The View From Singapore

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‘Too big to fail’ is a phrase which gained mainstream popularity during the late 2000s financial crisis. It was used to describe a business that had become so large that should it fail, the resulting ripple effect would be disastrous to the economy. In the past two months, the phrase has been batted around by many of my peers, politicians, the talking heads on the cable news channels, and political scientists around the world. The Singapore summit between President Trump, and Kim Jong Un  has been labeled, fairly or not, ‘too big to fail.’ There is some truth to the label for the summit, however, not in the manner that many people would think.

To borrow another phrase, the outlook of most observers, and journalists can best be described as ‘too ignorant to comprehend.’ It is generally understood that the stakes are incredibly high for the summit scheduled to begin here in less than twenty-four hours. Identifying just what those stakes include is where the trouble begins. Journalists, as well as nearly everyone else, continually overlook the reality that unless an agreement is reached on eventual North Korean denuclearization, the US-North Korea standoff is likely to escalate. The ripple effect of a failed summit could very well lead to US military action to neutralize the North’s nuclear weapons in coming months.

North Korea’s nuclear weapons are a clear and present danger to the United States. The singular purpose of this summit, contrary to what is said in front of the cameras, has always been removing nuclear weapons from Pyongyang’s control. If it turns out to be impossible to do through diplomacy, negotiation, and economic incentive, the US has to consider a kinetic alternative.

To be sure, nobody wants that to happen. Unfortunately, the desires of peaceful people around the world pale in comparison to the crucial interests, and security concerns of sovereign nation states.

President Trump has said that the Singapore meeting will be a one-shot deal for North Korea. Let’s hope Kim Jong Un will understand this and negotiate in good faith.

Thirty-six hours from now we will have a fairly good take on whether or not the summit was successful. In short, a successful summit will see concrete steps towards denuclearization laid down. An unsuccessful meeting places all parties back at square one with little incentive to try the negotiation route again.

Sunday 3 June, 2018 Update: Italy and US Tariffs Will Dominate the G7 Summit This Week

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Not surprisingly, the new Italian government’s calls for debt relief from the European Central Bank (ECB) appear to be falling upon deaf ears. The ECB has released a statement saying current treaties in place forbid such a move. German Chancellor Angela Merkel ruled out the possibility. In an interview published today in Frankfurter Allgemeine Sonntagszeitung Merkel said the eurozone should not be transformed into a ‘debt union.’ These dismissals set the stage for a potential showdown between the EU and Italy’s populist government over the future of Italy’s place in the eurozone. Giuseppe Conte, the new Italian prime minister, is expected to meet with Merkel, and French President Emmanuel Macron at this week’s G7 summit in Canada.

Italy will not be the only major point of discussion in Quebec later this week. US trade tariffs, and their potential impact will be discussed at length. At midnight on Friday tariffs on steel, and aluminum imports from the EU, Canada, and Mexico were put into effect. The US has been negotiating with all parties involved. Progress has been slow in coming, however, prompting the US to take unilateral action. The EU has promised strong countermeasures in response.

Fears of a global trade war have been looming for some time. Negotiations between the US and China appeared to have pushed much of the concern to the background for some time. Markets had stabilized, and investors seemed to be getting over their jitters. If the EU, Canada, and Mexico are unable to reach some sort of compromise with the US this week, those fears could spiral out of control and have an adverse effect on global markets, and the global economy as a whole.

This promises to be a busy upcoming week in Quebec.

Saturday 2 June, 2018 Brief Update: US-North Korea Summit Back On

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The summit between President Trump and Kim Jong Un is on once again. Trump informed reporters of the reversal this afternoon at the White House. The date and location will remain unchanged: 12 June, 2018 in Singapore. Last week the president announced the cancelation of the highly anticipated summit after a number of openly hostile statements were made by North Korean government officials. Trump also cited the failure of Pyongyang to send a delegation to meet with US officials in Singapore to discuss logistical issues, and other pre-summit items as a reason for pulling the plug on the summit.

Almost immediately, a flurry of diplomatic activity broke out from Seoul to Washington. Diplomats, and leaders from around the world moved with startling speed to salvage the summit if at all possible. Not surprisingly, South Korea spearheaded the efforts. A planned meeting between South Korean President Moon Jae In and Kim Jong Un which had been cancelled previously, was held at the DMZ. China was also active, pressuring Pyongyang behind the scenes for a solution that would make the summit a reality. This week, the diplomatic focus shifted to the United States. Secretary of State Mike Pompeo met with a North Korean delegation in New York City on Thursday. This morning a personal letter from Kim was delivered to the White House and a few hours later, President Trump informed the world that the summit is back on.

If the summit plans remain unchanged from this point on, it will be time to start talking about what the chances are for a US-North Korea deal to be struck, and what a possible deal could look like.

I will post about those subjects next week. Enjoy the weekend!

Thursday 24 May, 2018 Update: Trump Cancels US-North Korea Summit Meeting

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The much-anticipated summit meeting scheduled for mid-June between President Trump and North Korean leader Kim Jong Un in Singapore has been cancelled. The decision was made by President Trump following recent comments and actions by North Korea indicating that perhaps the North was not turning over a new leaf as many were hoping. Last week Pyongyang canceled scheduled talks with South Korea over joint US-South Korean military exercises going on in the South. Earlier this week, the first cracks became apparent. On Monday, North Korea made comments suggesting a nuclear showdown could occur if talks between the US and North Korea fail.  Twenty-four hours later, Trump indicated there was a chance the planned summit might not take place at the planned time and place. Unknown to many outsiders, and journalists at the time, the president was making reference to North Korea’s failure to attend recent meetings in Singapore to work out planning for the summit. Then came Thursday’s cancellation with Trump citing North Korea’s ‘tremendous anger and open hostility’

What happens next is the great unknown. The cancellation took South Korea by complete surprise. South Korean President Moon Jae-in expended a lion’s share of political capital to make the US-North Korean summit a reality. In politics, of course, perception matters more than reality. Moon has to know his image will take a big hit as the fallout from the cancelled summit settles. Upon learning of Trump’s decision to call the meeting off, the South Korean government expressed complete surprise. Moon called an emergency meeting of his close advisers, and national security team to try and make sense of the US move.

The South Koreans are on the sidelines for the time being, however. The next step in this unfolding drama will depend on Pyongyang and how Kim chooses to respond.

Sunday 20 May, 2018 Update: Iran, Sanctions, & Saving the Nuclear Deal

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The past few weeks have been a challenging period for Iran, both at home and abroad. The regime is facing a variety of obstacles and growing opposition to its policies, actions, and to its rule. This is not the first time that Iranian leaders have faced this sort of situation, however, the present geopolitical climate does not favor Iran. Unless Tehran moves swiftly and favorably on at least one front, the trend will not change.

Iran’s leadership is pinning its hopes on salvaging the Iran nuclear deal, believing that this will help reverse its fortunes of late. The future of the deal is very much up in the air at the moment. In spite of the European Union striving to keep the current deal alive, there’s no guarantee that anything substantial will stem from the effort. The US withdrawal from the deal has complicated matters for both Iran and the EU. Tehran has said it will live up to the terms of the nuclear deal if the EU is able to counteract US sanctions. A prime concern for Iran is that sanctions will have an adverse effect on its oil industry, and subsequently, on its economy as a whole.

With the US giving consideration to imposing new sanctions on Iran, a number of European companies are thinking hard about pulling back from Iran. This has led to claims by Iranian government officials over the weekend that the EU is clearly not doing enough to keep the nuclear deal alive. Next Friday, a meeting will be held in Vienna between representatives from Britain, Germany, France, China and Russia to discuss the future of the deal after the US withdrawal. According to Iranian Deputy Foreign Minister Abbas Araqchi, his nation will also be taking part in Friday’s talks.

Time is working against Iran at the moment. On Monday US Secretary of State Mike Pompeo is expected to lay out a potential US plan to force Iran back to the negotiating table. The plan will address not only Iran’s nuclear program, but its activity in other areas such as involvement in Syria, Yemen, and its escalating proxy war with Israel. If a US plan comes to fruition and gains traction, Iran’s options will narrow, forcing the regime to contend with the rising amount of international pressure in a less cooperative fashion.