22 June 2017
Meanwhile, In The White House…
The administration looks at Syria and Wall Street.
Events in the UK have rather distracted from what is happening across the Atlantic. We can confirm that Mr Trump is still President, though you might have thought from some reports that he was about to be removed therefrom. And he is still pursuing at least some of the strategies that he suggested he might when campaigning for the Presidency last year.
But one area where he is perhaps varying his approach is to be more interventionist in foreign affairs. Nothing hugely dramatic; but the United States’ has quietly stepped up to a more active role in Syria (more active than during the time of his immediate predecessor that is), and all those who made jokes last year about the worries of The Donald’s finger on the nuclear button will no doubt be re-warming them now. But what seems to be going on is actually Pentagon-led; the generals have asked to be allowed to take the gloves off a little when it comes to protecting American interests in the area. Hence the very carefully targeted attack on President Assad’s biological weapons depot several weeks ago, and the shooting down of a Syrian army SU-22 jet fighter at the weekend. The depot bombing was communicated to Russian personnel on site a few minutes before, allowing them to get clear, in accordance with rules of engagement agreed between the Russian and US military forces, which were further reinforced and clarified after the bombing.
In relation to the downing of the SU-22 it is not clear what warnings were given; as it was Syrian the State Department in Washington have said that strictly speaking no warning was required, but as it was part of joint Russian-Syrian forces they did communicate intent. The Russians have said no warning was given and have suspended the pre-warning communication structure, aggressively criticising the US action.
From here your perspective, and your decision as to whether to restock the emergency supplies in your private nuclear fall-out shelter, will depend on which of the various area experts you believe (no doubt bearing in mind Mr Gove’s comments on experts). The doves say that the Russian response is in fact a friendly one, doing what they have to do to calm the anger of their Syrian allies and concerned local military, but actually refraining from more precipitate actions. The hawks though say it is all bad news as it is likely (or, designed, say the very hawkish) to lead to a situation where there will be further breaches of the restraint code of conduct which will lead to retaliation against American forces, rapid build-up of American involvement in the area, ditto Russian, fingers on buttons, and Armageddon. The proponents of this view do seem to be the same ones that suggest Mr Putin and Mr Trump are secret best friends, slightly disrupting this argument, but maybe they have a secret plan to rebuild the world in their private ownership when it has been nuked.
What seems to be a more likely explanation of the weekend’s events is not any form of conspiracy theory, but that much more common cause of trouble, the cock-up. And in Syria this eventuality is not at all surprising. The Americans are supporting Kurdish forces, the Russians Assad government forces. Both these clients and their sponsors are trying to destroy ISIS; but the clients also hate each other. In this incident the Russian-Syrian military claimed to be attacking ISIS but found that the Kurdish-American effort got in the way. The Americans say the plane was shot down to protect Kurdish ground troops which they claim had become the Syrian target. General Joseph Durnford, who is chairman of the US chiefs of staff and thus the man in charge for operational purposes, said that “Every effort [was made] to warn those individuals [responsible for the jet] not to come any closer”. You don’t have to be a lawyer to recognise that there is some very careful wording in that statement. The Russians say there was no use of the “de-confliction” (add that to your dictionary of expressions not previously encountered) communication system. Those of us who have to try and work all this out can see that the various statements are actually not very conflicting, indeed deconflicting. Nevertheless the Russians are saying that US fighter planes are now legitimate targets, though word is there are conversations going on between Washington and Moscow. Let’s hope that jaw-jaw will prevail, that the striking of fierce attitudes can cease and life on the battlefield can get back to normal. And, just a suggestion, maybe the parties might also involve the local population in communication strategies and remove them from their current role as collateral damage on that battlefield.
In domestic matters though, Mr Trump’s administration is currently less in need of clarity in its pronouncements and actions. Top of Mr Trump’s little list currently is to sort out those pesky Wall Street bankers. His method here is to offer them a great deal of rope, an approach seemingly welcomed by the bankers who think there is lots of money to be made in rope dealing. Not literally of course; what The Donald wants to do is to force them to be more like other industries – such as, say real estate developers – who if they get it wrong go bust and have to call in the bailiffs. This is generally how bankers behaved until relatively recently, helped occasionally by the Federal Reserve Board (in the UK by the Bank of England) who would if approached by naughty bankers to say that they had got the pluses and minuses the wrong way round, or left the bank cheque book with a rogue trader over the weekend, try and help out. This usually meant forcing a merger on terms very painful for the bankers in trouble; it also meant that banks should not get so big that they became impediments to the structural integrity of the banking system. Things have moved on though, on both sides of the Atlantic. In the US the system is now based on the Dodd-Frank Act which sounds like a comedy routine but is actually what drives the current system of regulation. The bankers think, rightly, that the regulation is extremely intrusive, expensive, and gives enormous powers to the regulators. It is meant to, so to that extent it is working well, but the bankers complain further that it is driving up their costs to uneconomic levels, prevents them using their (shareholders’) capital to maximise profits, and means that they cannot compete or expand whilst faced with the growing threat from other forms of deposit taking, advising, dealing, and lending. They would like Dodd-Frank amended or abolished, and so would much of the Republican Party in Congress, some because they think it is over-interference in business, and no doubt a few because they are bankers or are friends thereof.
Mr Trump agrees, not because he wants to take up banking after his retirement from politics or because he likes bankers – the inhabitants of Wall Street say on the contrary, he detests them – but because he wants bankers to go back to standing on their own two feet. He would like smaller banks that are competitive and business like. And if they go bust, go bust. In accordance with this, Mr Trump last week appointed Jim Clinger as Chairman of the Federal Deposit Insurance Corporation, the key bank regulator. Mr Clinger has long been in various jobs a vocal and determined opponent of regulation. The House of Representatives has recently passed a bill to abolish Dodd-Frank that the anti-regulator lobby consider to be the perfect solution to how to control the sector, but it is thought to be unlikely to get through the Senate. So the second best solution is to put in charge of the regulators a man who wants a lot less regulation.
Which suggests that Mr Trump is indeed learning how to get his way on Capitol Hill. Just one problem remains – getting Mr Clinger’s appointment confirmed by the Senate.
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