Bull meets Bear
The US and Russia are speaking again. That is the chief message of the Helsinki summit. While the summit did not bring any breakthrough, it did improve the atmosphere. However, the actual results are meagre and open to interpretation:
- Renewed commitment to a reduction in nuclear weapons and stringent non-proliferation.
- Agreement to do more for humanitarian relief in Syria but no agreement on strategic questions.
- Same on Iran. Putin praised the Iran nuclear deal (JCPOA), which Trump had just torn up.
- No unilateral movement by Trump on Crimea as some had feared. No new Yalta. Putin blamed Kiev for not fulfilling its obligations under the Minsk accord.
- Joint commitment to intensify cooperation against terrorism. Both sides underlined positive cooperation: the US assisted in preventing terrorist attacks in Russia in Saint Petersburg and during the World Cup.
The following topics were not touched upon:
- Trade and investment, sanctions, “unfair practices”, currency manipulations
- Confidence building measures, exchange of information on strategy
- Tariffs and WTO-rules
- Cyber attacks
Both sides were evidently eager to dispel any suspicion of collusion or of Russian interference in the democratic process in the US. Trump gloated in his electoral victory over Clinton and attacked Democrats viciously, calling the interrogation of FBI-agent Peter Strzok in Congress a “disgraceful witch hunt”– disgraceful for whom? Putin only gave very weak assurance offering to cooperate with Mueller’s investigation, provided there was reciprocity.
He pointed out that any liberal society can suffer from illegal activity that is not necessarily attributable to the state. If there had been any improper dealings, they were as far from the Russian government as George Soros is from the US government. A clever argument!
Trump abruptly interrupted the press conference when questions arose on collusion between his presidential campaign and Russia. Members of his own party criticized his performance. Former Trump campaign rival Sen. Marco Rubio (FL) said, “Foreign policy must be based on reality, not hyperbole or wishful thinking” and retiring Sen. Bob Corker (TN) said that he was “disappointed and saddened” over Trump’s statements regarding Russia’s involvement in election meddling. Members of the US media, including Fox News used adjectives such as “disgraceful” and “disgusting” to describe Trump’s statements.
Detailed Analysis & Context
- The Helsinki summit comes at a time when diplomatic relations between the US and Russia are at their lowest. Beginning with the Magnitzky-Act in 2012, relations have deteriorated progressively:
- Hundreds of Russian diplomats were expelled by the West, consulates closed, economic sanctions imposed, more than 150 individuals and 50 enterprises were subjected to travel bans and asset freezes. Last round of sanctions was imposed in April.
- Russia stands accused of meddling in the democratic process in the US with 12 individuals of Russia’s military intelligence service (GRU) indicted. More revelations are likely to come when Robert Mueller submits his final report, presumably before midterm elections.
- The same GRU is strongly suspected of using polonium and novichok to kill defectors Litvinenko and Skripal on British territory.
- The US Senate Select Committee on Intelligence has endorsed the findings of the US intelligence agencies: Putin was personally involved in efforts “to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency”.
Despite the above, President Trump has been lavishing praise on President Putin, though he also accused Russia of currency manipulation. By criticising Germany’s oil and gas deals with Russia he implied that he considered Russia an adversary. However, in Helsinki he explained that he had meant Russia was a competitor and that competition was good.
Meanwhile, Trump has triggered a trade war with his closest allies in Europe and around the world, wrought havoc with NATO-partners by threatening to withdraw from NATO, labelled the EU a “foe”, and openly encouraged Great Britain to seek more confrontation with the EU over Brexit. While Trump shook the US’ European allies into more defence spending, he did so by seriously undermining political cohesion and mutual trust – the bedrock of the transatlantic alliance. On arriving in Helsinki, Trump insulted his predecessor in the White House and the institutions of his own country. The Kremlin tweeted: “We agree!” Trump handed success to Putin on a silver plate!
The timing of the meeting was favourable to Putin as well: The glorious finish of the FIFA World Cup cast a glowingly favourable light on his country. Billions of people had received positive images of an open, friendly Russia with no ugly excesses by hooligans. A majority of 76% had re-elected Putin President for a fourth term until 2024, so his overwhelming domestic popularity is undisputed. Russia complained about massive cyber-attacks during the World Cup, thus turning the tables on any American complaint.
Similarities between personalities…
Trump and Putin show surprising similarities: Both obsessively project an image of strong, authoritarian leadership and practice highly personalised rule. They show themselves intolerant of criticism and surround themselves with religiously faithful and orthodox company. Both dislike the constraints of law or due process.
Trump and Putin are adept at using modern communication tools to shape public perception, define their own narratives and obfuscate critical issues. Their respective messages appeal mainly to conservative, nationalist, nostalgic sentiments.
While Putin is a former spy, Trump has a background as a property developer and TV personality. This means that both come from a world where make-believe, embellishing the truth and sowing confusion are the key skills of trade and craft.
… but difference in policies
Both differ significantly, however, in approaching political problems: Putin is a chess player, preparing the board carefully with patience and strategic circumspection. He has a strong team and listens to advice. In contrast, Trump is impulsive, considers himself “a stable genius”, charges like a bull without thinking problems through, despises advice and creates confusion. Putin operates à longue durée, Trump seeks instant gratification and wallows in superficial show effects.
Trump is a realist and an isolationist. His “America First” means “America alone”. He follows the advice of George Washington “to steer clear of permanent alliances with the foreign world” and Thomas Jefferson’s warning against entangling alliances. Like Lord Palmerston, Trump acknowledges perpetual interests but no permanent friendship.
Impact of Helsinki summit on geopolitics
Geopolitically, the US and Russia remain opposed over various hotspots: Crimea/Ukraine, Georgia/Abkhazia/South Ossetia, Syria, Iran and North Korea. Russia has no interest in a nuclear North Korea, but even less interest in seeing the antagonism between Pyongyang and Washington dissolve. There has been no tangible progress on any of these issues.
The situation feels similar to 1961, when a poorly prepared Kennedy met Khrushchev in Vienna after Castro had seized power on Cuba in 1959 and Gary Powers had been shot down over Russia in 1960. The portents were ominous and the summit did not produce much substance, though it provided an opportunity for a mutual size-up. As a result, the Berlin Wall went up two months later. However, without knowledge of each other’s characters the Cuba Missile Crisis in the following year might have taken a disastrous turn. Maybe, something comparable will remain as the essence of the Helsinki summit in 2018.
Does it matter for markets?
Trade relations between Russia and the US are weak. Therefore, trade sanctions have no meaningful impact on US growth. Bilateral trade between the US and Russia amounts to about $25bn and consists mainly of US exports of aircraft and machinery and imports of minerals and metals. Russia’s exposure to the much smaller German economy is twice as large. These amounts are dwarfed by a US trade volume of $660bn with China, $650bn with Canada and $580bn with Mexico.
Russia accounts for 0.1% of all US-direct foreign investment, with Exxon, McDonald’s and Ford being the main protagonists. Boeing operates a close and profitable cooperation with partners in Russia in design and development. Russian civilian aircraft industry is still lagging far behind, however. Sukhoi has delivered only 146 of its heavily promoted Superjet 100 in 8 years, with 418 outstanding orders. Compare that to Airbus’ A320 (7’329 delivered) and Boeing’s 737 (10’077 delivered).
China is Russia’s most important economic partner with bilateral trade expected to reach $100bn this year, growing constantly at double digit rates, which means trade volume is set to double by 2022. Therefore, Russia can easily get from China whatever the West refuses to sell.
Similar to the Singapore summit between the US and North-Korea, there were invisible guests present in Helsinki. Notably, China and the EU held their annual consultations in Beijing. The more the US isolates itself through trade disputes, the closer the other actors in global markets will cooperate.
The far bigger risk to the US economy is that global trade wars boost trade routes that bypass the United States altogether and infuse new resolve into ambitions to establish alternatives to the US dollar as a global reserve currency.
Rudolf Georg Adam serves as an Advisor to BGA. As a former German diplomat and security analyst, he began his diplomatic career in 1976 when he joined the German Foreign Service. Following his service as Second Secretary in Singapore and First Secretary in Beijing, he was speechwriter for German President Richard von Weizsäcker in Bonn, political counselor at the German Embassy in Moscow and worked in the Planning Staff at the German Foreign Office in Bonn.
In 1995, he became director of global disarmament and arms control in the Foreign Office and in 1998 European correspondent (EU foreign relations, since 1999 including security and defence policy). In 2001, he became vice president of the Federal Intelligence Service. From 2004 to 2008 he was president of the Federal College for Security Policy.
In 2008 he became the German Deputy Chief of Mission in Moscow and in 2011, he held the same position in London. He retired in 2014 after a year as Chargé d’Affairs at the German Embassy London. He is currently an external lecturer at the Bundeswehr University, Munich, and president of CSASC.
He holds a BA, MA and D.Phil. in Modern History from the University of Oxford.