chairman of the board, CEO and director of the Regional Centre for Strategic Studies.

**A version of this article appears in print in the 23 January, 2020 edition of Al-Ahram Weekly.

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