With the U.S.’s attempt at regime change in Venezuela going nowhere fast it’s becoming increasingly obvious that major
vassals allies aren’t scared of the consequences of defying us.
India, in particular, has been quite clear in its opposition to Trump’s edicts on who they can and cannot trade with. And with Prime Minister Narendra Modi reeling from a corruption scandal it’s clear he isn’t going to give Trump an inch on important trade issues, especially with Modi in full re-election mode.
Not only has India defied the U.S. over buying Iranian oil and Russian S-400 missile defense systems but now they continue to flaunt U.S. sanctions on Venezuela upping its purchases from 400,000 barrels per day to more than 600,000.
The quantity of exports to India has jumped 66 per cent to 620,000 barrels a day and the boost is being driven by refiners like Reliance Industries Ltd and Nayara Energy Ltd, backed by Rosneft, Russia.
Overall though, Venezuela’s crude exports have taken a dip as the US has intensified the sanctions against the Latin American nation’s oil company.
The response from the U.S. was the nearly inconsequential removing India from the Generalized System of Preferences which created tariff-free trade on a number of products between the U.S. and India.
Crying over Spilled Oil
It amounts to $190 million in net benefit to India a year.
The preferential treatment brought India an annual “actual benefit” of just $190 million, he told reporters.
Of the 3,700 products covered, India used the concession for just 1,784, Wadhawan added.
“The benefit to industry is low, U.S. tariffs are already low,” said another government official, who spoke on condition of anonymity. “GSP is more symbolic of the strategic relationship, not in value terms.”
It’s a 2% tariff reduction folks. It sounds big because it will hit $5.6 billion in trade but in the end it is less than 1% of the trade deficit between the U.S. and India.
Trump is also hitting wayward Turkey with the same stick.
I’m sure Erdogan didn’t even bother to notice.
Let’s put this in context shall we? Even at a heavy discount to current prices ($55 vs. $65 per bbl), India is paying Venezuela over a billion dollars a month.
And that’s part of the reason why India raised its purchases of Venezuelan oil, it’s available at a steep discount. Playing this out a little further, a $10 per barrel discount times 600,000 per month is a $72 million net benefit to India offsetting a large chunk of Trump’s temper tantrum.
Because that’s what this amounts to, a tantrum. John Bolton and Mike Pompeo began a regime change operation that they shouldn’t have to take control of Venezuela’s oil and stick it in the eye of China and Russia who support Maduro financially and politically. Everyone else then has to take sides because in Trump’s mind our allies aren’t supporting us.
Boo freaking hoo.
Allies No More
As has been pointed out numerous times, empires do not have allies, they have vassals. And when the vassals get uppity they need to be slapped down.
But, what happens when they refuse to sit down? What happens when they continue to defy the imperial edicts of the Orange Obama and his Mustachioed Mafiosi?
Exactly what we’re seeing now. Did anyone in the White House really think India and Modi would back down over $190 million in tariffs?
Look, I’m all for removing barriers to trade and for the government to get out of the way of commerce. All government does is pick winners and losers, and this GSP program is a classic example of this.
But, to think it was going to scare India into cutting its own throat economically is simply the height of hubris and, worse, paranoia.
India is a massive energy importer. And all the Trump administration has done is antagonize India over issue after issue.: S-400s, Iranian oil, now Venezuela, destabilizing its relationship with Pakistan and China.
And to make matters worse, Trump’s lack of a coherent foreign policy has alienated India on multiple occasions. Think back to the cancellation of the important 2+2 meeting last year because the North Korea Summit took precedence.
Do you really think that sat well with the very proud Indians? No it didn’t. This was a meeting postponed for over a year already and once the U.S. canceled it again, it told India all it needed to know about its future relationship with Trump.
Moreover, why would anyone spend one minute hoping that Trump will treat them with even a modicum of respect when it comes to trade? He already slapped major tariffs on steel (10%) and Aluminum (25%) and threatened the world with worse if they did any trade with Iran.
The better plan is to expect the worst and prepare accordingly. This is why India was nonplussed when Trump hit back at their refusal to stop buying Venezuelan oil with the only thing he can hurt them with…. essentially nothing.
The Asian Pivot
All this is doing is confirming that the emerging powers of Asia — North, Central, South and East — will coalesce over time around a shared platform of intertwined goals.
Pakistan’s Imran Khan is working hard to defuse the hostilities between it and India. The U.S. foreign policy establishment under John Bolton are freaking out at the idea of detente between India and Pakistan while they are trying to squeeze China and Russia ‘until the pips squeak.’
Trump knows the U.S.’s unipolar moment is behind us, but he can’t let go of it without a fight. That desire is admirable but he would be better served in the long run to bow off the center of the stage gracefully versus the embarrassing us to the point of vilification.
Because that’s the next stage of this. Trump has no real leverage over China in trade talks. If he can’t control emerging powers like India or effect regime change in a basket case like Venezuela, what does he really have to threaten China with?
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Trump may the that the America’s unipolar moment is done but does the deep state?
I don’t think that Trump ever really had any control of foreign policy but letting the neocons run amok would cause the break up of Pax Americana to occur much faster. It is unclear if this is by accident or design but the effect will be the same.
I have doubts that Trump really understands his role in history.
One thing is certain, the era of the dollar as reserve currency of the world is coming to a close very soon now.
I find it interesting that Russia is willing to spread around the S-400 system this much. To my knowledge the S-500 is not yet operational so they are selling a current top of the line air defense system. Sales of this system does offer advantages to Russia and has very little downside since it really is a defensive system with little offense potential.
First, selling this system demonstrates that Russia has no interest in attacking these nations. This also has the upside, from Russia’s point of view, of degrading US air power. The greatly reduces the effectiveness of US military threats. The less effective S-300 system has certainly put a damper on Isreal’s bombing of Syria.
Second, sales of the S-400 provide an incentive to set up systems to bypass the dollar in trade arrangements with Russia. This reduces the threat of sanctions through the banking system. As the US gets progressively more belligerent the incentive to trade with Russia increases. Unlike most other oil producers Russia has much more to offer than just oil.
Without the ability to enforce sanctions through SWIFT or militarily it is not possible for the US to dominate nations as in the past. Putin figured this out but I wonder if Bolton has since he seems to be running the show these days in terms of foreign policy. Once again the neocons display their incompetence for all to see.
I have the feeling Trump is all in with the neocons. It looks like good cop bad cop to me. As far as the S400 systems, I think I read somewhere that the S500 is a different system meant to compliment the other systems. I thought it was more akin to the US Thaad system. Patriot/Thaad vs S400/S500
S400 is junk, never tested in combat except when Israel bombed Syria, unscathed, a few dozen times.
The less the Orange Swan has to threaten the world with, the better the rest of the world will be.
I find it bad enough that Trump wants to sanction Iran oil exports…just because he wants to. But if he wants to refuse to allow their exports to come to the United States, that’s one thing. But to try to enforce those sanctions over other sovereign nations is madness. And the fact that China, Russia, and India aren’t playing this game is gratifying. There is no sane reason they should. And the quicker they escape their vasselage, the better they will be.
Why should any nation agree to hobble itself economically just because one of their trading partners is stupid enough to do so on their own? If I had one neighbor who owned a reefer truck, but refused to transport goat cheese to my neighborhood for me and my other goat-cheese-loving neighbors, the first thing I would do is try to find a reefer truck to handle the transport needs for my neighborhood; I wouldn’t go on strike against goat cheese producers just because my neighbor wanted me to do so. Real-life example, because I LOVE goat cheese. And goat milk.
One more thing: If India wants to support Venezuela to help them escape their internal collapse, while the United States leadership, including Trump, Bolt-on and Pompous, just sit by while the country burns, then the United States has no claim on moral leadership anywhere.
Excellent Kevin Well said
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