Scribblings

A Hard Rain May be About to Fall

I finished up my Scribbling last week with these words:

No one, but Europe itself, can decide its own future. Time to let go of the American hand. Walk our own way. Whatever the price. All we need is the courage to do so.

Little did I think when I wrote these words that we would have to find that courage within a week. And I think we have, even if we are not fully there yet.

Trump wants Greenland, for whatever reason. It can’t be for military reasons, for the US has extensive rights under a 1951 treaty to station military forces on the island and expand them as appropriate. There would be no objection from other European countries to such an expansion. Many of them host large US military bases themselves.

My own view is that Trump wants the history books to record that he enlarged the US through buying Greenland from the Danes, just as the US grew with the Louisiana purchase in 1803 from the French. Not to mention Alaska. On March 30, 1867, it was agreed that the United States would pay Russia $7.2 million for the territory of Alaska. For less than 2 cents an acre, the United States acquired nearly 600,000 square miles. I suspect that Russia regrets that sale today. Trump likes real estate deals, though at least six of his deals have ended up in bankruptcy.

Trump cannot abide the fact that other US presidents did things he has not done or cannot do. For example, he is riven with rage that Obama was awarded a Nobel Peace Prize and he wasn’t. So much so that he accepted a “second-hand Nobel prize” when the Venezuelan opposition leader María Corina Machado gave him her Nobel medal during the past week, to add to his “FIFA peace prize”. No doubt, if the US had won the Ryder Cup golf competition, instead of being soundly beaten by the Europeans, he would probably have claimed to have been the team captain. After all, he is the best golfer in the world, is he not? He plays enough, at great cost to US taxpayers.

However, I am not persuaded that Trump is mad. But he does engage in “madman negotiations”. Of all people, Boris Johnson, described how this approach worked when speaking in private, or so he thought, to a small gathering at the Institute of Directors in London about Brexit. According to Johnson:

“Imagine Trump doing Brexit ... He’d go in bloody hard … There’d be all sorts of breakdowns, all sorts of chaos. Everyone would think he’d gone mad. But actually you might get somewhere. It’s a very, very good thought.”

I think this fairly much describes Trump’s approach to statecraft across the board. Walk into the room, knock over the table, and shout your demands. Reasonable people who believe in reasonable ways of doing things find it difficult to respond, other than trying to appease his rage. Which is precisely the wrong thing to do. Feed an alligator raw meat, and it will come back for more.

Trump’s latest “madman” tactic is to threaten those European countries that have sent troops to Greenland with a further 10% tariff, possibly rising to 25%. These tariffs are to remain in place until Greenland is sold to the US. Whether these tariffs are legal under US law is questionable, but the current Supreme Court has a habit of backing Trump’s excesses. Trump also appears to be under the impression that the countries he “tariffs” pay the money to the US, rather than US importers and/or consumers paying it through higher prices. Trump seems to think that his tariffs tax the world, rather than US businesses and consumers, though tariffs do have a negative impact on the ability of other countries to export to the US.

European leaders have made it clear that this time they are not for bending to Trump’s will. He can get as mad as he wants; it is not going to work on this occasion. The Guardian reports President Macron of France as saying that:

“no amount of intimidation” will persuade European nations to change their course on Greenland. here

Depending on how things play out, Europe could hit back with tariffs on US goods. No doubt, a list of potential goods to tariff is sitting on more than one desk in the Berlaymont. A full-scale trade war could be fast approaching.

If a trade war does break out, and a madman negotiator will always up the stakes when his initial outburst does not lead to the collapse of the other party, then it may not just be traded goods that get caught in the crossfire.

Too often in these situations, we forget that we trade services just as much, if not more, than goods these days, and the trade in services is hugely dependent on cross-border data transfers. Readers of this Scribbling will be only too well aware of the General Data Protection Regulation (GDPR) and how it requires the European Commission to certify that “third countries” are safe jurisdictions to which to transfer the personal data of EU citizens. The EU awards “adequacy decisions” to third countries which it deems safe.

There are not many such countries. The US is one through a bespoke agreement, The Data Privacy Framework, which replaces two previous agreements struck down by the Court of Justice of the European Union (CJEU) because of concerns that the US intelligence services had too easy access to personal data of EU citizens transferred to the US.

Can anyone doubt that if a full-scale trade war breaks out between the EU and the US over Greenland, that data transfers will not be an early casualty? Already, the veteran Belgian politician, Guy Verhofstadt, has called for the breaking up “of the Internet monopolies and halting the transfer of our data to the other side of the Atlantic.” While no longer an MEP, Verhofstadt is still an influential voice in Brussels political circles. Expect his call for the suspension of data transfers to be picked up by others during the coming week.

Until now, it would seem that the European response to Trump’s “madman strategy” was to seek to appease him in words, if not necessarily in deeds. But Greenland may be a While House tantrum too far.

Expect difficult days ahead. A hard rain may be about to fall.