United States Ambassador to the United Nations, Nikki Haley, recently visited the IAEA (International Atomic Energy Agency) to review the ongoing JCPOA (Joint Comprehensive Plan of Action) as they continue to monitor Iran’s nuclear program.
Ambassador Haley outlined a summary of the IAEA meeting and fielded additional questions about North Korea and Venezuela. She will be traveling to Washington DC on Monday to brief President Trump and Secretary Tillerson.
As you might note from her remarks (see below), Ambassador Haley is keenly aware of the uniqueness, and effectiveness, of President Trump’s economic approach toward regional national security issues – specifically as it pertains to the recently announced Venezuela sanctions. Strong concise statements. Strong, short, effective and deliberate answers.
The corporate U.S. media are hopelessly deficient in their coverage and explanations of how strategic objectives for national security are being delivered through a Trump Doctrine via economic leverage. The results are stunningly effective, yet few have noticed, and even fewer seem willing to articulate.
The latest example of the geopolitical Trump Doctrine in action comes via Venezuela, and in the wake of a fraudulent Maduro election – the Trump administration’s economic and financial policy delivering sanctions against the rogue Maduro regime:
The sanctions Trump signed by executive order are bound to dramatically escalate tensions between Venezuela and the U.S. and exacerbate the country’s economic crisis.
The White House said in a statement that the measures “are carefully calibrated to deny the [President Nicolas] Maduro dictatorship a critical source of financing to maintain its illegitimate rule, protect the United States financial system from complicity in Venezuela’s corruption and in the impoverishment of the Venezuelan people, and allow for humanitarian assistance.”
The new actions prohibit dealings in new debt and equity issued by the government of Venezuela and its state oil company. It also prohibits dealings in certain existing bonds owned by the Venezuelan public sector, as well as dividend payments to the government of Venezuela. (read more)
To appropriately conceptualize the strategic policy of the Trump Doctrine in action, it becomes necessary to remind ourselves the latest activity does not happen in a vacuum. In the multidimensional economic security approach of President Trump, Treasury Secretary Steve Mnuchin and Commerce Secretary Wilbur Ross play a critical role.
The financial and economic sanctions against Venezuela, while targeted, are only one small outcropping of a much larger geopolitical strategy that U.S. President Trump has initiated for the past eight months with jaw-dropping success:
From OPEC (Saudi Summit) to the EU and Baltic States (Poland Pre-G20); to North African energy development via President Macron (Libya and Mali); to walking away from the Paris Climate agreement; to discussions with Theresa May on a bilateral trade deal; to massive shipments of coal to U.K. and France; to closing a deal to deliver Ireland massive amounts of Texas LNG; to our own internal U.S. energy production policy with pipelines, Oil, Coal and Liquified Natural Gas (LNG) etc.
President Trump has used all of those “allied” relationships to lower global energy prices.
The bigger part of the MSM’s ‘big-missed-picture‘ was how energy strategy impacted adversaries like Russia, Iran, China and recently Venezuela; while simultaneously supporting the larger America-First economic and geopolitical goals.
President Trump thinks seriously long-term, and really BIG picture.
Global energy, mostly oil, fuels the expansionist and interventionist structure that builds the very foundation of our geopolitical adversaries’ ability to continue their global influence. Diminish the value of oil and Donald Trump puts the squeeze on the financial resources of those nations dependent on energy as income.
Most of our current geopolitical adversaries Russia, Iran and Venezuela are dependent on high energy prices. Secondly, the downstream economic adversaries are dependent on high energy prices to maintain their economic position and alliances. As examples: China (as an geopolitical influence agent), and Mexico (as a NAFTA trade parasite), hold adverse interests to the U.S. on trade.
President Trump, by lowering global energy prices, has fractured the foundation of energy producing nations to influence geopolitical strategy; Trump has diminished their most powerful tool.
As a consequence, economic adversaries like China are put into a position of having to spend more money, directly, to aid their allies and to maintain their influence.
Think about how much financial strain is on China currently. North Korea is entirely financially dependent on China; Pakistan is financially dependent on China’s continued investment; Mexico is financially dependent on Chinese investment; Venezuela is dependent on Chinese loans and oil purchases; etc., etc. the list goes on.
The Trump Doctrine is confronting these relationships through economics. Each of these relationships is bleeding out money from China.
Conversely, on the income side of China’s ledgers, they are dependent on manufacturing and trade to keep their revenue stream viable. The Trump Doctrine of renegotiated trade relationships is also confronting China on the revenue side. China needs our market to sell their goods; China is dependent on access to the U.S. $20 trillion trade market.
See the squeeze?
The Trump Doctrine of using economic strategy is forcing China to spend more and yet simultaneously they are facing less income. And remember, as a combined result of their dependency on international trade and a trade surplus with the U.S., China’s central bank vault holds “dollars”.
However, China is also not operating in a vacuum. In addition to direct confrontation with the U.S. over various regional issues of opposition, there is an underlying multinational aspect where China is acting -somewhat in concert- at the request of multinational banks who also oppose President Trump’s nationalistic economic approach.
The network of global trade, and the corporations who dominate within it, is underwritten by massive multinational banks who have a vested interest in retention of global perspectives. Nationalism and bilateral trade policy is adverse to their interests. China is a useful tool for those financial institutions to protect their interests.
China’s primary defense threat, if you want to call it that, would be to dump dollars to retaliate against what President Trump is doing. However, if the value of the dollar drops, China has less value in their vault, and a lower dollar actually helps our exports.
#1) Big necessary expenditures. #2) Lower income to afford the expenditures. #3) And no substantive way to stop the incoming Trump policy driving #1 and #2. President Trump has created a three-way geopolitical and financial squeeze against China and the economic adversaries within the multinationals.
Now, back to Venezuela – The United States was the only remaining cash purchaser of Venezuela oil. Both China and Russia purchase Maduro’s oil, however their current purchases are/were all made as offsets, repayments, for prior loans. It doesn’t generate additional revenue for Maduro if China and Russia to purchase more oil, it only pays down the Venezuelan debt.
This report was earlier in this month (we predicted today’s outcome from it):
MEXICO CITY (Reuters) – A tanker carrying a cargo of about 1 million barrels of Venezuelan heavy crude has been stranded for more than a month off the coast of Louisiana for lack of a bank letter of credit to discharge, three sources have told Reuters.
The cargo’s fate adds to state-run oil company PDVSA’s precarious financial position. Revenue from the company’s oil sales, which have suffered because of low prices and declining production, account for more than 90 percent of the nation’s exports.
Major banks are cutting exposure to Venezuela as a result of political upheaval in the South American country. Some have closed accounts linked to officials of the OPEC member who have had sanctions leveled against them by the U.S. government and have refused to provide correspondent bank services or trade in government bonds.
Credit Suisse this month barred operations involving certain Venezuelan bonds and is now requiring that business with President Nicolas Maduro’s government and related entities undergo a reputation risk review.
[…] The tanker Karvounis carrying Venezuelan oil is anchored at South West Pass off the coast of Louisiana, according to Reuters vessel tracking data. PBF Energy Inc, the intended buyer of the cargo, has been trying unsuccessfully to find a bank willing to provide a letter of credit to discharge the oil, according to two trading and shipping sources.
Crude sellers typically request letters of credit from customers that guarantee payment within 30 days after a cargo is delivered. The documents must be issued by a bank and received before the parties agree to discharge.
It was not immediately clear which banks have denied letters of credit or if other U.S. refiners are affected. (read more)
Today’s additional sanctions by Treasury Secretary Mnuchin formally removes the ability of Venezuela to get underwriting for their most important export, oil. Essentially, Maduro is cut off from additional cash.
The only option for Maduro’s economic allies: China, Russia, Cuba etc., is to directly give more money to Venezuela. However, if they do so they run the risk of running afoul of Secretary Mnuchin’s sanctions and freezing their own international financial systems from engagement with U.S. banks. Chinese businesses cannot effectively trade with the U.S. market if they are cut off from access to the U.S. banking system.
See the leverage?
Now when you step back, and look at the bigger BIG PICTURE, and think about North Korea, Pakistan-Afghanistan, and the other geopolitical hot-button issues where China is involved…. And then overlay Russia’s lack of energy revenue and simultaneous drain on resources via Syria,… well, you begin to see how effective the Trump Doctrine is.
None of this happened this week, this month, or last month. This is a cumulative strategy mapped out long before the January inauguration and carried out ever since.