Away days ... what's next in Quebec ...
The G7 meet in Quebec this week-end. A difficult long week-end in the Fairmont Manoir Richelieu will follow. An apt location? Perhaps. Cardinal Richelieu was "First Minister" in the Government of Louis XIII.
Appointed as foreign minister in 1616, he survived in office until his death in 1642. Richelieu sought to consolidate royal power, crush domestic dissonance and develop French hegemony in central Europe, largely at the expense of the Hapsburg dynasty.
Political intrigue was of second nature. Religious dogma would accommodate alliances with Protestant rulers. Domestic enemies were confounded by the "Jour des Jupes" "Day of the Dupes". A day in November 1630 in which the enemies of Cardinal Richelieu mistakenly believed that they had succeeded in persuading Louis XIII, to dismiss Richelieu from power.
So the G7 leaders meet in Charlevoix for Trump's "Day of the Dupes". Trump seeks to consolidate his perceived royal power, crush international dissonance and to develop Trump hegemony in international affairs. "Surreal Politik" replaces "Real Politesse" as domestic and foreign advisers alike are confounded by the twists and turn of Trump's twitter diplomacy.
"G7 in Canada ... Day of the Dupes"
Tariffs on allies, tough talk on trade. Trump arrives in Quebec complaining about Canadian dairy taxes, blaming Trudeau for burning down the White House (1824) and wishing Putin was here (2018), to rejoin the club.
Can't stay long, "I have a world to run" says Trump. Time to shoot off to Singapore to bring about peace
in Korea and a Trump Tower Hotel in Pyongyang. No need to prep. "I can just wing it". May be a few notes on Air Force One, and hopefully Fox news will run a "What everyone should know about North Korea" feature before landing.
Trump complains about the 270% tariffs on Canadian dairy imports and the 33% tariff on dairy imports into the EU. How the 10% tariff on EU car imports contrasts with the 2.5% tariffs on EU car imports into the U.S. He talks of further tariffs if trade talks are not successful; Of a day when Manhattan is free of Mercedes. Yet late Friday, Trump hints of a complete abolition of tariffs in North America and Europe completely.
No one but Trump knows what happens next. This includes the State Department and the White House staff. First create confusion, grab the attention and then close the deal. The "Day of the Dupes" is taking place. There are nuggets of truth to what Trump says about trade as the Washington Post explains today. The EU must make some concessions, if a trade war is to be averted. No one, including Trump wants a trade war …
Away Days ... Cabinet at Chequers ...
In the UK, no one wants a trade war, especially in cabinet. It just goes with the territory. David Davies came close to resigning this week. All to do with an Irish backstop to max fac or CU Plus apparently.
No need to resign over something Michel Barnier has made clear the EU will not accept. Theresa May compromised with an end date to the back stop. This seemed to appease the Secretary of State for Leaving the EU, not to leave Cabinet for the moment.
Boris Johnson was nearly "asked to leave". He accused the Treasury of being a hot bed of remainers, "The Heart of Remain", a quivering wreck when it comes to identifying the economic opportunities post Brexit. So much for Collective Cabinet Responsibility. Business is confused and no wonder.
Business leaders met with Theresa May this week. With just ten months before Britain leaves the EU, Government has still not made clear, what it wants to achieve. Business is becoming impatient and more nervous. This week the Dutch Government advised local firms to reduce purchases from the UK. The UK could face a ban on car exports to the European Union. The SMMT warned the proportion of domestic content in UK car production was more like 25%, well below any rules of origin threshold.
"Cabinet at Chequers ... Another Day of the Dupes".
The Prime Minister will hold a crunch summit at Chequers next month to hammer out detailed plans for the UK’s future partnership with the EU. Theresa May has promised a paper to be published on the basis of the planned deal. Away day at Chequers to thrash out the deal? More like another "Day of the Dupes". Brexiteers and remainers will be convinced, each of the other, they have been removed from power. There is no real solution or compromise possible on the entrenched positions either side of the deal …
Away Days ... In Singapore ...
In Pyongyang. Kim Jong-un is prepping for the summit meeting with Trump. The Chinese will provide the auto cue for a carefully scripted ask. The prize is huge for the North Korean leader and for Korea specifically.
Peace in the Peninsula, denuclearization in the North. The removal of US troops in the South and the abolition of sanctions specifically. A move to unification with peace guaranteed by China and the US. No need to involve the Russians. In South Korea a population of 50 million enjoys GDP wealth of $1.4 trillion dollars. It is the 11th largest economy in the world.
In the South a population of 25 million struggles with GDP wealth of $30 billion dollars. A unified Korea with a target of economic equalization within ten years would push Korea into the top five economies in the world.
The prize of peace and unification is much greater than Macdonald's, KFC and a Trump Tower in Pyongyang. Trump may win the Nobel peace prize. President Xi has his eye on a much larger peace prize. The Chinese would be the real winners in South East Asia. The enlarged trading block would surpass the economic strength of Europe and North America. Truly global Britain outside of the EU and the three largest trading blocks in the world would be a mere sprat in an EU fishing net in comparison.
"Peace in Pyongyang ... the Chinese will be the real winners"
That's all for this week, we will be back next week, with some economics perhaps!
Have a great weekend.
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy.
|The Saturday Economist|
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.