The Out-Of-The-Box World Disorder

By Anil Madan

In just over two weeks of President Trump 2.0, the world has seen an expansionist idea of America with Greenland, Canada, and the Panama Canal in its sights. The overture to buy Greenland ended in a somewhat testy telephone call between Trump and Danish PM Mette Frederiksen in which Trump insisted on acquiring Greenland and Frederiksen insisting that it is not for sale. That is not the end of the matter. Recently confirmed Secretary of State, Marco Rubio said: “This is not a joke,” and added: “This is not about acquiring land for the purpose of acquiring land. This is in our national interest.”

It should not be overlooked that Frederiksen gives legitimacy to US concerns about security and has signalled that she would welcome the presence of additional US troops in Greenland.

Meanwhile, Trump threatened to impose tariffs on Canada, Mexico and China. In addition to voicing his displeasure with the massive trade surpluses that these countries enjoy over the US, he raised other concerns. With Mexico and Canada, it is the flow of illegal immigrants and fentanyl into the US. With China, it is the massive trade surplus as well as the flow of precursor chemicals for the manufacture of fentanyl, from China to Mexico. As well, he voiced his displeasure over alleged Chinese control of the Panama Canal: “China is operating the Panama Canal, and we didn’t give it to China — we gave it to Panama, and we’re taking it back.”

China’s influence over the Panama Canal

This past weekend, Rubio visited Panama and relayed the message that Trump believes “the current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat to the canal and represents a violation of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.”

Trump then announced tariffs on imports from Mexico, Canada and China.

In Panama, Rubio insisted that unless immediate changes were made, the United States would be forced to take necessary measures to protect its interests under the treaty.

With Trump threatening: “We’re going to take it back, or something very powerful is going to happen,” President Mulino of Panama protested that the premise of Trump’s concerns — that the canal is being operated by the Chinese — is wrong, and tried to downplay the situation by suggesting that Trump was more focused on Chinese operated ports than on the canal itself.

Two ports, one on either end of the canal, Balboa and Cristobal have, since 1997, been operated by Hong Kong-based Hutchison Ports Holding. US military and security personnel have expressed fears that China might weaponize the private Chinese company’s control of these ports should a geopolitical crisis erupt.

Mexico then appeared to capitulate to Trump’s tariff threats and Panama appeared to yield to American concerns about Chinese control of the canal. Following the announcement of 25% tariffs on imports from Mexico and Canada, Trump agreed to pause the tariffs on Mexico for 30 days. Mexico agreed to deploy 10,000 soldiers to the U.S.-Mexico border to stem the flow of illegal migrants and fentanyl into the US. Trump announced that Rubio would spearhead further negotiations with Mexico.

Meanwhile, Canadian Prime Minister Trudeau had announced retaliatory tariffs on imports from America, but by day’s end Canada too announced that it had agreed on a 30-day pause and the deployment of 10,000 troops to the Canada-US border to stop the inflow of illegal immigrants and fentanyl. No mention was made of Canada becoming the 51st state of the US.

Panama also agreed to major concessions. President Mulino who had declared that negotiations over the canal were off the table, announced that Panama was open to discussing Trump’s concerns about Chinese influence over the canal. Mulino announced that Panama would not renew its contract with China under that country’s Belt and Road Initiative and would seek to end its contract with China before the scheduled end of the relationship. Apparently, negotiations for American companies to operate the canal will take place.

The American bully

It is not surprising that reaction to Trump’s overtures to acquire Greenland and the Panama Canal, as well as his threats to impose tariffs on Mexico and Canada, have been negative. He is often described as a “bully” and his actions as “bullying.” There is, however, an undeniable legitimacy to his concerns. As already noted, Frederiksen has recognized that the presence of additional US troops might be one way to meet security concerns. And, as the Danish defence minister’s remarks I have quoted in a previous article, show, European security too is at stake. When it comes to Canada, the flow of illegal immigrants and fentanyl may be a tiny percentage of that from the southern border, but it is important that efforts to secure the Mexican border not end up a pyrrhic victory if the northern border remains porous.

For decades, Mexico has stood by as immigrants from Central and South America, the Caribbean and indeed, from the world, have surged into the US and its inability to control drug cartels has seen the flow of fentanyl and other illegal drugs continue unabated. Hundreds of thousands, if not millions of American lives have been lost to these drugs. Trump’s initiatives may not be the cure, but they are a first step. Perhaps they are an important first step to recognizing that it is just as much in Mexico’s interest to control the problem as in the interests of America.

Where will the actions against China lead? It is difficult to say. In 2024, China had a worldwide trading surplus of almost $1 trillion. Of this, more than one-third (36%) was with the US. Whereas the US is an important trading partner for China, American influence over Chinese actions is tempered by the massive surpluses that China enjoys around the world.

China acted with alacrity in announcing retaliatory tariffs on US imports and banned the export of certain strategic commodities to the US. Further discussions between President Xi and President Trump are planned.

For perspective, consider that in 2023, China’s top three categories of exports included almost $67 billion worth of cell phones, $53 billion in computers and accessories, and $42 billion worth of electrical and industrial equipment to the US.

China announced a 15% tariff on American coal and liquefied natural gas products as well as a 10% tariff on crude oil, agricultural machinery and some American vehicles. China also complained that Trump’s tariffs are a seriously violation of World Trade Organization rules. China has filed a request for consultations under WTO procedures. This triggers a 60-day period for the US and China to resolve the dispute before submission to a three-judge panel of WTO judges.

Less than 2-1/2% of US LNG exports go to China and only 110,000 vehicles were imported by China. The impact of tariffs on those exports is not large. Far more important are bans on commodities designated as critical minerals by the US Geological survey. These are considered vital to US economic or national security and include tungsten, tellurium, bismuth, molybdenum and indium. These are particularly sensitive to supply chain disruptions. In December, while Biden was President, China had already restricted exports of gallium and graphite.

Trump has also proposed that Ukraine supply the US with rare earth minerals — “their rare earths and other things” as he put it — in exchange for support against Russia’s war on that country. This is undoubtedly in response to the Chinese squeeze on America’s access to such critical commodities.

Transactional foreign policy

These actions suggest that Trump’s transactional approach to foreign policy is in full force and that his threats against Mexico, Canada, and Panama were negotiating ploys. The tariffs on Chinese imports, on the other hand, may simply be a reflection of his belief that they are a source of great revenue for the US government. He has spoken of funding the US government through tariffs and of eliminating income taxes.

The threat of tariffs may have had the unintended effect of causing the US trade deficit to balloon as imports surged in December by 3.5% to an all-time peak of $364.9 billion. Exports declined in November to $266.5 billion.

To cap off a wild week in which Elon Musk and his associates seemed to seize control of the US Agency for International Development and the US Treasury’s payment systems, Trump also suggested that Gaza be taken over by the US.

White House Press Secretary Karoline Leavitt described his comments on Gaza thus: “His administration is going to work with our partners in the region to reconstruct this region. and let me just take a step back here, because this is an out-of-the-box idea. That’s who President Trump is, that’s why the American people elected him, and his goal is lasting peace in the Middle East for all people in the region.”

Trump’s comments on Gaza came out of the blue — out-of-the-box, indeed. Going beyond his previously expressed idea that Gazans should be “cleaned out” while the area was rebuilt, Trump suggested that the US would acquire Gaza and rebuild it completely, into a Riviera of the Middle East.

On the one hand, Trump seemed to suggest that the Palestinians be moved out of Gaza forever, to some place where they could live in peace: “You build really good quality housing, like a beautiful town, like some place where they can live and not die, because Gaza is a guarantee that they’re going to end up dying.” On the other hand, he spoke of redeveloping Gaza to include housing for people of the region. Whether that includes Palestinians or just Israelis was not clear.

“The US will take over the Gaza Strip, and we will do a job with it too,” Trump said. “We’ll own it and be responsible for dismantling all of the dangerous unexploded bombs and other weapons on the site. Level the site, and get rid of the destroyed buildings, level it out, create an economic development that will supply unlimited numbers of jobs and housing for the people of the area, do a real job, do something different.”

Sounds crazy, doesn’t it? On the one hand, perhaps he is right that there will never be peace so long as Gaza remains what many Arabs have described as an open-air prison. On the other hand, where does one realistically think about moving two million people? And, if I were an economist and had a third hand, I’d say that Trump’s call on the richest nations of the region to finance the development may end up being the key.

The economic opportunities in developing the Gaza Strip are enormous. Here, you have prime waterfront real estate, with unlimited potential for luxury and destination type of development. There is plenty of room to build factories, universities, and hospitals to serve the people of the region whether from Israel, Jordan, Egypt, Syria, and the wider Middle East, perhaps even Cyprus and Africa.

Don’t dismiss this crazy idea just because it is crazy.

But to make this work, the Gazans must agree to leave voluntarily. Forced displacement is a crime under international law. Hamas too would have to agree to leave voluntarily. The Saudis, Qatar, Emirati, and Israel would have to agree to fund the project. Funding includes housing displaced Gazans and providing for their livelihood over a number of years. The area would probably need a missile defence system. And you’d need workers to do the clean up and building. Would those include Gazans?

Maybe it is just a crazy idea after all.

Cheerz…
Bwana

Mauritius Times ePaper Friday 7 February 2025