More Straws on US Financial Hegemonic Camel’s Back

Over the weekend, Juan Cole laid out how, if nuke negotiations with Iran fail this week, Europe is likely to weaken or end its sanctions anyway.

Iran-Europe trade in 2005 was $32 billion. Today it is $9 billion. There isn’t any fat in the latter figure, and it may well be about as low as Europe is willing to go. Tirone also points out that European trade with Iran has probably fallen as low as is possible, and that those who dream of further turning the screws on Tehran to bring it to its knees are full of mere bluster.

Arguably, Iran has simply substituted China, India and some other countries, less impressed by the US Department of Treasury than Europe, for the EU trade. Iranian trade with the global south and China has risen by 70%, Tirone says, to $150 billion. Indeed, at those levels Iran did more than make a substitution. It pivoted to Asia with great success before the phrase occurred to President Obama.

China is so insouciant about US pressure to sanction Iran’s trade that it recently announced a plan to expand Sino-Iranian trade alone to $200 billion by 2025. (It was about $52 billion in 2014). And Sino-Iranian trade was only $39 bn. in 2013, so the rate of increase is startling.

Cole notes — and quotes a British diplomat strongly suggesting — that the US may lack credibility because of the stunts by people like Tom Cotton.

Meanwhile, Dan Drezner assigned blame to both a an obstinate Congress and Obama for losing its allies to China’s Asian Infrastructure Investment Bank (the first domino of which I noted here).

The Obama administration has been reduced to backbiting U.S. alliesin the press — which, by the by, is a passive-aggressive habit that it really should stop. Newspapers articles, Economist leaders, and smart China analysts are all blasting the Obama administration on this issue. Indeed,most China-watchers advised the administration to join the AIIB six months ago on the logic that influencing it from within was a much smarter move than the course of action they actually pursued.

So, no contest, the executive branch screwed this up. But it would be selfish for the Obama administration to hog all of the credit on this policy failure. No, one of the main drivers behind China’s push for the AIIB has been frustration that Beijing’s clout at the IMF and World Bank has not matched its economic rise. The way to fix that has been quota reform to give China more power. As it turns out, the Obama administration negotiated that very thing five years ago.  All that was needed was for the U.S. Congress to pass it. And as I wrote two years ago:

If Congress stalls this quota reform measure that the executive branches from both parties have negotiated , they will be weakening a U.S.-friendly international institution and inviting potential rivals to set up or bolster alternatives. Which, if you think about, is a really stupid way to run U.S. foreign economic policy.

And hey, what do you know, Congress did that stalling thing.

These are just two straws on a still very big camel’s back. But slowly, US financial hegemony is getting weighed down by our hubris.

11 replies
  1. taodaoman says:

    If there is no agreement Iran will get even closer to China and Russia.
    The sanctions have stopped Iran from entering the SCO.
    But i suspect that even with no agreement Iran will have shown they gave it their best.
    And Iran will be fast tracked into SCO.

  2. galljdaj says:

    The writings are all on the World’s walls and in every US workers’ homes!

    ‘The gangs in ‘control’ are doing the ‘same’ to all Peoples! Impunity/Immunity for the US Gangs’ protected few, the rest get screwed and or subject to be.

    Democracy is a joke if you review just what the Gangs Do while dictating what (our) Govt does!

    Everywhere the gangs go there is immunity! Does immunity go with democracy? An example of the uses; Iraq, and, Columbia ( ) RAPE FOR EVERYBODY, but in the US, ITS THE WORKERS PAY THAT GETS MOST OF THE RAPING!

    • bevin says:

      No, its not just you, Jo, Cole’s emphasis on Cotton’s role and the GOP’s folly is typical of his refusal to accept that his mulish friends are equally as bad.

  3. Don Bacon says:

    The stupid, co-opted public press has never recognized that sanctions are a two-way street.
    HELLO — commercial transactions involve buyers and sellers. Cancel out either one, and the other suffers! And that is what Europe has done with Iran (and now Russia) US economic sanctions. Especially hurt on Iran was France’s Peugeot-Citroen, contributing to closed plants and increased unemployment. They want back in Iran, with all its pent-up demand. There are many others.
    And yes, China and India benefited.
    We have to assume that the US wanted to weaken Europe with its Iran & Russia sanctions. It’s so obvious. As Nuland said….(you know).

  4. bevin says:

    When the media starts quoting Michael Ledeen as an expert on Iran- who says that the Iranian economy is about to collapse and that its only hope is an agreement with the US (which is utter nonsense)- it becomes very clear that one of the most obvious symptoms of Hubris in DC is the promotion of corrupt, ignorant and idiotic con men into influential political positions.

  5. Don Bacon says:

    On Cotton, we have too much “executive privilege” in the US and so I applaud his renegade action as making the valid point that foreign policy belongs to the people acting via the Congress. Yes, the Congress is a bought-and-paid-for joke, but it’s the only Congress we have and it’s still better than having a dictatorial “Decider.”

    • Peter Eugene Bovold says:

      Okay. This is just tiring to watch. Big American Industry (Oil, The American Fruit Company, the U.S. arms industry, etc.) (The list is long!)) has long used and abused the CIA privileges not to mention misuse of the U.S. Armed Forces. That large numbers of people (yes, they’re human beings just like you!) on the other side of the globe and the southern hemisphere hate, loath and despise AMERICA should come as no surprise what-so-ever. We have behaved like the worst kind of thugs. We kill freely elected leaders, bribe, manipulate, cheat and steal if necessary. G. W. Bush invaded Iraq for phony reasons, an oil grab, a power play, a popular move with those invested in our military-industrial complex, destabilizing the entire region. If ISIS is even more radical than Al Queda, who would be suprised. It’s time we became reasonable, sane, sensible global citizens. The wealthy in this country should resign from the debate, step back from politics, and let unmonied, unbiased folks, citizens with little to no “conflict of Interest” (Why do we never use this ethical phrase anymore?) take a wack at running things for about 70 years. That’s how long it’s been corrupt. Eisenhower warned us, and I think the look on his face said it all. He may as well have blinked it out in morse code: It’s already too late, we’re bombing Guadamala for a fruit company.

  6. SomeCallMeTim says:

    Well, that kind of myopia is understandable for journalists who are still coming around to the idea that the size of the Lilliputians relative to Gulliver has changed over the past 30 years.

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