The Financial Express

Is G-7 an exercise in make-believe?

Evaly and Fianancial Express Evaly and Fianancial Express
Is G-7 an exercise in make-believe?

The prelude to the G-7 summit this year was full of dark forebodings, not the least from inside the alliance in Europe. It was apprehended that given the boorish and disdainful attitude of President Trump to all western alliances of industrialised countries, the G-7 was heading for another lacklustre summit. The sceptics foresaw the summit singing the swan song, heralding the end of the western alliance that was belittled by Trump from the very beginning of his term as American President. Some even predicted that the anti-summit demonstrators who had gathered near the chic sea resort of Biarritz, France, would create so much havoc that it would look like a reprise of G-7 in Seattle twenty years ago when the summit had to be almost abandoned.

In the event, nothing of the worst-case scenario predicted darkly happened. G-7 summit at Biarritz concluded at the end of the scheduled programme. It was not a glowing success over which member countries can gloat over, nor was it a disaster or an ignominious non-event calling for wringing of hands by the summiteers. Yes, there was no joint communiqué presenting unanimity of views and decisions on the agenda of the summit. But very pragmatically, the deliberations concluded with a joint statement which is a halfway house between consensus and disagreements. Reading between the fine prints, it became evident that every effort was made to paper over the differences, particularly between America and the rest of the alliance.

MACRON'S CHARM OFFENSIVE: Two things served to ensure that the G-7 this year is not remembered as an unmitigated disaster. The first is the charm offensive of the French President Emmanuel Macron who almost bent over backwards to win the heart of the mercurial and megalomaniac American President. Fresh from his whacking of Federal Reserve chairman Jerome Powell for his refusal to oblige him with further cuts of the lending rate to kick-start the American economy and the tit-for-tat slapping of tariff on Chinese exports worth $75 billion, the American President was in anything but a conciliatory mood. On the contrary, he was at his impulsive worst and almost hell-bent to blaze his way to the next election with populist policies to make America great again. But to the surprise of many, not the least his fellow summiteers, he behaved like a tame lion. Gone was the bluster and the eternal damnation that characterise his tweets and public utterances over trade, climate change and Iran nuclear deal. During the summit he used `fantastic' several times with such gusto that took his critics by surprise. Apart from the warm reception, the unscheduled lunch by the French President worked the magic and President Trump appeared to be the very picture of reason and decency.

AMAZON FOREST IN CONFLAGRATION: The second development that might have sobered down President Trump was less man-made; it was the vicious natural disaster of Amazon forest in conflagration that continued during the entire summit. The Amazon forest in Brazil that accounts for 20 per cent of oxygen of the planet earth was ablaze for days wreaking destruction on a vast swathe of rain forest in Bolivia, Peru, Paraguay, besides Brazil. The enormity of the disaster led the French President to exclaim, `our house in fire'. His concern was shared by other leaders present in the summit and it served to both unite them and reach out to the anti-summiteers demonstrating near the summit venue. For the first time the G-7 openly co-opted one of the agenda of the anti-capitalist movement and at the same time won over a recalcitrant American President on climate issue. It is not known if the announcement of using $20 million from the G-7 fund to cope with the damage wrought by the Amazon fire took the wind out of the sail of the demonstrators but it faced no opposition from President Trump. To be sure, the American President did not have a sudden change of heart over climate change but he saw the emergency situation created by conflagration in Amazon forest and tacitly agreed with the decision to assist in the recovery from damage caused by the fire. Highlighting climate change, resulting from a natural disaster would have failed to convince President Trump in another place and at another time. But at Biarritz, during the G-7 summit, Amazon forest in fire was not only news in sound bites or voice-overs, it could be seen in real time in television and social media. It was too near and too real to give the go-by. President Trump did not actually become a born again Christian, adopting the pro-climate agenda. But nor could he ignore the elephant in the room. But to save his face and at the same time the situation, he tactfully left the venue of the meeting, ostensibly to have side-line meetings with other world leaders. It was a rare show of his accommodation to ideas and decisions with which his gut reactions are at loggerheads. For a change, the G-7 summit at Biarritz presented a Trump who could compromise.

Amazon was not the only instance where NEGOTIATIONS WITH CHINA: President Trump showed his conciliatory attitude and spirit of co-operation. Much to the surprise of many observers he announced his desire to resume the trade negotiations with China and thus put the ongoing trade and currency skirmishes on hold. Some observers see in this softening of stance a tactic where tariff is used as a weapon to bend China to the end of American interest. They point out that his `art of the deal' consists of blusters and punishing measures deliberately used as a means to the end of reaching a mutually satisfactory agreement. His brinkmanship is unknown and unprecedented in the world of geo-politics and international economic order. It is no surprise, the observers point out, that President Trump misunderstood about his real intentions. It is pointed out that his no-holds-barred tactics has so far produced results in re-shaping the trade deals with Canada and Mexico to the satisfaction of all parties concerned. More recently, the spat between America and France over slapping of tax on American tech giants like Amazon, Google, Facebook and Apple has been resolved without the retaliation threatened by President Trump. Referring to these outcomes of negotiations it has been observed that America-China trade skirmishes will also end with mutually satisfactory results. But President Trump, apart from showing his willingness to resume trade negotiation with China, did not show his hand in the G-7 summit. As a hard-headed negotiator and dealmaker President Trump remains as inscrutable as ever. In spite of his apparent reasonableness, he remains unpredictable and unstable.

IRAN NUCLEAR DEAL: The enigma of President Trump's persona was in full display when it came to the nuclear deal with Iran. Though the US was a signatory to the deal, President Trump withdrew from it on the ground of it being unsatisfactory. The other signatories to the nuclear deal, including members of G-7, are trying hard to salvage it; but they require agreement of America to the mechanism that they want to use to circumvent the sanctions imposed by America. At the summit, a desperate attempt was made by the French President in this regard which saw him inviting the Iranian foreign minister to have side-line meetings with his American counterpart. President Trump conceded this much to his fellow summiteers that he was open to a meeting with the Iranian President on the issue. Again, President Trump showed a reasonable attitude but without making any significant concession, particularly on sanctions.

THE PROSPECT OF ECONOMIC RECESSION: A sober and a reasonable President Trump appears too good to be true. He is not so simple as to change his attitude and mind because of warm hospitality. Nor could his hardened heart melt because of the devastating fire raging in the Amazon. Warning from pundits about the disastrous consequence of the escalating tariff war with China and other trading partners of America could not have suddenly changed his view of global economic order. So, why did he appear accommodative and conciliatory at the G-7 summit? For the answer one has to look at the heartland of America, particularly the swing states that voted for Trump in the last election. His escalating trade war with China and others is beginning to bite on the well-being of farmers and consumers who have to bear the brunt of higher prices resulting from tariff. The prospect of economic recession setting in the near future has disenchanted many Americans who had supported Trump. It is this ground reality at home, rather than the persuasions of world leaders who gathered at Biarritz for G-7 summit that has made President Trump to change his policies, particularly on trade. Once the presidential election is over and if he is re-elected, President Trump in all likelihood is going to repeat the same policies that affect geo-politics and international political order as he has been doing until recently. To sum up, with President Trump in the White House all international organisations and alliances have to hold their breath as to the steps that will be taken by him. To judge by his record on commitments to bilateral and multi-lateral agreements, it can be concluded that it would be a rough ride for all.

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