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Deep State vs. Donald Trump

Russian President Vladimir Putin has said it often: the door to cooperation (with the U.S.) “lies ajar.” He has said it repeatedly: that it was not Moscow in the first place that had withered – and then severed – the lines of communication with Washington. And Mr. Putin has been consistent in periodically easing the path to “Moscow” for President Trump.

(The Americans had hinted recently that they might appreciate “a gesture” from the Russians – and they got one: Russia invited the incoming U.S. administration to the Syria talks, at Astana. Moscow made this gesture – even at the cost of almost losing their Iranian ally’s support at the talks.)

Perhaps it is this “door ajar” stance by Mr. Putin that has given rise to the idea, in much of the press, that détente between the two leaders is somehow a “slam dunk” bet — that Trump and Putin are cut from similar cloth, and will somehow end up bashing Islamic radicals together. If that is the consensus, then it is perhaps premature, and possibly wrong.

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The door is indeed “open,” and it is possible that the two leaders may indeed conjure up a détente. But it is no “slam dunk” (certainty). And Moscow certainly does not regard it to be “slam dunk” – at all. On the contrary, they are aware that whereas there are areas of common approach, there are also areas of obvious difference – and possible disagreement – between the new U.S. administration and Moscow. The hope for détente ultimately may prove to lie just beyond reach. We shall have to see.

We do not know what President Trump’s foreign policy – in practice – will be. It is not at all clear (intentionally so, in part. But, also because the details have not yet been thrashed out within the team, who are busy with managing a complex transition). Nonetheless, we can tease out, perhaps, a few solid pointers in the wake of the new U.S. President’s inaugural speech:

–Mr. Trump has witnessed America’s political and economic decline over the years (he made plain previously his concerns about America’s deteriorating situation in his 2000 campaign publication).

–He sincerely believes the U.S. to be in crisis – and that without radical, urgent and comprehensive reform, America (qua “America”) will be in peril. He is, as it were, someone who has looked upon decay and corruption and been transfigured by that which he saw: Yes, there was a Cromwellian “New Model Army” whiff to his inauguration speech. He said that he intends to purge – and then to remake – America, no less.

–He has arrayed against him the still intact power of the Deep State, yet he chooses mainly to taunt them. His inaugural speech told the Deep State flatly to prepare for its own disempowerment. He has thereby “burnt his bridges” in respect to any subsequent Faustian sale of his soul. He can only succeed or dramatically fail.

–For all the pomp of an orderly transfer of power on Jan. 20th, the reality behind the trappings is one of a “state of war” between the U.S. President and the still-present Deep State elites (but not necessarily the Deep State’s foot soldiers, many of whom, it appears, voted for Trump).

Political Tactics

Artemis Capital presciently describes Trump’s likely political tactics: “Trump knows that if you can’t win [as matters stand], then you change the rules of the game – this is what he has already done with American politics – and what he is about to do to the entire Post-Bretton Woods World Order. If you really want to know a person, watch what they do, and not what they say … or what they tweet … the rants and twitter storms are part of a strategy of media control and distraction.

“Trump’s business career was largely comprised of three core strategies 1) Leverage 2) Restructure 3) Brand … in that order. Throughout the late 1970s and 1980s, Trump rode a generational decline in interest rates and debt binge to purchase a range of high profile real estate projects including the Grand Hyatt (1978), Trump Tower (1983), the Plaza Hotel (1988) and the Taj Mahal (1988). In the 1990s he went through a total of 6 bankruptcies due to over-leveraged hotel and casino businesses in Atlantic City and New York. In the 2000s he pivoted to move away from debt-driven property investments to building a global brand through the ‘Apprentice’ TV show.

“Trump will run the country as he ran his businesses … He will lever, and lever, and lever, and lever … and lever … and then restructure his way to success, or whatever success is defined as, by the broadest measure of popularity at any given time. Trumponomics, if it delivers, will be a supply-side free for all: massive tax cuts, deficit spending to create jobs, financial and energy deregulation, business creation, and trade protectionism – all driving inflation. More importantly, Trump sees bankruptcy as a tool and not an obligation and will have no problem pushing the US to the limits of debt expansion. ‘I do play with bankruptcy laws, they’re very good to me!’ he once said.”

‘The Destructor’

And this is what – in broad outline – we already see. Trump’s tweets are “the destructor” element: Creating negotiating leverage through uncertainty. No one can be sure of Trump’s final aims, or his “bottom line.”

This is his strategy. The tweets are mini-grenades tossed into the mix, precisely to confuse, to distract, and to loosen up the existing “order” – and to make it more susceptible to negotiation – and to subsequent “re-structuring” – should initial negotiations hit a brick wall.

Similarly, with leverage. Trump has leverage: Most significantly, the U.S. is the globe’s biggest buyer of consumer goods; it possesses the world’s reserve currency and controls all the Bretton Woods financial institutions, with all the privileges which that implies. It has the Federal Reserve and can manipulate other states’ currencies; the U.S. “owns” NATO, and the defense protection it does (or does not) choose to confer on other states; it has the biggest military, and is more or less energy independent. Not bad cards.

Trump may be expected to lever, and lever again, all these assets. He will pull out all the stops in the interest of putting America First, and returning jobs and manufacturing to America’s marginalized white middle- and blue-collar classes. He will lever this aim financially (i.e. debt, border taxes and tax incentives) to, as well as politically strong-arm America’s trading rivals.

Brand “America” will be advanced by all the tradecraft that Trump acquired through his “reality” TV show: distractions, surprises, and publicity stunts to create an aura of success – for he is determined to succeed. It is almost as if he feels he can lift the “animal spirits” of Americans, as it were, by willpower, and pithy, one-liner tweets. To an extent, he already has – to judge by polls on business confidence in the U.S.

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