Below is our translation from RIA Novosti on a very uncharacteristic Trump tweet that reveals a fateful weakness in the strategy of “negotiating from a position of strength.”
I had written on Quora last October that shale drilling is a losing prospect because fracking (hydraulic fracturing) is simply too expensive a process to produce a profitable product. I saw no future in the shale industry on which Trump had pinned all his hopes in terms of making America great. It was blasphemy, of course. I was stepping on toes on both sides of the aisle. But the truth behind the truth is always blasphemy at first. The latest profit-loss statements from US oil companies bear me out. In fact they have significantly pared back their investment plans for 2019. It only took them the better part of a decade to figure out the obvious.
Ironically, while shale oil industry requires high oil prices, the price at the pump makes or breaks presidential elections. This presents a Gordian knot for Trump, who is damned if he supports US shale oil producers, damned if he doesn’t.
Even 2-D chess, to say nothing of the 3-D variety, requires foreseeing the opponent’s possible moves ahead of time. Applied to economics, it requires some knowledge of oil technology, which Trump clearly lacked, while applied to geopolitics, it means doing due diligence, ie, research on culture, attitudes, religion, history, etc, to foresee everything that could go wrong in implementing a plan involving foreign countries. In the case of US intervention in Venezuela, for example, it would have entailed examining the current attitudes of the Venezuelan people and the peoples in the countries considered potential allies in a possible military move against the country. It is vitally important to know the history of the Bolivarian Revolution and how it and its relation to Chavismo is perceived and appreciated by the people of Venezuela and surrounding countries. For many of them, even many who do not support Maduro, this revolution is sacred – just as sacred to them as the 1st and 2nd Amendment is to many Americans. It is also important to appreciate their religious views on war and peace. A detail that the incompetent US advisers surely overlooked was that Pope Francisco, during his extended visit to Panama, had clearly called for a peaceful resolution of the Venezuelan problem and had categorically opposed a military approach. This is an important reason why the Lima Group is opposing US military intervention in Venezuela. Further, if the US movers and shakers had known how strongly Venezuelan politicians and military leaders feel about traitors and betrayal of their country, they could have foreseen that the military would stick by Maduro. The fact that Guaidó “authorized” a US invasion and even continues to do so, out of desperation at this point, shows that during his years of study (and indoctrination) at George Washington University, he had adopted the US Establishment’s superficial – and now obsolescent – definition of “democracy” and a strong – likewise obsolescent – belief that the US is the moral leader of the world. He also forgot how his insistence on inviting a US bombardment would look to his millions of patriotic countrymen. He and his American keepers, as well as the Trump advisers are also way out of touch with the rest of the world, which is inexorably becoming multipolar. More importantly, they are out of touch with the Venezuelan people, who hate traitors.
In the translated article, Danilov points out the change in tone from “negotiating from a position of strength” – threats of sanctions or intervention— to pleading, almost grovelling. Not surprising since Trump is appealing not to Russia, China or a Third World country, but to a group that includes Saudi Arabia, the other signatory to the petrodollar agreement. No US president has ever sullied this dictatorship.
Donald Trump asks for lower oil prices
The US president is again trying to use his personal twitter as a reality control panel. At a quick glance it may seem that he is doing very well: for example, yesterday after his tweet that oil costs too much, the price of black gold on the exchanges in New York and London in fact fell by a few dollars. However, after a closer look at the situation, it is clear that the participants in the oil market are really scared - only they are not afraid of the US president’s tweets.
The most interesting thing about Donald Trump's “oil tweet” is the very pleading tone uncharacteristic of the American president: “Oil prices are getting too high. OPEC, please relax and calm down. The world cannot accept the price increase - (he. - Ed. ) fragile! " - writes the American leader. You need to be literally blind not to notice that Trump has departed from the traditional American approach in the sense of using threats and pressure, namely, he asks OPEC (obviously, meaning all participants of the “oil deal” in OPEC + Russia format) not to raise prices higher and to convince, not to intimidate, although in his case it would be logical to refer to possible sanctions or the so-called “NOPEC bill”, which now lies before the US Congress and, if adopted, may allow the US Department of Justice to try to punish the participant countries of the "oil deal". However, the president of the United States makes a very different reference, writing that the "world is fragile" and won’t pull through. This is most likely what frightened the market.
When the American leader publicly admits that the world economy is so fragile that it will shatter from the next increase in oil prices, then from the standpoint of many market participants, this situation is a reason to panic in advance. Oil prices often reflect expectations not only in terms of world production, but also relative to world oil demand. In fact, Trump said that there will be serious problems with demand in the global economy.
In addition to purely economic considerations, the American leader was probably guided by geopolitics, related to the situation in Venezuela. If you look at the crisis in this country from the point of view of its influence on the oil market, the picture is rather unpleasant for the USA: very tough sanctions were recently introduced against Caracas, which prevent Venezuela from exporting oil, which pushes up prices on the world market, and a certain progress in terms of the "colour revolution", which the State Department launched after Juan Guaidó was recognized as president of the country, is not being observed now. The recent failure of the Venezuelan border breakthrough scheme with the aid of a "humanitarian convoy," as well as reports by the American agency Bloomberg that even the US allies in the region - Peru and Colombia - do not support military intervention against Venezuela, indicate that American hopes for a speedy "flooding of the Venezuelan oil market " (which would already be under American control), most likely, will not happen. If this is a correct assessment of the situation, then Trump's appeal to OPEC countries via Twitter is rather a gesture of despair.
It is likely that concern about the "fragility of the world" in Trump’s case, means, above all, concern about the state of the American economy. The American President's “Oil Tweet” was published the same day as the poll of the American National Association for Business Economics (National Association for Business Economics), a reputable NGO that brings together experts on the impact of macroeconomic factors on the business environment. According to this survey, the US economy will enter recession in 2021. As reported by the business information agency Bloomberg, "ten percent (of the economists surveyed. - Approx. Ed.) predict a recession starting this year, and 42 percent call it for the beginning of next year." Translated from the language of economic predictions to the language of political perspectives, this means the following: looming large before Donald Trump is the prospect of holding an election campaign in a falling American economy, and any American political consultant will confirm that holding onto the presidency is an extremely difficult task, which in Trump’s case is aggravated by the fact that many voters tolerate him solely for economic reasons.
That is why, where many Russian commentators noticed a sign of some special “Trump force” that could affect the price of oil, American journalists saw only the president’s attempt to secure a convenient scenario for the upcoming election campaign, at least for a while. John Kemp, a columnist and energy analyst at Reuters, writes: "Fragile" is the most important word in President Trump's tweet. The President acknowledges that the global economy has slowed significantly since mid-2018. As a result, "the world cannot deal with a price increase." The White House is fully focused on avoiding a recession, maintaining economic growth until the end of 2020, and saving the presidential re-election campaign. Re-election is number one priority. Chinese trade negotiations must come to a successful conclusion for the same reason. The White House cannot afford to raise tariffs if such could push the economy into recession. The US president needs a deal as much as China. "
In terms of of preserving the world hegemon image, the actions of the Washington administration are extremely toxic - because everyone can see that the White House can no longer negotiate on issues important to it from a position of strength. Moreover, another important point is hidden in the petition of the American leader - if Trump is forced to appeal to OPEC countries to stop the price increase, this means that all the talk about "US energy self-sufficiency" and that if necessary the United States can flood the market with "cheap American shale oil" is in the realm of PR, not reality. The flagship of the American business press, the Wall Street Journal, explains why: "The once-powerful partnership between oil companies and (inanciers from. - Ed.) Wall Street is declining as the (shale. - Ed. .) industry is struggling to attract investors after nearly a decade of losing money. Frequent capital injections from Wall Street have supported the American shale boom. But this generosity is coming to an end."
It is not only the generosity of American financiers, who do not really want to invest in unprofitable "shale drillers," is ending. The historical period in which the United States could unilaterally dictate its will to the outside world is also coming to an end. The White House will have to learn again the forgotten art of negotiating. Only by now, partners willing to negotiate with Washington will be very hard to find.