02:39 GMT +321 August 2019
Listen Live
    Pivot to Asia

    US Sanctions From an American Perspective

    Pivot to Asia
    Get short URL
    John Harrison
    0 0 0

    The US trend of imposing tariffs on countries to solve perceived global trade problems is considered to be negative. The negative effects, however, have to be evaluated in perspective.

    Mark Mariska, Managing Director of the Aurora Russia Private Equity Fund, joins the program.

    The effect of the new US international trade policy is discussed country by country. Turkey is the first on the list. "The United States hit Turkey with a sanction on steel which had an immediate impact on the lira, which has led, I think, to a 20% drop over the last few weeks….The issue with Turkey is related to NATO, Syria, the Kurds; we have a tendency in the United States to use sanctions as a political weapon."

    Host John Harrison points out the US's actions is forcing Turkey to realign itself with new trade blocks such as the Chinese One Belt One Road strategy (OBOR). Mark comments: "China is doing what China needs to do, with its substantial population that I consider to be a problem. Because it goes deeper than trading relationships. China needs to expand its sphere of influence… We can look at this as a precursor of additional moves by China which from their point of view I think are protectionist."

    Russia is discussed, in the context of the argument over the Nord Stream II pipeline. "I think we have to put this into a political context in addition to a practical one. On a practical basis, from what I've seen, Nord Stream will provide natural gas cheaper than gas transported form the United States. A pipeline from Russia to the Baltics seems to me, and I think too many, to be a cheaper process. The issue with Europe and our trade relations is I think more complex than simply looking at Nord Stream. We've got a $600bn, that was in 2016, trading relationship with the EU which dwarfs any trading relationship around the planet. In that trading relationship we have a deficit of about $146bn, which is significant. If you look at those kind of numbers and then contrast it to Nord Stream you think that in a way it's just a rounding up error. I don't agree with our [US] trading policies; however I can understand the mixture of political, and by that I mean geopolitical, commercial, and practical common sense that develops out of this."

    Discussion turns to Iran, specifically the maritime insurance business. Because of sanctions, American insurers are now no longer able to insure Iranian vessels. Mark comments: "I think we also need to place these kind of things in perspective. Iran's major export is petroleum and petroleum-based products. I think, and this may expose my bias, that we may be doing the right thing in trying to induce Iran to eliminate any nuclear development programs. Having said that, if we place sanctions on countries like Iran and North Korea you also have a tendency to impose secondary sanctions on those countries that offer insurance services and so on. Now that may force Iran to insure its ocean marine cargo with an insurer that's not western based. That to me is a dodgy situation. You don't want to do this with a Russian reinsurer because the asset base there is not very attractive; within the Russian insurance industry. So you have a tendency to apply a draconian situation on a relatively small trading potential. Iran probably has not been, and will not be in the near future, like North Korea, being large trading partners with anyone. What this does is to create winners and losers….Using international trade as a political tool has far deeper ramifications that we would normally think. It may cause realignment but then again you are talking about countries and trade volumes that are on a global scale relatively, and I don't mean this in a negative way, but I guess it is, relatively insignificant. It does force a possible realignment on the OBOR scenario, with China and realignment in the Middle East, but does the long term framework of such transition serve those particular countries? Does Iran really want [in the meantime] want to insure its cargoes with some dodgy insurer somewhere in the Middle East? I can't think of many decent operating alternatives…"

    John Harrison points out that the size and speed of China's rise was not foreseen, and that little by little, a basic pattern of realignment towards the East is taking place. "You are right in noticing that there are substantial deals being made in China but San Su (in the Art of War) would say: ‘Take your enemy's greatest strength and look at it as a weakness.'…If China fails to continue to grow, it cannot support its population of 1.6bn. China must continue to do this no matter what…." In other words, Mark believes that the West may wish and be able to stop OBOR and other strategies in their tracks by limiting China's growth. He may be right, and he may be wrong.

    On US sanctions in general, Mark says: ‘The US applied sanctions on Japan in the 1930s, on steel and petroleum, products primarily because Japan invaded China and Manchuria. This led to Japan bombing us at Pearl Harbour and us entering into a 5 year war in the Pacific….I have a problem with sanctions, especially when you apply them not so much against a small country, one that doesn't have much self-sufficiency, and I would say that North Korea is one and Iran is another…. The US has a tendency to be ‘bad buddy.'…The US is probably the worst witness to how to conduct international trade because we complicate it with geopolitical agenda."

    We'd love to get your feedback at radio@sputniknews.com

    Tags:
    trade policy, Nord Stream 2, steel, US sanctions, trade, Iran, China, Turkey, Russia
    Community standardsDiscussion
    Comment via FacebookComment via Sputnik