Well, there it is. Quietly within the deliberate words from Vice-President Mike Pence a revelation that explains the origination of the Central American invasion force. For those who are not deep in the geopolitical weeds, the subtlety can pass unnoticed; for those who travel within the deepest international conflicts, Pence’s words here are as subtle as a brick through a window:
[…] “Financed by Venezuela; and sent North to challenge our sovereignty and our border”…
Announcing the migrant caravan is “financed by Venezuela” is a direct notification the Central American invasion force is being funded by Russia and China. Venezuela doesn’t have any money to sustain its own operational government – let alone a 10,000 person convoy. Venezuela is entirely reliant upon massive investment from Russia and China.
In fact China owns 49% of Venezuela’s state run PDVSA energy production. A collateral system where Beijing takes oil as payment for prior loans the Maduro regime cannot pay back. With the crippling treasury department sanctions President Trump put on Venezuela last year, Trump has punched Maduro and Xi-Jinping hard.
With Mike Pence pointing a finger at Venezuela the politics behind the invasion force begin to make much more sense. The invasion objective takes on a geopolitical angle directly targeting a series of U.S. policies that are against the interests of Russia and China.
It helps here to remember the strategic moves taken by President Trump that have put the geopolitical/economic squeeze on both China and Russia:
♦Squeeze #1. President Trump and Treasury Secretary Mnuchin sanctioned Venezuela and cut off their access to expanded state owned oil revenue. Venezuela needs more money. China and Russia are already leveraged to the gills in Venezuela and hold 49% of Citgo as collateral for loans outstanding. China and Russia now need to loan more, directly.
However, China cannot engage in economic commerce with Venezuela or they risk losing access to the U.S. banking system. Therefore all current Chinese aid to Maduro comes in the form of IOUs. These ongoing loans are likely impossible to be repaid.
♦Squeeze #2. China’s geopolitical ally, Russia, is already squeezed with losses in energy revenue because of President Trump’s approach toward oil, LNG and coal. Trump, through allies including Saudi Arabia, EU, France (North Africa energy), and domestic production has influenced global energy prices. Additionally, President Trump is demanding NATO countries, specifically Germany, stop supporting financial dependence on Russia.
Meanwhile, and directly connected, Russia is bleeding out financially in Syria. Iran is the financial reserve, but they too are energy price dependent and President Trump is now putting pressure on Iran vis-a-vis new sanctions and new demands on allies.
♦Squeeze #3. In 2017 Trump and Secretary Tillerson, now Secretary Pompeo, put Pakistan on notice they need to get involved in bringing their enabled tribal “extremists” (Taliban) to the table in Afghanistan. Pakistan’s primary investor and economic partner is China. The U.S. removed $900 million in financial support to pressure Pakistan toward a political solution in Afghanistan, China has to fill void. [NOTE: Last month the World Bank began discussions about a financial bailout for Pakistan.] Again, more one-way bleed for China.
♦Squeeze #4. China’s primary economic threat (competition) is next door in India. President Trump has embraced India as leverage over China in trade and pledged ongoing favorable trade deals. The key play is MFN (Most Favored Nation) trade status might flip from China to India. That’s a big play. It would have massive ramifications.
♦Squeeze #5. President Trump launched a USTR Section 301 Trade Investigation into China’s theft of intellectual property. This encompasses every U.S. entity that does manufacturing business with China, particularly aeronautics and technology, and also reaches into the financial services sector.
In March of 2018 U.S. Trade Representative Robert Lighthizer completed a section 301 review of China’s trade practices. [SEE HERE] Section 301 of the U.S. Trade Act of 1974 authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. However, as talks with China progressed, President Trump shelved the 301 action to see where negotiations would end-up. The May and June, 2018, negotiations between the U.S. and China provided no progress. The 301 review of China was pulled back off the shelf, and President Trump assembles his trade-war strategy. The 301 tariffs/sanctions are currently being worked out with U.S.T.R Robert Lighthizer.
♦Squeeze #6. President Trump, Secretary Ross, Secretary Mnuchin and USTR Robert Lighthizer dissolved NAFTA in favor of the USMCA. One of the primary objectives of team U.S.A. was to close the 3rd party loopholes, including dumping and origination, that China uses to gain backdoor access to the U.S. market and avoid trade/tariff restrictions. [China is a Non-Market Country without a Free Trade Agreement (FTA) and sends parts to Mexico and Canada for assembly and then back-door entry into the U.S. via NAFTA.]
As we see in the details within the U.S-MCA trade agreement, China’s ability to use Mexico and Canada as a backdoor into the United States is now gone.
♦Squeeze #7. President Trump has been open, visible and vocal about his intention to shift to bilateral trade renegotiation with China and Southeast Asia immediately after Team U.S.A. concluded with NAFTA. [Current discussions with Japan are ongoing]
♦Squeeze #8. President Trump positioned the U.S. relationship with the E.U. as a massive potential loss for Europe (via Steel, Aluminum, and Auto tariffs) if they did not: (A) shift their trade relationship toward greater reciprocity; and (B) reconsider the size of their trade relationship with China. After initially trying to push-back, Europe acquiesced.
♦Squeeze #9. President Trump has positioned ASEAN (Association of Southeast Asian Nations) as trade benefactors for assistance with North Korea. Last year the KORUS (South Korea and U.S.) trade deal was renegotiated, and announced in March. The relationship between ASEAN nations and the Trump administration is very strong, and getting stronger. Which leads to…
♦Squeeze #10. President Trump has formed an economic and national security alliance with Shinzo Abe of Japan. It is not accidental that North Korea’s Kim Jong-un fired his last missile over the Northern part of Japan. Quite simply, Beijing told him to. However…
♦Squeeze #11. President Trump cut-off the duplicitous Beijing influence over North Korea by engaging directly with Kim Jong-un. The open exchange and ongoing dialogue has removed much of the ability of Beijing to leverage the DPRK nuclear threat for their own economic benefit. This dialogue was as much, if not more, about dismantling the Beijing geopolitical influence as it was about denuclearizing the Korean peninsula; however, no-one caught on to that part of the strategy.
SUMMARY: It makes sense from the perspective of China, Russia and Venezuela to use their alliance to create a border crisis between the United States and Mexico, especially since the interests of President-elect Lopez Obrador and President Trump are now aligned within the U.S-MCA trade agreement; which is structured to the detriment of pre-existing Chinese investment in Mexico under their prior -and corrupt- Mexican leadership.
Remember, President Trump out manuevered Chairman Xi Jinping in North Korea. Xi lost most of his control position over DPRK Chairman Kim Jong-un; and while President Trump stood guard on the watchtower North Korea (Kim) and South Korea (Moon) are now happily joined in mutual fellowship. In the grand trade-conflict between the Red Dragon and the United States, Xi needed a new form of leverage.
In the geopolitical realm this invasion force makes much more sense now…