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Article / 15 December 2016 at 11:00 GMT

Trump should be careful what he wishes for in international arena

Russia oil and gas expert
United Kingdom
  • 2016 – truly the year of the "strong men" (aka megalomaniacs)
  • Connections rather than cognition is what Trump requires of his team
  • Trump may have a grand diplomatic plan but it may unravel fast
Putin pose
 Trump's new BFF Vladimir striking a James Bond pose. Photo: Kremlin press office

By Nadia Kazakova

It has been an amazing year for a few world politicians united by their strong man image. It feels as if a magic wand has been regularly (if not recklessly) wielded by a fairy with a weak spot for middle-aged men (and senior citizens) with authoritarian/messianic/megalomaniac inclinations.

The good fortune came thick and fast not just for president Vladimir Putin (whose wish to become an international man of action and mystery has not been just granted but over-generously bestowed) but also for prime minister Benjamin Netanyahu (who got what he wished for in the White House while remaining nearly invisible to the mass media), for president Tayyip Erdogan (who miraculously survived a coup and turned it into his own) and for President Bashar al-Assad (who just miraculously survived). 

Not to mention US president-elect Donald Trump, who has won big time regardless of the success of his upcoming presidency.

Putting aside a silly thought of some magic (keeping in mind A.C. Clarke's observation that, “Any sufficiently advanced technology is indistinguishable from magic”), let's guess what's the next wish could be. 

Or, to frame it in less whimsical terms, what might be Trump's international strategy?

I would not pretend to know the mind of the great man. I would doubt, however, that a great relationship with Russia (or not so great with China) is a priority for Trump with or without Rex Tillerson as the secretary of state. The immediate priority might be the Middle East while various other deals, agreements or disagreements in other parts of the world would serve as little wheels and cogs in the overall grand design.

What we see in Trump's nominations is the positioning of his key players for this game on the chess board. The main requirement of these men (apart from solid business backgrounds; the men must be hands-on doers rather than in-the-clouds thinkers) is the ability to have a direct phone line to an appropriate world leader. Tillerson might need to spend a lot of time talking directly to Putin, ironing out whatever deal Trump has in mind for Russia.

A deal is likely to come early in the presidency, while Trump enjoys popular support and before mistakes (either economic or diplomatic, or a combination of both) may  become overwhelming and he loses his lucky knack of walking on water.

Tillerson's advantage is that he knows Russia like nobody else and is well aware of the country's Achilles' heel, which is its ageing and hopelessly backwater oil and gas industry. 

Russia needs advanced US technology to rejuvenate its oil industry. As Exxon chairman, Tillerson showcased to Russia how a US company can deliver an extremely challenging project (Sakhalin-1) on time and nearly on budget. It could do more of the same, sanctions permitting. The US could sell billions worth of equipment and expertise to Russia, creating those promised US jobs.

For Russia, it is superficially a great proposition. Ending the sanctions would give a second lease of life to the oil and gas industry and would ensure economic growth. The inevitable downside is that Russia would become even more dependent on the oil & gas sector with little transfer of actual technological knowledge (and much of its precious petrodollars spent on imported equipment). 

The Russian side of the bargain (in exchange for the lifting of financial and technological sanctions) is almost irrelevant. President Putin would proclaim it as a great victory and would probably believe that himself.

It can and likely will go wrong at some point. Any grand plan usually comes unstuck through an oversight of some insignificant detail or simply by overconfidence (or that magic fairy becoming over-enthusiastic with her wand).

My hunch is that there have been recently too many black swan events (whether induced or not) which might have already triggered the economic domino effect, we are just not yet quite aware where the thin thread has snapped. 

Or the Chinese economy might simply topple over, taking pretty much everything else with it. The economic rubble might bury the most intricate international plans, forcing the Trump administration to forget about international glories and firefight domestic problems. 

It would also mean that within six months or so the markets might be doing exactly opposite to what they are doing/pricing in at the moment. 

P.S. For those still pondering the role of Russia in the US presidential campaign, Brexit and any other unexplained phenomena, it might be time to revisit Daniel Kahneman's Thinking, Fast and Slow. Much recommended. 

– Edited by Clare MacCarthy

Nadia Kazakova is a specialist on Russia, particularly the oil and gas sector
3y
ka26 ka26
Mr.Trump does not understand the whole degree of danger from Russia with its inadequate leader. Despite Trump`s decisions , people know about the crimes of Putin`s regime in Syria and Ukraine. Mr.Trump now needs to work very hard to convince his companions that the outlaw state suddenly turned to be economically attractive. So far, it looks as fantastic as Putin's flight to Mars. Russia, as it is now, is invalid for investors who ALWAYS demand guarantees. And eventually "the victories"of Putin may be soon analyzed in Hague.This is not exactly a favorite scenario for those who invest.
3y
Martin O'Rourke Martin O'Rourke
There may be a strategy or he really may be making it up as he goes along. Here is what we had to say on the China dimension of this relationship. https://www.tradingfloor.com/posts/trigger-happy-trump-stalks-baffled-china-8313894
3y
seas seas
Compelling article and well written. Thank You.

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