US Defence & Immigration Policies; US/China Trade; OZ Energy Policy

Where Does US Defence Policy Stand Now

Trump’s sudden announcement that the US intends to “immediately withdraw” troops from Syria (and much reduced troops for Afghanistan) has caused much confusion as to US defence policy and, following the resignation of Mattis as Defence Secretary, Trump has found it difficult to get a replacement. While consistent with his election manifesto, Trump appears to have recognised that he was being too hasty and it appears he has accepted the view of National Security adviser, John Bolton, that the withdrawal be extended over a longer period and that it should first involve the elimination of IS (which Trump initially claimed had been achieved). Even so, policy uncertainty remains.

This has been increased by an address made by US Secretary of State Pompeo in Cairo, who declared the US was committed to “expel every last Iranian boot” from Syria where, in alliance with Russia, Tehran, in its drive for regional hegemony, has been propping up the murderous Assad regime. Without mentioning Mr Obama by name, Mr Pompeo heaped scorn on the former president’s “misguided” thinking on the use of military force and reluctance to call out “radical Islam”. That was a reference to Mr Obama’s preference for the term “violent extremism” when referring to Islamist terrorism and his call for an “opening towards Muslims” that would “transcend stereotypes”.

“Remember: it was here, here in this very city, another American stood before you … he told you that radical terrorism does not stem from ideology. He told you 9/11 led my country to abandon its ideals in the Middle East,” Mr Pompeo said as he argued Mr Obama had misjudged the Arab Spring uprisings. The Obama administration’s Middle East policy, he said, was an example of “what not to do”, whether in striking the nuclear deal or abandoning long-time ally Hosni Mubarak, Egypt’s ruler, allowing him to be brought down by an uprising orchestrated by the Muslim Brotherhood” (see Pompeo on US Middle East Policy).

It is difficult to see how Pompeo’s statements can be reconciled with Trump’s.

Who Will Break the Deadlock on Mexican Wall?

The refusal  by Democrat’s House Speaker Pelosi and Senate Minority Leader Schumer to give Trump approval (in the House) for any finance for building the border wall with Mexico poses a challenge to Trump now facing a majority in the House. In return, Trump has refused to approve finance for a large number of federal government employees and has threatened to declare a national emergency which (it appears) would allow him to obtain indirectly finance for the wall.  But Trump says he is “not yet” taking such action.

Trump has defended his position not with a tweeter but by making his first formal address from the Oval Office (see Text of Trump’s Address on Border) and has announced that he will not now attend the Davos meeting in Switzerland which purports to give major international leaders an opportunity to expound their international policies.He is also reported as actively promoting his view particularly in the south of US.

The Democrats are using the opportunity to remind people not only of their new majority position in the House but also of the problems which Trump is experiencing on implementing some of the various policies he advocates and the problems created by the partial shut-down of the federal government. However, the Democrats are not reported as addressing the illegal immigrant problem which previous Presidents have acknowledged and, in respect of which, some have supported cross Mexican border measures, albeit not one stretching across the country as Trump promised in his election manifesto.

In an editorial yesterday The Australian points out that “in 2017 the number of undocumented migrants apprehended for crossing into the US was just over 300,000, the lowest number in 46 years. In a year, however, that figure has jumped to 400,000. A Morning Consult/Politico poll shows 42 per cent of Americans believe there is a “crisis” on the border, 12 per cent perceive it as “a problem” and only 12 per cent see nothing amiss; Democratic leaders would be wise not to ignore those numbers” (see Merits in Border Security).

In short, the President of the US is correct in identifying an immigration problem, although he should have started to do that some time ago when he had control of both houses. He did of course attempt early in his Presidency to limit immigrants from seven mainly Muslim countries and there has been an ongoing debate in the US on the extent of controls on immigrants. The increasing immigrant policy problem faced by various countries, including the development of the UK’s English Channel problem (see Migrants Attempting to Cross English Channel), may now attract more support in the US for some tightening of controls.

As Greg Sheridan points out, “it is legitimate for Clinton, Schumer, Pelosi and other Democrats to argue that Trump is proposing a bigger wall than that which they previously supported, or that they have changed their minds. What is not legitimate is to claim that Trump’s proposed wall — refashioned rhetorically now into a barrier, and to be made of steel rather than concrete — is a unique crime against the very essence of humanity and decency.  And the wall or barrier or fence that Trump wants to build would certainly help control illegal immigration. So, as ever, there is a good deal of plain common sense in the Trump proposal and it is also what he promised on the election trail … In the next few days Trump will either escalate, by declaring a national emergency and using extraordinary powers — which would be ridiculous but might be effective politically — or capitulate, with some minimal face-saving compromise. In the meantime he has again succeeded in being the trapeze artist from whom no one can avert their eyes” (see Sheridan on Trump’s Wall Explanation).

The Morrison government has made no comment on this matter.  Without supporting Trump’s building of the wall, it would be appropriate in circumstances where there is a general public discussion on immigration policy for Australia to indicate support of the US’s attempts to establish an effective regulatory system to control migrants. That is, of course, a potential major election issue here.

US Trade With China

An article published in the Wall St Journal reports that talks on US/China trade have resumed and that this constitutes “a show of Beijing’s seriousness”. At this stage the representatives on each side are not the most senior but the preparedness of China to engage in talks follows an agreement reached between Trump and Xi in December that the US would suspend until March tariff increases on $US200 bn of Chinese imports and thereby give the Chinese time to address what the US regards as unfair trade and economic practices (China became a member of the World Trade Organisation in 2001).

China has an enormous trade surplus with the US, with in 2017 its exports to the US amounting to $506bn and its imports from the US only $130bn (see China’s Large Trade Surplus With US). This appears to confirm that Trump has correctly threatened trade action against China not for protectionist reasons per se but because China is not conforming with WTO rules. Even so, the various aspects discussed in the attached indicate the complexity attached to any unwinding of Chinese restrictions, which extend to investment in China. As a major source for Australian exports, it is important that a satisfactory outcome be achieved.

Energy Policy

In my Commentary of 1 Jan I drew attention to the Morrison government’s decision to carry-over emissions credits obtained under the Kyoto agreements and that this meant that Australia’s emissions reduction target of 26% by 2030, as agreed by Turnbull, will in practice be much less. I also noted that, as a result, the Coalition is an even  better position than it was to contrast the adverse economic effects with Labor’s much larger target of a 50% reduction by 2030.

However, there remains much that needs to be done to effect a reduction in electricity prices and the operation of the electricity market. In his analysis of the problems that still exist, climate expert Alan Moran pointed out on January 9 that the latest report by the Energy Regulator, “in line with other official analyses, hugely understated how the electricity market has been undermined by 15 years of government subsidies to the inherently low-quality supply that is wind/solar” (see The Australian Energy Regulator’s Wholesale electricity market performance report).Moran offers a disheartening conclusion as follows:

“Its analytical shortcomings aside, the report’s call for stable policy is a forlorn one.  With half a dozen major Commonwealth policy direction changes since 2001 (and many others at the state level) there is zero prospect of policy stability.  There never can be such stability when energy policy is inextricably tied to emission reduction policy and the targets for renewable energy vary from zero to 100 per cent”.

If the Morrison government can further moderate its energy policy, it would increase its electoral chances. But as John Roskam said last Friday in an article in the AFR “The Liberals are terrified to talk about industrial relations, they don’t have an energy policy and on questions of values such as freedom of speech and freedom of religion they can’t agree among themselves on a position”. A lot of policy changes are needed.