On the Record
I have a concise and pointed request to the White House this morning. Tell China to forget about it. Don't let China exclude our nation's security and Huawei from the negotiations.
U.S. Senate Minority Leader Chuck Schumer
On Our Radar
Glimmers of Hope for U.S.-China Trade. This week brought a bit of cautious optimism to what had seemed an ever-darkening outlook on the U.S.-China trade front. Chinese peace offerings to exempt some U.S. products from retaliatory tariffs and make agricultural purchases were reciprocated by a White House announcement of a two-week delay in planned Oct. 1 tariffs in deference to China's 70th anniversary holiday. From this emerges the prospect of a narrow, preliminary deal amounting to a trade truce to sustain bilateral negotiations, which could be divided into two tracks that would separate pure trade issues from the even thornier national security and strategic issues. With late-month talks scheduled, the Oct. 1 tariff reprieve will make room for the two sides to solidify this truce while potentially paving the way for an interim deal. But it is important to keep in mind that such moves will do little to stem the high level of trade uncertainty plaguing global and regional markets. Even under the auspices of a truce, talks will be lengthy and littered with potential pitfalls — bringing the risk that White House impatience could see a snap decision to swing back toward pressure tactics.
Bolton Leaves the Trump Administration. While he was useful leverage at times because of his maximalist positions, John Bolton created difficulty for the White House when negotiations required a softening of positions to help finalize deals. His ouster as national security adviser this week comes as President Donald Trump is looking for possible foreign policy wins to help bolster his resume going into the 2020 presidential elections:
- Iran: The Trump administration is considering offering Tehran some relief from U.S. sanctions, likely in the form of the French-backed $15 billion credit line proposal, in hopes of getting a meeting between Trump and Iranian President Hassan Rouhani at this month's U.N. General Assembly. It remains to be seen whether the credit line depends on the outcome of a Trump-Rouhani meeting or as an incentive with firm guarantees to make the meeting happen. The former is likely a non-starter for Iran and the latter will be problematic as Rouhani navigates a tense political landscape at home and would face criticism for caving in to U.S. demands.
- Afghanistan: Trump's Sept. 7 announcement that he was suspending the nearly yearlong U.S.-Taliban peace dialogue revealed the schism in his administration between Secretary of State Mike Pompeo, who supported a peace deal, and Bolton, who did not (though both men supported a partial drawdown of U.S. troops). With Bolton out of the way, it will be important to watch whether Trump resurrects the peace talks since he knows a political settlement is the preferred outcome to end U.S. involvement in the 18-year-long war.
- North Korea: Bolton's removal is a hopeful sign for movement toward a U.S.-North Korea compromise ahead of North Korea's self-imposed end-of-year deadline. Trump specifically cited displeasure with Bolton's uncompromising North Korea approach as one reason for firing him and expressed hope for another summit.
Implications of a New European Commission. After weeks of speculation, European Commission President-elect Ursula von der Leyen unveiled the members and portfolios of the European Union's executive branch. Von der Leyen's choices to what she described as a "geopolitical" European Commission reveal that she wants Brussels to play a more assertive role in deepening EU integration and preparing the bloc to deal with the United States, China and other global players. Denmark's Margrethe Vestager, who made a name for herself imposing large fines on big tech companies like Google and Apple, again will handle the European Union's competition portfolio, while France's Sylvie Goulard was given the bloc's broad portfolio that covers industrial policy, the single market and defense. These appointments suggest that the new Commission will be willing to support European companies in their competition against large Chinese and American corporations by allowing mergers to create European "industrial champions." Perhaps the most controversial appointment was that of former Italian Prime Minister Paolo Gentiloni in the economy portfolio. This means that a commissioner designated by the Italian government will be in charge of negotiations with Rome over its budget plans for 2020 at a time when Italy is pushing for a more flexible application of the European Union's deficit rules.
Beijing's Energy Shake-Ups in the South China Sea. This week brought news of potential progress for Beijing's objectives with two key energy claimants in the South China Sea: the more conciliatory Philippines and the more confrontational Vietnam. Philippine President Rodrigo Duterte announced that China has offered the Philippines a controlling share of a potential joint South China Sea energy project if Manila sets aside a 2016 ruling by an international arbitration panel that invalidated China's claims. The Philippines desperately needs to bring new domestic natural gas projects online and this field is the best option. On the other side of the sea, China may have made progress in its efforts to undermine Vietnam's goal to pull in third parties for joint energy development in disputed and adjacent waters. According to unsubstantiated rumors, U.S.-based ExxonMobil may sell its stake or scale back its plans in the Blue Whale natural gas project.
On Our Minds
Russian Forces Observed in Mozambique. Several observers have noted a Russian military presence in Mozambique, with Russian forces reportedly collaborating with local Mozambican forces in several locations around the country, including the port towns of Palma and Nacala and the inland town of Mueda. The exact size and purpose of the Russian presence are unknown at this point, but it is likely to be limited to training local forces and supporting them with intelligence and logistical services against jihadist militants. This tracks with Russian efforts to increase its economic and security ties in Africa as part of its global diversification strategy, and recent energy, finance and military deals between Moscow and Maputo suggest that Mozambique is an increasingly important part of this strategy.
New Saudi Energy Sector Appointment Signals Seriousness With Aramco IPO. The Saudi energy sector underwent a major shake-up this week with the appointment of a new energy minister as it presses the accelerator on its plans to sell shares in the state-owned Saudi Arabian Oil Co. The appointment of Prince Abdulaziz bin Salman as head of the oil and energy ministry marks the first time that a member of the Al Saud royal family has taken the ministry's reins. Prince Abdulaziz has worked in the energy sector in various positions for three decades. As an older half-brother to Crown Prince Mohammed bin Salman, his appointment is a sign that the crown prince is removing all obstacles, like Prince Abdulaziz's predecessor Khalid al-Falih, to moving forward with the Saudi Aramco initial public offering. Riyadh wants to list 1 percent of its crown jewel on the domestic Saudi exchange by the end of 2019, possibly as early as November. The risks and logistical concerns that many experts have had about the IPO remain, but Prince Abdulaziz's appointment is a sign that the crown prince wants to make his promise a reality. How drone attacks, claimed by Yemen's Houthi rebels, on a crucial Saudi oil processing facility and a major oilfield on Sept. 14 will affect Saudi Arabia's oil production or the hoped-for IPO was not immediately clear.
Israel Goes to the Polls — Again. On Sept. 17, in what is likely to be a narrowly decided contest, the Likud party of Israeli Prime Minister Benjamin Netanyahu will try to hold off a serious challenge by former Israel Defense Forces chief Benny Gantz of the Blue and White party to maintain power. To do so, Netanyahu has promised to annex much of the West Bank, which is a long-sought dream of the settler movement. The annexation of the West Bank would mark a major change in the international order, after decades of diplomacy aimed to avoid a precedent that military conquest could change borders.
In Case You Missed It
On Our Calendar
In the coming week, Israel holds parliamentary elections, the U.N. General Assembly opens and Russian President Vladimir Putin and Iranian President Hassan Rouhani visit Turkey to meet with President Recep Tayyip Erdogan. For more, see our Geopolitical Calendar.
Mat Best is a former Army Ranger, entrepreneur and social media star. He's also the author of the brutally honest memoir, Thank You for My Service. Stratfor Chief Security Officer Fred Burton recently interviewed Best for the Stratfor podcast.
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