WORLD VIEW 05
Friday, 10 August, 2018
The SaudiS deliver a Sobering leSSon: in diplomacy, wordS do maTTer OUR DIPLOMACY HAS SUFFERED SERIOUS SETBACKS IN BEIJING, DELHI AND RIYADH. WE NEED TO UNDERSTAND THAT PUNCHING ABOVE OUR WEIGHT INVOLVES MORE THAN SIMPLY TALKING ABOVE IT
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OREIGN Affairs Minister Chrystia Freeland is doing her best to sound undismayed in the wake of Saudi Arabia’s furious reaction to Canadian comments on Twitter about the Kingdom’s recent detention of women’s-rights activists. But the Saudi response, which included a plan to withdraw all state-funded Saudi students (as many as 20,000) from Canadian schools, the suspension of Saudi Arabian Airlines flights to and from Toronto and a freeze on new trade and investment, and a selloff of Canadian assets, is almost certainly far more than the minister bargained for. The relationship is now effectively on hold, with high-level channels shut down until
the Saudis decide that we have corrected what their foreign minister described as our “big mistake.” We should care about what’s happening. Saudi Arabia’s one-step-forward, two-back approach to basic rights for women is deeply troubling. There is also a Canadian dimension to the crackdown. One of the detained, Samar Badawi, is the sister of the imprisoned writer Raif Badawi, whose wife, Ensaf Haidar, recently became a Canadian citizen. But we clearly didn’t anticipate that the Saudi response to our commentary would be so swift and damaging. Twitter-based diplomacy is a high-stakes exercise, particularly when you are trying to gauge how far you can push a prickly and secretive totalitarian regime. It’s attractive because it allows a hands-on foreign affairs minister, such as Ms. Freeland, to intervene in real time. But it is no substitute for careful analysis, co-operation with allies and patient engagement at all levels of Saudi society. Although the attention paid to precise language in diplomacy can seem excessive, words do matter when one state tries
to communicate with another. Insecure regimes, as with insecure people, react badly to highly directive words such as “immediately,” which was the timeline we urged the Saudis to adopt in freeing the detainees. The possibility of a negative reaction increases exponentially when the message is delivered in public. When asked on Wednesday whether we could resolve things through an apology, Prime Minister Justin Trudeau was vague. Ottawa wordsmiths are probably already hard at work on a very carefully worded expression of regret. But the Saudis may want the deep freeze to continue. That’s because Canada was also a target of convenience, big enough to serve as a sobering example for Saudi Arabia’s many other critics, but not so big that it couldn’t be punished with relative impunity. It didn’t have to go this way. The Chinese government’s recent decision to allow Liu Xia, the wife of Nobel laureate and human-rights advocate Liu Xiaobo, to leave house arrest in Beijing and travel to Germany owes much to the quietly ef-
fective diplomacy of Chancellor Angela Merkel. She and her diplomats worked patiently to make this outcome seem a natural outgrowth of their respectful, mutually-beneficial relationship with China. I suspect that the Germans did as much listening as talking. We seem to be doing far more talking than listening, favouring a form of megaphone diplomacy that only seems to work with smaller countries that need our diplomatic support or our aid dollars. Yet we stubbornly favour broadcast mode even when it comes to major powers, something that contributed to our recent diplomatic debacles with China and India. We’re strangely reluctant to believe that our “values-based” foreign policy can come across as preachy, insensitive and interfering. It’s safe to assume that, back in May, Saudi diplomats in Ottawa shared with their headquarters a widely circulated photo of Environment Minister Catherine McKenna high-fiving our ambassador to Ireland as they publicly celebrated the victory of the “Yes” side in Ireland’s re-
The real message behind the Saudi Crown Prince's diplomatic war with Canada TRUMP MAY BE RELISHING THE THOUGHT THAT TRUDEAU IS GETTING A BEATING BY THE SAUDIS time BessMA MoMANi
Saudi’s young Crown Prince Mohamed bin Salman (MBS) has been moving his country at a rapid speed of change. At home, that has elicited joy and caused a surge of nationalism. But since becoming crown prince last year, his foreign policy moves have been a source of anxiety for the international diplomatic community. Unpredictable and brash moves have now become the crown prince’s diplomatic signature. From the alleged kidnapping of the Lebanese Prime Minister to get him to renounce Hizbollah and Iranian influence in Lebanese politics, to the severing of all diplomatic and economic ties with neighboring and fellow Gulf Cooperation Council member Qatar, to the now intractable war against the rag-tag Houthi rebels in Yemen, MBS takes foreign policy to the extreme. Now it looks like it’s time to take on Western governments that dare criticize Saudi Arabia’s human rights record. Countries who speak out will lose billions of dollars of lucrative business deals. And so, on Monday, Saudi Arabia was willing to cut Canada loose—to achieve its broader objective of signaling to the world that the new Saudi Arabia is serious about rejecting unsolicited criticism of its internal affairs. After all, bilateral economic ties are minor in the grand scheme of things. What matters to Riyadh is that the message will be heard loud and clear across the globe. Both Sweden in 2015 and Germany in 2017 felt similar Saudi wrath when they criticized the Kingdom’s human rights. European ambassadors were temporarily recalled and some business deals were suspended. But the crown prince is taking this diplomatic spat with Canada to a whole other level. Expelling the Canadian Ambassador, halting new trade and investment deals, suspending Saudi Airlines flights into Canada, removing government holdings of all Canadian assets and bonds in their financial portfolio, flying back Saudi patients from Canadian hospitals, telling some 15,000 Saudi students in Canada on government scholarships to find alternate arrangements abroad, recalling nearly 800 Saudi doctors training in Canadian healthcare to come home. All this in under a week since the Canadian Foreign Ministry sent a tweet criticizing Saudi human rights’ record. If the dispute with Qatar is any indication of where things are going with Canada, the Saudi crown prince will leave no room for com-
promise, ask the impossible of the Canadian government, and continue to bash Canada at every turn. Saudi state television has already made Canada—a country with a reputation of welcoming minorities and immigrants—to be the beacon of global oppression. This all out mudslinging of a country’s reputation comes from the same playbook used with Qatar. So what next? Short of having Canada’s foreign minister’s resignation, this feud will likely continue to roil until there is a change in government. Since the crown prince is a young 32 and has effectively consolidated power around him, it will be the change of Canadian government that will put this diplomatic spat to rest. Canada has elections coming up in October 2019. Until then, expect more of the extreme. After all, Saudi Arabia is literally trying to cut off Qatar by creating a physical channel of water between it and the Qatari peninsula attached to it. At least in Canada, we can be thankful we do not share a border with the Saudis. But the country with which Canada shares the longest undefended border in the world, the United States is silent. The absence of diplomatic support for Canada from its traditional allies is astounding. In any other time of history, Canada would have expected the United States to have come to the defense of Canadians and the liberal democratic values they supposedly share. But under the Trump administration, this is no normal United States. Trump is also no fan of Prime Minister Justin Trudeau—calling him “weak” on Twitter—and is likely unimpressed with Trudeau’s self-declared feminist foreign policy. We don’t know whether Riyadh cleared the diplomatic move with Washington before expelling Canada’s Ambassador, but the deafening silence out of the White House on the matter makes it clear that Trump does not care for a traditional bilateral relationship with Canada. Indeed, he may be relishing the thought that Trudeau is getting a beating by the Saudis. The young crown prince is not yet king, but already Qatar, Yemen, and now Canada are in Saudi crossfires. It seems clear that Saudi Arabia will be sending shockwaves in diplomatic circles for years to come. Momani is Professor at the University of Waterloo and Balsillie School of International Affairs, Senior Fellow at the Centre for International Governance and Innovation, and NonResident Fellow at the Stimson Center in Washington, D.C.
cent referendum on abortion. Such a high-level Canadian intervention would have seemed unprecedented but for the fact that Prime Minister Trudeau had already inserted himself into the campaign. We’re generating the perception among emerging powers that when we talk about human rights, we’re arrogantly insisting on the adoption of an agenda that reflects the worldview and biases of the secular West. Among our Western allies, we’re increasingly seen as dilettantes, promoting our values agenda because we have no real interests to pursue. Up until the Trump era, this didn’t matter much. For decades, we benefited from the fact that the main objectives of any foreign policy – security and prosperity – were conveniently built into our neighbourly relationship with the United States. We could afford to dabble in diplomacy elsewhere. Although the world has changed, we’re still dabbling. It’s time to get serious. Our diplomacy has suffered serious setbacks in Beijing, Delhi and Riyadh. We need to understand that punching above our weight involves more than simply talking above it. David Mulroney was Canada’s ambassador to China from 2009 to 2012.
The US is at risk of losing a trade war with China Project Syndicate Joseph e stiglitz
What was at first a trade skirmish— with US President Donald Trump imposing tariffs on steel and aluminum—appears to be quickly morphing into a full-scale trade war with China. If the truce agreed by Europe and the US holds, the US will be doing battle mainly with China, rather than the world (of course, the trade conflict with Canada and Mexico will continue to simmer, given US demands that neither country can or should accept). Beyond the true, but by now platitudinous, assertion that everyone will lose, what can we say about the possible outcomes of Trump's trade war? First, macroeconomics always prevails: if the United States' domestic investment continues to exceed its savings, it will have to import capital and have a large trade deficit. Worse, because of the tax cuts enacted at the end of last year, the US fiscal deficit is reaching new records—recently projected to exceed USD 1 trillion by 2020— which means that the trade deficit almost surely will increase, whatever the outcome of the trade war. The only way that won't happen is if Trump leads the US into a recession, with incomes declining so much that investment and imports plummet. The “best” outcome of Trump's narrow focus on the trade deficit with China would be improvement in the bilateral balance, matched by an increase of an equal amount in the deficit with some other country (or countries). The US might sell more natural gas to China and buy fewer washing machines; but it will sell less natural gas to other countries and buy washing machines or something else from Thailand or another country that has avoided the irascible Trump's wrath. But, because the US interfered with the market, it will be paying more for its imports and getting less for its exports than otherwise would have been the case. In short, the best outcome means that the US will be worse off than it is today. The US has a problem, but it's not with China. It's at home: America has been saving too little. Trump, like
so many of his compatriots, is immensely shortsighted. If he had a whit of understanding of economics and a long-term vision, he would have done what he could to increase national savings. That would have reduced the multilateral trade deficit. There are obvious quick fixes: China could buy more American oil and then sell it on to others. This would not make an iota of difference, beyond perhaps a slight increase in transaction costs. But Trump could trumpet that he had eliminated the bilateral trade deficit. In fact, significantly reducing the bilateral trade deficit in a meaningful way will prove difficult. As demand for Chinese goods decreases, the renminbi's exchange rate will weaken—even without any government intervention. This will partly offset the effect of US tariffs; at the same time, it will increase China's competitiveness with other countries—and this will be true even if China doesn't use other instruments in its possession, like wage and price controls, or push strongly for productivity increases. China's overall trade deficit, like that of the US, is determined by its macroeconomics. If China intervenes more actively and retaliates more aggressively, the change in the US-China trade balance could be even smaller. The relative pain each will inflict on the other is difficult to ascertain. China has more control of its economy, and has wanted to shift toward a growth model based on domestic demand rather than investment and exports. The US is simply helping China do what it has already been trying to do. On the other hand, US actions come at a time when China is trying to manage excess leverage and excess capacity; at least in some sectors, the US will make these tasks all the more difficult. This much is clear: if Trump's objective is to stop China from pursuing its “Made in China 2025” policy—adopted in 2015 to further its 40-year goal of narrowing the income gap between China and the advanced countries—he will almost surely fail. On the contrary, Trump's actions will only strengthen Chinese leaders' resolve to boost innovation and achieve technological supremacy, as they realise that they can't rely on others, and that the US
is actively hostile. If a country enters a war, trade or otherwise, it should be sure that good generals—with clearly defined objectives, a viable strategy, and popular support—are in charge. It is here that the differences between China and the US appear so great. No country could have a more unqualified economic team than Trump's, and a majority of Americans are not behind the trade war. Public support will wane even further as Americans realise that they lose doubly from this war: jobs will disappear, not only because of China's retaliatory measures, but also because US tariffs increase the price of US exports and make them less competitive; and the prices of the goods they buy will rise. This may force the dollar's exchange rate to fall, increasing inflation in the US even more—giving rise to still more opposition. The Fed is likely then to raise interest rates, leading to weaker investment and growth and more unemployment. Trump has shown how he responds when his lies are exposed or his policies are failing: he doubles down. China has repeatedly offered face-saving ways for Trump to leave the battlefield and declare victory. But he refuses to take them up. Perhaps hope can be found in three of his other traits: his focus on appearance over substance, his unpredictability, and his love of “big man” politics. Perhaps in a grand meeting with President Xi Jinping, he can declare the problem solved, with some minor adjustments of tariffs here and there, and some new gesture toward market opening that China had already planned to announce, and everyone can go home happy In this scenario, Trump will have “solved,” imperfectly, a problem that he created. But the world following his foolish trade war will still be different: more uncertain, less confident in the international rule of law, and with harder borders. Trump has changed the world, permanently, for the worse. Even with the best possible outcomes, the only winner is Trump—with his outsize ego pumped up just a little more. Joseph E Stiglitz is the winner of the 2001 Nobel Memorial Prize in Economic Sciences. His most recent book is Globalization and its Discontents Revisited: Anti-Globalization in the Era of Trump.