Rational America

Today, I had the opportunity to witness a keynote address by U.S. Secretary of State Mike Pompeo in Brussels (see video from the event here). It prompted me to jot down some quick thoughts on U.S. policy and our perception thereof. Strictly my own rambling, as always.

I continue to be bewildered by the fact that many policy wonks in Brussels (and elsewhere in Europe) continue to limit their analyses of American foreign policy to Trump-Twitter-ology. There is an obsession to comment on the latest late-night tweet and the most recent scandalous speech and leave it at that. This fascination with the erratic character of the 45th U.S. President leads many to conclude that White House policy is simply that: Erratic. Misguided. Irrational.

I disagree. On the contrary, I think U.S. trade and foreign policy is quite rational. However, the U.S. administration wants to maximize its relative gains, while the EU is built upon the idea of maximizing absolute gains. That is why I think many Europeans misread U.S. policymaking these years.

To follow my train of thought, it is necessary to look beyond the smoke screen of orange-flamed fire and fury. When I listened to Mike Pompeo today, I was left with the same impression as when I saw U.S. Secretary of Commerce, Wilbur Ross, speak at the OECD in Paris. Ditto when I read a profile of U.S. Trade Representative, Robert Lighthizer, in Foreign Policy. Calm, composed men speaking in the language of the establishment. The messages were decidedly those of the Trump administration that we all know and love to hate. But the style was different. And this different style makes one pay attention to the arguments underpinning those messages.

A rational trade and foreign policy doctrine

Mike Pompeo spoke of the new U.S. foreign policy doctrine of “principled realism”. In my reading, this strategy builds on three pillars: (1) National sovereignty (and especially American sovereignty) is sacrosanct and the key principle of international relations, (2) Maximizing relative national interests is the most important objective of foreign policy, (3) Multilateralism must not exist for the sake of multilateralism but only for the pursuit of said national interests.

Pompeo was very clear in his criticism of multilateral organizations: Multilateralism is a means with which to achieve certain goals. Multilateralism must not become a goal in itself. This echoes Wilbur Ross’s statements in Paris. Pompeo sharply pointed to the allegedly diminishing output legitimacy of multilateral organizations such as the UN (with dictators sitting at its Human Rights Council), the African Union (which has not advanced the mutual economic interests of its members), the European Union (which has seen Britain leave and which might be putting the interests of bureaucrats above those of its citizens), the Paris Climate Agreement (which distributes wealth from American taxpayers to polluters in China), and so on.

Does that mean that the U.S. is abandoning such multilateral institutions? Not necessarily. But Pompeo pointed out that such institutions must be kept up to date or be discarded. In other words, these institutions have to be adapted to maximize U.S. interests (as they were originally designed to do) or be abandoned. Fairer economic burden-sharing in NATO. Less room for Chinese abuse of the WTO trading system. Perhaps even a smaller EU that is easier to push around by the U.S.?

Absolute vs relative gains

These objectives are not that outrageous, are they? To me, they definitively seemed less unreasonable when presented in a firm, but diplomatic manner rather than the abrasive style of President Trump. They give credence to the idea that the U.S. administration is rationally seeking to maximize U.S. interests.

When I discuss this point with friends and colleagues, however, two counter-arguments usually come up:

The first one goes something like this: The administration’s disruption of free trade is harming the U.S. economy as well! The WTO and all the rest – they were created by the U.S. exactly because they serve the long-term U.S. interests. When Trump makes trade wars, we all lose, including American companies, consumers and workers. Look at the factories closing. When threatening the integrity of NATO, U.S. security intersts are harmed – not enhanced. And so on. Surely, that’s not rational!?

Well – it depends on what the rational actor in question seeks to maximize. Many multilateral organization – and the EU in particular – are built around the idea of maximizing absolute gains. The EU’s Single Market is a win-win. Free trade is a win-win. What’s not to like? The Chinese can become richer faster than us as long as we are also getting richer at the same time. Everybody wins.

That is the classic and completely reasonable way for small countries to behave. But the people in Trump’s administration do not want the U.S. to act like a small country. They look at growth, trade and military spending figures and see a world in which multilateral absolute gains benefit other actors, such as China, more than they benefit the U.S. So in relative terms, the U.S. is losing. That must be changed. Disrupting trade flows is fine if you think that it is fine if “we” lose, as long as “they” lose more. In relative terms, such trade wars could indeed be “easy to win”. And if that is the mindset, then starting trade wars to shock the system and possibly re-order it could be quite rational indeed. Even if it grates in the eyes of “absolute gains” multilateralists (like myself) and even if it brings great economic pain to small states like Europe’s. We cannot deny that China has been shocked into concessions (at least on the short term) by U.S. tariffs to a much greater extent than by years of the EU’s “dialogue-based approach”. Whether it works in the long term remains very much to be seen, of course.

Trump is only half of the show

The second counter-argument usually goes like this: It is foolish to think that the U.S. administration has a rational long-term goal. Trump makes the decisions. His own staff do not even know what official U.S. policy actually is until he gets the final say or sends the final tweet.

Here, I must concede that I do not know how the current White House really works. So I could be very misguided. But I do see a pattern of strategic behavior on the trade policy field (that I follow) that is maintained by soft-spoken, experienced and knowledgeable people (like Lighthizer and Pompeo). Policy has not really deviated from these long-term goals of maximizing relative gains. Trump might be the mastermind or he might simply be a useful distraction. Or indeed both. But personally, I do not think that Trump’s theatrics and erratic communication disproves the presence of a true, rational strategy behind the current administration’s trade and foreign policy work.

The fool and the fooled

So my message really is to keep the mind open and the eyes sharp when Europeans discuss and analyze American trade and foreign policy. Are the Americans necessarily the irrational ones? Or do they only seem irrational because their policies damage our own economic and security interests? Do we take the multilateral world view of “we win-you win” and absolute gains for granted? Is that why we are so inept at dealing with actors who are much more interested in the “we lose less than you” rationality of relative gains – such as the Trump administration – or indeed such as “populist” political forces emerging all over Europe? It is worth reflecting over, I think. We might be so busy laughing at the fool, while in truth we have been fooled ourselves.

PHOTO:  Mike Pompeo keynote address at the German Marshall Fund in Brussels on 4 December 2018. My own photo.