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First Kim, Then Xi, Now Putin?

Written by Alex Koyfman
Posted April 11, 2018 at 8:00PM

A few short months ago, the media was busy spinning us into a panic over potential nuclear war with North Korea. 

Today, you don't hear much more about it from the mainstream media outlets — though it looks likely that a meeting between Trump and Kim will take place at some point later this year.

Since then, there have been no missile tests and no large-scale military exercises on or around the Korean peninsula. 

Just a few weeks ago, after a shocking proposal to levy $50 billion in tariffs on Chinese imports became the center of attention, those same media outlets started selling us the notion that a trade war was in the works. 

The very next day, Chinese Foreign Ministry spokesman Hua Chunying responded with these harsh words:

China will not sit idly by while its interests are jeopardised. We have made sufficient preparations and will firmly defend our legitimate interests.

And when the list of affected Chinese goods was published two weeks later, the Chinese fired another bowshot, announcing their own set of tariffs on American products — also $50 billion worth. 

Fear turned to panic, as it appeared that the prediction of a full-blown trade war was coming true... until three days ago, when the Chinese government did the unthinkable. 

On April 9, Chinese President Xi issued a statement saying that tariffs on imported cars — which had stood at 25% and represented a substantial problem for American carmakers — would be “substantially cut” before the end of the year. 

Once again, the apparent capitulation of a foreign power to Trump's bizarre, unprecedented, utterly unpredictable style of foreign relations was buried by the mainstream media. 

The story's conclusion didn't so much make the news as cause the entire thread to die off, as if it had never been a thing to begin with.

Battle of the Egos: Round 3

Thankfully, for the media at least, there was no lull in stories to cover on the foreign affairs front. 

Just yesterday, after Russia stated that it would shoot down any cruise missiles fired by U.S. forces at elements of the Assad regime in response to a recent chemical attack against Syrian citizens, Trump took to his usual digital soapbox and fired off this priceless chunk of prose. 

Looking at the word choices, the punctuation, and the sentence structure, it's hard to imagine that the above message came from the mind of our chief executive, and yet, that's exactly what it is. 

Moreover, it's a message from our chief executive to a nation possessing either the world’s biggest or second-biggest nuclear arsenal, depending on which source you cite. 

This isn't some backwater dictator; this is Russia: the heart of the former Soviet Union and a rival nation for closing in on three-quarters of a century. 

We went against them in the space race, in the arms race, in the race for ideological supremacy, and each time we won, leaving their once-proud and expansive empire a broken, bankrupted, rusting giant. 

They have a long and well-established sense of contempt for the U.S. and American “arrogance” that's so ingrained in popular thinking that it's part of the culture. 

Every time the U.S. suffers a political setback, as it did when it failed to respond to a 2013 chemical attack in Syria — an act President Obama concretely stated would constitute a “red line” for active American involvement — the Russians treat it as a personal victory.

Selling a strong-posture approach to the populace would not be too difficult for Putin.

Mutually Assured Destruction Only Works When It's Assured

So the question we face now is: Will Trump's erratic behavior once again cause the other side to blink?

Regardless of whether you think Trump is a genius, a madman, or just plain stupid, it's important to note that this sort of foreign policy isn't new. 

It goes all the way back to Niccolò Machiavelli, who wrote in his 1517 book on politics and philosophy, Discourses on Livy, that on occasion, it is “a very wise thing to simulate madness.”

Nixon famously employed what he coined the “madman theory” in dealing with the North Vietnamese. 

In that instance, his approach was to cause the communists to believe that he had been “pushed too far” and would go to any length, even full-scale nuclear war, to end the conflict with a victory. 

Nixon's approach may have seemed feasible at the time, but history proved it ineffective, as the U.S. withdrew from Vietnam under the force of building social pressure from within, and did so with nothing approaching a clear political victory.  

So Why Would An American President Go Down the Same Road?

First of all, I want to make it clear that I do NOT believe Trump is acting the way he is after reading the works of Renaissance thinkers or going over the notes of his predecessors in the Oval Office. 

I believe he evolved his management style in the business world and that his method of speaking loudly and having a big stick to back it up has been the driving force behind both his corporate and political career. 

It scared business leaders, but today, as the discourse takes place in a public forum, world leaders being targeted by Trump and his keyboard are simply left guessing. 

They understand that they're dealing with an ego-gone-wild, perhaps a truly disturbed one, whose life of privilege, luxury, and unequivocal autonomy over his immediate surroundings has created a self-perception bordering on godlike... a man who just might consider himself the most important being in the world. 

In short, they're dealing with a personality exactly like their own. 

Is he stupid/crazy enough to really nuke North Korea? Who knows. It's possible. It wouldn't cost the U.S. anything besides lost political capital with its allies — albeit a great deal of it. 

Militarily, it would be virtually unilateral. 

Kim had to play the sane role and back down, let the headlines settle, and start to discuss talks. 

Is he stupid/crazy enough to really start a trade war with China? Who knows. It's possible. Even at the cost of tens of billions and at the risk of destabilizing the dollar, he just might. 

Xi decided to play the sane role and back down. 

Is he stupid/crazy enough to really start a nuclear war with Russia? Who knows. It's possible. The scary prospect for Putin is that Trump might truly believe he can win a nuclear war with Russia. 

For a guy like Putin, who just got done winning an election that guarantees him six more years of power, the cost of gambling could easily be too high. 

There is too much to lose, and if, after his final term is over, Putin wants to live a single day without being jailed or killed, he can't be the one to preside over a hot war with the U.S. — even a conventional one.

Don't Forget the Good Cop: Leave Your Opponent an Option

One of the things I noticed about Trump's patterns of interacting with his most powerful political rivals via Twitter is that, sooner or later, he always gives his opponent a way out. 

His very next tweet pivoted, emotionally, to the completely opposite end of the spectrum. 

This playing-out, reeling-in approach was exactly what ended up silencing Kim Jong Un, with tirades of insults and unabashed provocations being punctuated by offers of peace and an apparent willingness to talk things out.

Can it possibly work on Putin, who, unlike the leaders of North Korea and China, has the capacity to do equal damage to the U.S. and its assets?

As long as Putin believes Trump thinks he can win, the possibility remains strong that it will work. 

Trump does get one thing right: Russia is in a tough spot at the moment, and it's not going to get any better. Continued hostilities for them, even if only on an economic basis, could cause another revolution — a scenario that cannot end favorably for Putin. 

All-out war will cause definite destruction. 

Putin's only choice might be to play the sane role. 

We'll see what happens only if Trump makes good on a promise his immediate predecessor failed to keep, and fires cruise missiles at Assad's assets.

Until that happens, our president's bluster will remain just that.

Fortune favors the bold,

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Alex Koyfman

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Coming to us from an already impressive career as an independent trader and private investor, Alex's specialty is in the often misunderstood but highly profitable development-stage microcap sector. Focusing on young, aggressive, innovative biotech and technology firms from the U.S. and Canada, Alex has built a track record most Wall Street hedge funders would envy. Alex contributes his thoughts and insights regularly to Wealth Daily. To learn more about Alex, click here.


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