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In normal circumstances, the Cook Islands only attract attention from honeymooners, green activists and Kiwi diplomats. That is because the remote Pacific country has a security deal with New Zealand (and, by extension, western allies) — and stunning palm-lined beaches threatened by rising seas.
But we do not live in normal times; US President Donald Trump is smashing the postwar geopolitical order. And this week Mark Brown, the Cook Islands premier, embarked on an investment deal with China.
The New Zealand government loudly howled in horror, fearing retaliation from Trump. But the Cook Islanders seem undeterred. And these specks of land in the Pacific have become a potent symbol of how the geopolitical sands are shifting.
As the Trump hurricane sweeps around the globe, two key themes are becoming clear: America’s leaders are determined to bolster US growth at any cost, be that environmental, social or diplomatic; and they are equally determined to use hegemonic power, jumbling military, financial, tech and trade interests together.
As a result, other nations face three choices: become a vassal of America’s imperial power; oppose it by allying with US rivals such as China and Russia; or copy the Cook Islands and try to hedge your bets.
Some have already made their choice. Take Nicaragua. Last month, amid threats from Trump to invade Panama and/or kick China out of its famous canal, the Nicaraguan government changed its constitution to enable the construction of a waterway linking the Atlantic and Pacific. This could present an alternative to the Panama Canal, and shows that Nicaragua is doubling down on being in China’s camp.
At the other end of the spectrum, the Japanese premier, Shigeru Ishiba, has moved into tribute mode. During a visit to Washington last week, he praised Trump’s “efforts to bring peace to the world”, and promised to invest $1tn in the US and buy oodles of American liquefied natural gas, too.
I predict that Tokyo will also soon try to strengthen the yen (to placate American complaints about competitive devaluations) and may even buy long-dated or perpetual US Treasuries (to “pay” for American military protection).
Meanwhile, Narendra Modi, the Indian premier, has also been in Washington this week, pledging to raise imports of US LNG and planes. And Britain has just sided with America at an artificial intelligence summit in Paris.
When I recently chatted in Davos with Pham Minh Chính, Vietnam’s premier, he was also mulling what tributes to offer Trump — in a bid to distract the US president from the fact that Vietnam now has the third-biggest US bilateral goods trade surplus (largely because global companies have moved production there to avoid US sanctions on China).
“We are seeking to buy 50 to 100 planes [from the US] and other high tech items,” he said, noting that he would also “play golf all day long” with Trump at Mar-a-Lago “if it is good for [national] interests”. He has another possible “gift” too: Trump is reportedly keen for a big casino investment, diplomats say. If so, that might be key.
However, the problem for Vietnam — like every other nation — is that Trump is now so capricious that no one quite knows for sure what will truly guarantee safety. In traders’ terms, the deal is impossible to “price” for the long term — for governments and investors alike.
Thus, there is also a rising temptation to slide into a strategy of “bow to the ruler, and then go your own way”, to cite the Bukharan proverb that was once (in)famous among Silk Road merchants. In other words, make performative tributes while hedging your bets.
Indeed, this is probably the only sensible thing for most countries to do, according to the Global Capital Allocation Project (a research site on hegemonic economic power that is replete with handy charts showing which countries are most vulnerable to American and Chinese hegemonic power). Diversifying inputs, this notes, is crucial if countries are to increase “economic security” in a capricious world.
This hedging trend has consequences. One is that commerce between non-US countries is swelling, raising overall global trade volumes, irrespective of Trump. Another is that supply chains are becoming longer, potentially increasing costs. And a third is that the tentacles of Chinese influence are stealthily spreading — even on to remote Pacific beaches — as Beijing almost seems like a more predictable, globalist force.
Ironically, this flies in the face of Trump’s stated desire to clip Beijing’s wings. Indeed, future historians might label his whole strategy as self-defeating. But right now the president seems to be convinced that his leverage rests on acting in an unpredictable and imperial manner.
Maybe he will eventually realise that these tactics also create a need to hedge, precisely because no one can “price” peace — or trust America. But don’t bet on it. In the meantime, expect those performative tributes to keep pouring in, accompanied by fake smiles.
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