United States Ambassador to the United Nations, Nikki Haley, recently visited the IAEA (International Atomic Energy Agency) to review the ongoing JCPOA (Joint Comprehensive Plan of Action) as they continue to monitor Iran’s nuclear program.

Ambassador Haley outlined a summary of the IAEA meeting and fielded additional questions about North Korea and Venezuela.  She will be traveling to Washington DC on Monday to debrief President Trump and Secretary Tillerson.

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As you might note from her remarks (see below), Ambassador Haley is keenly aware of the uniqueness, and effectiveness, of President Trump’s economic approach toward regional national security issues – specifically as it pertains to the recently announced Venezuela sanctions. Strong concise statements. Strong, short, effective and deliberate answers.

“Economic tools“

The corporate U.S. media are hopelessly deficient in their coverage and explanations of how strategic objectives for national security are being delivered through a Trump Doctrine via economic leverage. The results are stunningly effective, yet few have noticed, and even fewer seem willing to articulate.

The latest example of the geopolitical Trump Doctrine in action comes via Venezuela, and in the wake of a fraudulent Maduro election – the Trump administration’s economic and financial policy delivering sanctions against the rogue Maduro regime:

(Via LA Times) The Trump administration on Friday slapped sweeping financial sanctions on Venezuela, barring banks from any new financial deals with the government or state-run oil giant PDVSA.

The sanctions Trump signed by executive order are bound to dramatically escalate tensions between Venezuela and the U.S. and exacerbate the country’s economic crisis.

The White House said in a statement that the measures “are carefully calibrated to deny the [President Nicolas] Maduro dictatorship a critical source of financing to maintain its illegitimate rule, protect the United States financial system from complicity in Venezuela’s corruption and in the impoverishment of the Venezuelan people, and allow for humanitarian assistance.”

The new actions prohibit dealings in new debt and equity issued by the government of Venezuela and its state oil company. It also prohibits dealings in certain existing bonds owned by the Venezuelan public sector, as well as dividend payments to the government of Venezuela. (read more)

To appropriately conceptualize the strategic policy of the Trump Doctrine in action, it becomes necessary to remind ourselves the latest activity does not happen in a vacuum. In the multidimensional economic security approach of President Trump, Treasury Secretary Steve Mnuchin and Commerce Secretary Wilbur Ross play a critical role.

The financial and economic sanctions against Venezuela, while targeted, are only one small outcropping of a much larger geopolitical strategy that U.S. President Trump has initiated for the past eight months with jaw-dropping success:

From OPEC (Saudi Summit) to the EU and Baltic States (Poland Pre-G20); to North African energy development via President Macron (Libya and Mali); to walking away from the Paris Climate agreement; to discussions with Theresa May on a bilateral trade deal; to massive shipments of coal to U.K. and France; to closing a deal to deliver Ireland massive amounts of Texas LNG; to our own internal U.S. energy production policy with pipelines, Oil, Coal and Liquified Natural Gas (LNG) etc.

President Trump has used all of those “allied” relationships to lower global energy prices.

The bigger part of the MSM’s ‘big-missed-picture‘ was how energy strategy impacted adversaries like Russia, Iran, China and recently Venezuela; while simultaneously supporting the larger America-First economic and geopolitical goals.

President Trump thinks seriously long-term, and really BIG picture.

Global energy, mostly oil, fuels the expansionist and interventionist structure that builds the very foundation of our geopolitical adversaries’ ability to continue their global influence. Diminish the value of oil and Donald Trump puts the squeeze on the financial resources of those nations dependent on energy as income.

Most of our current geopolitical adversaries Russia, Iran and Venezuela are dependent on high energy prices. Secondly, the downstream economic adversaries are dependent on high energy prices to maintain their economic position and alliances. As examples: China (as an geopolitical influence agent), and Mexico (as a NAFTA trade parasite), hold adverse interests to the U.S. on trade.

President Trump, by lowering global energy prices, has fractured the foundation of energy producing nations to influence geopolitical strategy; Trump has diminished their most powerful tool.

As a consequence, economic adversaries like China are put into a position of having to spend more money, directly, to aid their allies and to maintain their influence.

Think about how much financial strain is on China currently. North Korea is entirely financially dependent on China; Pakistan is financially dependent on China’s continued investment; Mexico is financially dependent on Chinese investment; Venezuela is dependent on Chinese loans and oil purchases; etc., etc. the list goes on.

The Trump Doctrine is confronting these relationships through economics. Each of these relationships is bleeding out money from China.

Conversely, on the income side of China’s ledgers, they are dependent on manufacturing and trade to keep their revenue stream viable. The Trump Doctrine of renegotiated trade relationships is also confronting China on the revenue side. China needs our market to sell their goods; China is dependent on access to the U.S. $20 trillion trade market.

See the squeeze?

The Trump Doctrine of using economic strategy is forcing China to spend more and yet simultaneously they are facing less income. And remember, as a combined result of their dependency on international trade and a trade surplus with the U.S., China’s central bank vault holds “dollars”.

However, China is also not operating in a vacuum. In addition to direct confrontation with the U.S. over various regional issues of opposition, there is an underlying multinational aspect where China is acting -somewhat in concert- at the request of multinational banks who also oppose President Trump’s nationalistic economic approach.

The network of global trade, and the corporations who dominate within it, is underwritten by massive multinational banks who have a vested interest in retention of global perspectives.  Nationalism and bilateral trade policy is adverse to their interests.  China is a useful tool for those financial institutions to protect their interests.

China’s primary defense threat, if you want to call it that, would be to dump dollars to retaliate against what President Trump is doing. However, if the value of the dollar drops, China has less value in their vault, and a lower dollar actually helps our exports.

#1) Big necessary expenditures. #2) Lower income to afford the expenditures. #3) And no substantive way to stop the incoming Trump policy driving #1 and #2.  President Trump has created a three-way geopolitical and financial squeeze against China and the economic adversaries within the multinationals.

Now, back to Venezuela – The United States was the only remaining cash purchaser of Venezuela oil. Both China and Russia purchase Maduro’s oil, however their current purchases are/were all made as offsets, repayments, for prior loans. It doesn’t generate additional revenue for Maduro if China and Russia to purchase more oil, it only pays down the Venezuelan debt.

This report was earlier in this month (we predicted today’s outcome from it):

MEXICO CITY (Reuters) – A tanker carrying a cargo of about 1 million barrels of Venezuelan heavy crude has been stranded for more than a month off the coast of Louisiana for lack of a bank letter of credit to discharge, three sources have told Reuters.

The cargo’s fate adds to state-run oil company PDVSA’s precarious financial position. Revenue from the company’s oil sales, which have suffered because of low prices and declining production, account for more than 90 percent of the nation’s exports.

Major banks are cutting exposure to Venezuela as a result of political upheaval in the South American country. Some have closed accounts linked to officials of the OPEC member who have had sanctions leveled against them by the U.S. government and have refused to provide correspondent bank services or trade in government bonds.

Credit Suisse this month barred operations involving certain Venezuelan bonds and is now requiring that business with President Nicolas Maduro’s government and related entities undergo a reputation risk review.

[…] The tanker Karvounis carrying Venezuelan oil is anchored at South West Pass off the coast of Louisiana, according to Reuters vessel tracking data. PBF Energy Inc, the intended buyer of the cargo, has been trying unsuccessfully to find a bank willing to provide a letter of credit to discharge the oil, according to two trading and shipping sources.

Crude sellers typically request letters of credit from customers that guarantee payment within 30 days after a cargo is delivered. The documents must be issued by a bank and received before the parties agree to discharge.

It was not immediately clear which banks have denied letters of credit or if other U.S. refiners are affected. (read more)

Today’s additional sanctions by Treasury Secretary Mnuchin formally removes the ability of Venezuela to get underwriting for their most important export, oil. Essentially, Maduro is cut off from additional cash.

The only option for Maduro’s economic allies: China, Russia, Cuba etc., is to directly give more money to Venezuela. However, if they do so they run the risk of running afoul of Secretary Mnuchin’s sanctions and freezing their own international financial systems from engagement with U.S. banks. Chinese businesses cannot effectively trade with the U.S. market if they are cut off from access to the U.S. banking system.

See the leverage?

Now when you step back, and look at the bigger BIG PICTURE, and think about North Korea, Pakistan-Afghanistan, and the other geopolitical hot-button issues where China is involved…. And then overlay Russia’s lack of energy revenue and simultaneous drain on resources via Syria,… well, you begin to see how effective the Trump Doctrine is.

None of this happened this week, this month, or last month. This is a cumulative strategy mapped out long before the January inauguration and carried out ever since.

A very familiar pattern is emerging as President Trump turns his attention toward solving the ongoing issues within Afghanistan. A very uniquely Trumpian geopolitical strategy based on assigned ownership, economics and self-interest.

Last night as President Trump addressed the nation to discuss the ongoing conflict within Afghanistan he took the first step: Trump assigned strategic ownership to Pakistan:

[…] “The next pillar of our new strategy is to change the approach in how to deal with Pakistan. We can no longer be silent about Pakistan’s safe havens for terrorist organizations, the Taliban, and other groups that pose a threat to the region and beyond.

“Pakistan has much to gain from partnering with our effort in Afghanistan. It has much to lose by continuing to harbor criminals and terrorists. In the past, Pakistan has been a valued partner. Our militaries have worked together against common enemies.

“The Pakistani people have suffered greatly from terrorism and extremism. We recognize those contributions and those sacrifices, but Pakistan has also sheltered the same organizations that try every single day to kill our people. We have been paying Pakistan billions and billions of dollars, at the same time they are housing the same terrorists that we are fighting. But that will have to change. And that will change immediately.

“No partnership can survive a country’s harboring of militants and terrorists who target U.S. service members and officials. It is time for Pakistan to demonstrate its commitment to civilization, order, and to peace. (transcript link)

If anything President Trump stated was not the brutal reality the placement of strategic ownership would not work.  However, the entire international community knows that Pakistan, including their intelligence service ISI, has a great deal of hidden sympathy toward Islamic extremists within Afghanistan.

Never was that reality more stark than when the international community realized that 9/11 terrorist Osama Bin Laden held refuge inside Pakistan for almost a decade.  Within the governing systems inside Pakistan there is a large contingent of Taliban sympathy.  This reality has been the 800lb gorilla amid public discussions of international national security for several years.

Last night President Trump called it out, publicly.

This is where those who follow Trump closely will note a familiar pattern emerging.

The Taliban in Afghanistan are to Pakistan, as the DPRK is to China.

Remember, the solution to the threat that is Kim Jong-un was to assign direct responsibility toward Beijing.  In a similar approach, the solution toward eliminating the threat of extremist violence from the Taliban is to assign direct responsibility toward Pakistan.  President Trump began that process last night.

However, those who have followed closely will note there’s additional references.

♦When the threat is Sunni Extremism, the problem was/is the Muslim Brotherhood and the enabling of Qatar.  Trump assigned responsibility for solving that issue to Saudi Arabia and the Gulf Cooperation Council.   It is the GCC who are confronting Qatar, not the United States.

♦When the threat is Syria’s chemical weapon, the problem was/is the Assad regime and ISIS.  Trump assigned responsibility for solving that issue to Russia; Russia initially refused to solve it, so Trump bombed the shit out of Assad – Russia/Assad took ownership, the chemical weapon use stopped; further action was not needed by the United States.

♦When the threat is DPRK’s nuclear weapons, the problem was/is Kim Jong-un and the enabling China.  Trump assigned responsibility for solving that immediate threat to China.  It was Beijing who told Kim Jong-un to stand down.  Not the United States.

See the pattern?  In each example President Trump assigns responsibility.  However, the important element is the underlying ownership must be based entirely on truth.  In each of the examples the truth was/is that Gulf States/Qatar, Assad/Russia, and China/Beijing were manipulating and enabling the problem behavior.  By calling out that truth, each enabler was forced to take ownership and corrective action.

The same approach extends here with Afghanistan.  However, the solution is not Pakistan eliminating the Taliban per se’; the solution lies in leveraging Pakistan to force the Taliban into negotiations with the legitimate Afghan government.   Like the previous examples of Saudi Arabia and China, Trump has now assigned ownership of this objective to Pakistan.

The U.S. Military can/will engage the Taliban and Pakistan is on notice it better not act to enable the extremists.  Cliff Notes:

Additionally, this approach only works if there’s leverage to cajole Pakistan to act. Fortunately creating “leverage” is almost a uniquely Trumpian life-skill.  Throughout Trump’s business career he’s been a master at leverage.  Now with control of the largest economy and market in the world, he’s got massive economic leverage to generate beneficial national security outcomes.

Saudi Arabia was leveraged by U.S. economics and our commitments to their national security.  China was/is being leveraged by U.S. economics and their need to keep access to our markets.  So what approach will POTUS Trump use for Pakistan, yep – economics. It’s right there:

[…] “We have been paying Pakistan billions and billions of dollars, at the same time they are housing the same terrorists that we are fighting.”…

Who is Pakistan’s biggest regional adversary?  India.

[…] “Another critical part of the South Asia strategy or America is to further develop its strategic partnership with India, the world’s largest democracy and a key security and economic harbor of the United States.

“We appreciate India’s important contributions to stability in Afghanistan, but India makes billions of dollars in trade with the United States, and we want them to help us more with Afghanistan, especially in the area of economic assistance and development.” (transcript)

President Trump is smartly focusing on alliances with open democracies in regions where the greatest mutual economic benefits are possible.

♦For the North Korean problem, Japan, South-Korea and India are all economically leveraged against China by President Trump via favorable trade and market access opportunities.

[Note that “bilateral” trade deals are essential in these efforts.]

♦For the Afghanistan problem, India again becomes the economic leverage against Pakistan.  China has a great deal of investment in Pakistan, and China also views India as an economic threat to their one-road/one-belt plans.

For those who are worried about expansive military endeavors that will result in death and quagmire I would advise to put your mind at ease.  The military is needed as the visible alternative to economic leverage, see North Korea. It is a reference; but military engagement unto itself is not the central tenet or fulcrum upon which the economic leverage is dependent.

The U.S. military is not the leverage, the military helps creates leverage. The leverage itself is economic.  Financial interests are always the best leverage to use because inherent within the fundamental principles of economics is ‘self-interest’.  Actions taken generate financial benefits; those benefits are direct and immediate to the interests of those generating the results.

From the policy and outlook of trade and U.S. economic engagement, obviously India’s Prime Minister Modi is a much more preferred ally.  Both China and Pakistan fully understand the dynamics of this mutually beneficial Trump/Modi relationship and what it can mean for their own economic self-interests.

Finally Afghanistan’s government appears fully aware of the approach.

(LINK)

So what can we anticipate as next steps?  Well if the familiar pattern repeats:

• Look for Pakistan to attempt to avoid ownership.
• Look for President Trump and Secretary Tillerson to keep pulling Pakistan into each discussion point when referencing Afghanistan.
• Look for President Trump tweets aimed at creating and affirming the U.S. expectations of Pakistan.  Each time this happens the ownership gets stronger.
• Look for our diplomatic team to talk about Pakistan helping to solve the problem.
• Look for any affirming U.S. signals of warmth and friendship toward India.

These will all be indications of the ongoing strategy.  So far, this economic geopolitical approach has worked well with Syria/Russia, Qatar/Saudi Arabia and DPRK/China.  No reason not to be optimistic about Afghanistan (Taliban)/Pakistan.

An interesting article in the Washington Times poses a possibility of President Trump holding a deconfliction summit with North Korea –SEE HERE– And that begs a question of whether or not it’s actually plausible. I would state unequivocally yes, and here’s why.

If you have followed the foreign policy pattern of President Trump you immediately recognize he does not restrain himself to DC political customs or DC political norms. Indeed as Egyptian President Abdel Fattah al-Sisi optimistically noted, President Trump can accomplish many things because he brings a unique perspective to the world of policy and diplomatic engagement. Later repeating: “He Can Do The Impossible“.

Additionally since we originally outlined the likely scenario for a restart of the ‘six party talks‘ (China, South Korea, Russia, Japan and the U.S.), on August 13th, there has been some visible activity providing further evidence toward that end.

•Japan (Shinzo Abe) has stated they have “great confidence” in President Trump’s Asian national security approach. •South Korea (President Moon Jae-in) has stated they are “confident there will not be war again on the Korean peninsular“; •and they are willing to send a special envoy to North Korea to begin talks. •In addition, China has quietly removed the 71-year-old veteran diplomat, Wu Dawei, from the position of negotiator toward the DPRK, and replaced him with 58-year-old Kong Xuanyou. Kong is a long time Chinese diplomat in charge of Asian affairs and he speaks Korean.

All of this generally under-reported diplomatic activity has taken place within the past week while the American media was busy pushing Charlottesville narratives.  But more importantly this activity took place while President Trump directed USTR Lighthizer to begin a section 301 trade investigation into China.  POTUS Trump is ramping up the pressure on Chinese President Xi Jinping, but more specifically this action targets Beijing’s communist old guard who control both their economy and the DPRK behavior.

Additionally, into this uniquely Asian geopolitical dynamic we have India, and Prime Minister Modi, apparently finding some new energy to push back against their neighboring nemesis China.  Literal “pushing back“, heck they got into a fist fight.

Now, between Trump’s China trade action, and Modi’s regional geographic action, there appears to be a traditional squeeze play working out.  It would be intellectually dishonest not to recognize the appearance of some coordination, especially given the plans for Ivanka Trump to travel to India next month.  [*nudge, nudge* *wink, wink* say-no-more]

Here’s where it gets interesting.

When you understand that Beijing is really the support structure for Kim Jong-Un, in that China uses the DPRK to keep the Western (mostly U.S.) economic threats out of Asia, you realize it’s against Beijing’s interest for President Trump and Kim Jong-un to deconflict.

If diplomacy prevails in the Korean Peninsular, the historic economic arrow is gone from China’s quiver.  Indeed, many would argue there’s no greater threat to China’s overall ‘One-Road/One-Belt’ economic program.  With peace comes viable economic relationships.  The ability of China to use the DPRK as a sweatshop for their economy would potentially and realistically collapse.

So Beijing would want to impede diplomatic efforts.  It’s in their sneaky-self best interests; it’s also just how they roll.  However, even though China controls much of the Washington DC swamp via purchased lobby activity, they can’t control Trump; and they certainly can’t control Trump’s diplomatic approach toward engaging a foreign government.

Therefore China’s default position would be for China to ‘control‘ any meeting between the U.S., South Korea, and/or Japan, with Kim Jong-un.  When you recognize this, you recognize what that provides – MORE TRUMP LEVERAGE.

See how that works?

POTUS Trump knows it would be against Beijing’s interests for Kim Jong-un to meet a reasonable and non-political deal maker like President Trump.  That knowledge only fuels the probability of such a meeting taking place.

In an effort to control such a possibility, China will have to move fast to cut off any back channel discussion between Godzilla Trump, T-Rex and Dennis Rodman’s BFF Kim Jong-un.  Hence, we discover the motive for Beijing working to quickly get Kong Xuanyou, the new emissary, into place.  China is simply trying a better play for control by putting ‘six party talks’ back on the table.

Don’t be surprised to hear of those “six party talks” within days or weeks.  And don’t be surprised to hear of the potential for direct talks and direct engagement with North Korea either by South Korea or Japan, or by…. wait for it, yup Godzilla Trump via T-Rex.

President Trump isn’t constrained to DC political customs and diplomatic outlooks of non-engagement with North Korea.  Don’t be surprised if he doesn’t make a move within the next 30 days toward those ends.

After all, almost every bit of recent activity in Asia dovetails nicely with the position as it appeared only a little more than a week ago: August 13th:

As we have outlined extensively, President Trump holds all of the cards in this economic and trade standoff. The U.S. is China’s customer and there’s a $350 billion trade deficit.

However, President Trump cannot be completely open with the strategy because part of the long-term plan is to allow China to save face by giving up North Korea’s nuclear ambitions.

It would be against Trump’s interests if the entire global and geopolitical community understood what was happening.

So the question becomes, how will we know when President Trump has won in the economic and national security challenge?   Well, first let’s look at the geopolitical landscape and the known and identified calendar to view the goal timeline:

♦We know President Trump is planning to attend an ASEAN meeting in November.

♦We also know that President Trump is planning to visit China later this year.  Most likely that trip will be part of the ASEAN engagement.

So it makes sense that President Trump would like to conclude the outline of the economic diplomacy by the time of the ASEAN and China visit – such that: A.) President Trump can outline the agreement and stroke the panda’s ego on his turf; and B.) President Xi Jinping can announce his magnanimous victory on behalf of great Panda’s incredible achievement in providing great security to the world.

::::smiling:::::

Yup.

Meanwhile, just prior to the ASEAN/China meetup, President Trump’s secret weapon, Ivanka, who happens to be the most beloved American in China, is deployed to India to capture the world’s attention with Narendra Modi hugs.

President Modi is the “Trump Card” in the geopolitical economic gamesmanship.  China is currently at odds with India’s rise to economic power; Ballywood is very hot in the U.S. right now; and a warm Modi – Trump economic relationship is a foil against China’s heavy-handed extortion of their economic partners.

Whoopsie sounds like the makings of a fork in China’s One Road/One Belt plan.

Strategery.

::::still smiling::::

Again, President Trump holds all the economic cards.  Just look at what he did to neuter Russia’s economy when everyone was paying attention to the bouncing laser dot on the wall.  The American and Western media missed it, but President Trump moved the entire geopolitical world via a strategic energy platform.

Sip this next paragraph slowly to enjoy the strategery:

From OPEC (Saudi Summit) to the EU and Baltic States (Poland Pre-G20); to North African energy development via President Macron (Libya and Mali); to walking away from the Paris Climate agreement; to discussions with Theresa May on a bilateral trade deal; to massive shipments of coal to U.K. and France; to closing a deal to deliver Ireland massive amounts of Texas LNG; to our own internal U.S. energy production policy with pipelines, Oil, Coal and Liquified Natural Gas (LNG) etc.

President Trump used all of those “allied” relationships to lower global energy prices.

The bigger part of the ‘big-missed-picture‘ was how that energy strategy impacted adversaries like Russia, Iran etc. and simultaneously supported the larger America-First economic and geopolitical space.

President Trump thinks seriously long-term, and really BIG picture.

President Trump thinks so far out in front of his detractors they genuinely cannot fathom the sequential logic behind the day-to-day granular activity.

Yes, in large part this is what makes President Trump so enjoyable to watch politically. Just like the American media, our international adversaries and competitors have no reference point for a U.S. President that is entirely independent from influence.

::::Yup, smiling::::

So we can safely predict that sometime in late fall, most likely before the ASEAN visit timeline in November, President Trump and Rex Tillerson will be engaged in a new round of Six Party Talks, initiated by request of the increasingly desperate China.

China will structure the DPRK talking points to set up the meetings.  This is a part of how China is allowed to save face and sets up the magnanimous Panda narrative.

The six party talks will be essentially a Marshal Plan of sorts for North Korea.  Japan, South Korea, The United States, China, Russia and North Korea will enter into a set of negotiations publicly sold as engaging in diplomacy and reducing tension.

President Trump (or T-Rex) will sit on the patio complimenting Xi Jinping (or deputy), and Russian, Japanese and South Korean emissaries.

Meanwhile, in the conference room, Secretary Wilbur Ross, USTR Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin will play the role of Willy Wonka handing out the golden economic tickets to the representatives who all line up with their requests.

President Trump’s golf partner Shinzo Abe will already have his ticket, but he’ll play along.  The only real negotiations will be between the U.S. Russia and China.  Russia will be negotiating for higher regional energy prices to get their GDP growing again, and China negotiating to retain as much of the $500 billion trade surplus as possible.

The end result will be Kim Jong-un giving up his nuclear ambitions for good; the U.N. enters under carefully negotiated terms, and Big Panda promises to the world to be the magnanimous insurance policy therein.  Everything between now and that outcome is optically chaff and countermeasures.

That’s essentially the way the bright economic and national security future looks today.

Then again, it might get brighter – gilded even.

After all, this is President Donald Trump we’re talking about.