Time to break free from America

The Chinese smartphone company ZTE employs 75,000 people and last year sold $17 bn of products. Yet, despite being a booming and profitable concern, this week ZTE shut down its operations. Why? Because the United States has ‘banned American companies from exporting technology’ to it. ZTE phones contain a number of US-made components, as well as US-designed software. Thanks to the ban, the phones can no longer be made. ZTE is out of business, and 75,000 people will lose their jobs – just like that.

The ZTE ban follows American complaints that the company had been circumventing US sanctions against Iran and North Korea. ZTE admitted this and paid a $890 million fine to the US government, but American regulators maintained that it was still not being honest about its dealings – thus the sanctions imposed against it.

Meanwhile, following the US withdrawal from the nuclear deal previously agreed between the USA, Iran, and several other countries, American officials have been warning European companies that they must stop doing business with Iran. The European company Airbus had signed an agreement to sell Iran billions of euros worth of passenger aircraft. More than 10% of those aircraft, however, consists of American parts. Conseqently, the US has now prohibited Airbus from selling them to Iran because of sanctions re-imposed on Iran following the US withdrawal from the nuclear deal. Airbus could, of course, sell the planes anyway, but it would then find itself being fined huge sums of money in the USA and, like ZTE, have its American supplies cut off.

Any other non-American companies who rely on US components or software, and who are considering doing trade with Iran are now going to have to seriously reconsider their position. European governments and the European Union are none too happy with this. French Foreign Minister Jean-Yves Le Drian complained that, ‘We feel that the extraterritoriality of their [American] sanction measures are unacceptable. The Europeans should not have to pay for the withdrawal from an agreement by the United States, to which they had themselves contributed.’ Meanwhile, French Finance Minister Bruno de Maire asked yesterday, ‘Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers? Or do we want to say we have our economic interests?’

European politicians are now considering what measures they can take to protect themselves from American efforts to force them to comply with American sanctions policies. According to de Maire, the EU is considering various avenues. One of these, he says, involves ‘looking at Europe’s financial independence – what can we do to give Europe more financial tools allowing it to be independent from the United States?’ Connected with this is a ‘proposal is to set up a purely European finance house to oversee euro-denominated transactions with Iran’

For some time now, a number of Russians who disagree with their government’s economic policy have been complaining that by seeking to integrate Russia more and more into the world economy, the government has undermined national sovereignty and made it vulnerable to financial pressures from potential enemies, notably the United States of America. Economists such as Sergei Glazyev have for a while been urging the Kremlin to increase Russia’s financial independence by, for instance, ‘the creation of a system of exchanging information between banks, analogous to SWIFT but independent of the USA and the EU,’ the establishment of ‘our own rating agencies,’ pricing exported goods in rubles rather than dollars, and so on. For very good reasons, the Russian government has resisted going down this route. Economic autarky tends not to turn out well. Integration into the global economy has its benefits. Having said all that, it seems to me that examples like those above are going to add to the pressure not only on Russia but also on other countries around the world to go in the direction the likes of Glazyev are suggesting, albeit gradually and with caution. Looking at the fate of ZTE and Airbus, any senior manager of an international company worth his or her salt is going to have start thinking about how to reduce the company’s dependence on US suppliers. Politicians are also going to have to put more thought into how to strengthen their economic sovereignty. This is not something which is going to happen overnight, but the impulse to move in that direction must be stronger this week than last.

Some steps have already been taken. We see new financial structures outside US control beginning to emerge, such as the Asian Infrastructure Investment Bank and the petro-yuan. Already financial journalists are speculating that the US decision to renege on the Iranian nuclear deal will strengthen the latter. I tend to the view that such developments are an inevitable part of the global shift in economic power. As the US declines in relative economic terms, its grip on international institutions is bound to weaken. But decisions such as that concerning Iran can only accelerate this process. Very gradually, but nonetheless more and more perceptibly, other countries are going to want to distance themselves from the United States.

The Americans are like a man sinking in quicksand.: the more he struggles in an effort to get out, the faster he sinks. As their relative power declines, the Americans are fighting with all their might to retain their hegemony, striking out in sometimes rather peculiar directions. But the very act of struggling just sucks them down further. In the aftermath of Trump’s decision on Iran, the sound of the sand sucking America under can be heard louder and clearer than ever before.

14 thoughts on “Time to break free from America”

  1. My own view, and I believe that of Emmanuel Todt, is that decreasing American power will result in increased American taxes on the vasall states. Eventually resulting in these vasalls considering steps to break free. The thing is that, for western Europe and Japan, America wasnt that bad of an overlord historically speaking.

    Considerable degrees of internal autonomy, and fairly light military service.


    1. “result in increased American taxes on the vasall states”

      That is basically what Trump & Co. are already doing with taxes like more investment into the military which in turn is used to buy American equipment.


  2. *Meanwhile, French Finance Minister Bruno de Maire asked yesterday, ‘Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers?*

    Yes, actually, they do. This decision will not change the calculus of European governments as business with Iran is not worth sacrificing a beneficial vassal position. However, it will reveal that the countries are vassals when they decide to follow the American line, which will be a bit of a revelation for some of their citizens, so it can’t be that bad overall.


  3. Very apt. That sucking sound…wish I wasn’t in the pit, but the U.S. has put so many innocent people there, I guess I’ll have to take my turn.


  4. I believe autarky is definitely the way to go. The only question is the limits, the extent of it.

    What is a ‘state’? I used to think of it as a totality of people living within the borders of a territory, organized into self-governing entity.

    And what do we see now? I see ‘state’ having devolved into regional administration, tasked with servicing multi-national corporations. Providing them with the labor force, infrastructure, resources (land, electricity, etc.), and world-wide enforcement.

    And it’s not ‘the Americans’ doing this. Here in central Europe, national sovereignty is violated by the IMF and by various EU institutions.


    1. “I believe autarky is definitely the way to go. The only question is the limits, the extent of it. “

      Imperialism 2.0. with “Scramble for Everything”?


  5. Doesn’t seem too bright, considering China is something like 1/4 of worldwide sales $$ by Apple, which I think is the most obvious example going the opposite way. Apple’s sales in China are much larger than ZTE.

    Although, unlike ZTE, Apple has the wealth and negotiating leverage to probably buy their way out of becoming involved in a trade war, or at least be among the last of the big names to get pulled in.

    Boeing, Ford, GM, McDonald’s, Caterpillar, would probably come first on the US side, and the list of Chinese component suppliers to the US and worldwide industry is endless and impacts everyone.

    Past some point, you can be sure a serious trade war will not please Wall Street. I think eventually, Republicans will pull the plug on this project. But for the moment, the national security paranoiacs are in charge.

    A system of international commerce robust against misguided national actions would probably benefit everyone including the US. For what it’s worth, it’s something the free market ideologues have dreamed of for a long time too. It would be ironic if it were created in this way.


  6. The concerns are not just arbitrary sanctions. Unfortunately for global markets countries need to protect themselves by setting up institutions such as SWIFT alternatives so that economies can carry on. It is also extraterritoriality of US court judgements or massive fines imposed by US courts on companies operating there. Many of these legal actions are done by activist prosecutors seeking to get elected. This is another deterrent on having anything to do with the US and this attitude may we’ll bite America in the future


  7. This is actually great news for anyone who care about the global environment and thinks that these stupid little electronic toys have become the bane of of such mundane things as concentration, conversation and critical thinking. The more mobile phone, social media and electronic app companies that go down the better.


  8. Good article – had the following thoughts

    – We need an analysis of how countries can circumvent the US sanctions

    – What systems need to be in place to enable trade to take place out of reach of the US

    – The European populations are getting a lesson that their countries are vassals and have no opinions or independent actions. Will they care ?

    – China supports globalisation – however the example of the Mobile phone company being driven out of business – needs to teach them a lesson when developing their own home grown business they should not rely on American parts

    – Russia had this lesson with the sanctioning of parts for oil exploration – they adapted and looked at developing their own economy to make the equipment.

    – Iran needs to stay steady and the conservative elements need to not use this as a power grab – there are bigger issues at stake. They are under attack by the nut cases in the USA .

    – even if the JCPOA dies not survive will the Europeans adopt the hostile posture of the USA when Iran have done all required in the accord?

    – North Korea would be dumb to trust the USA


  9. Lol we have an update on ZTE.

    Trump had done a u- turn now says he wants to save “Chinese jobs!!!”

    Or could it be the realisation that American jobs will also be threatened

    US companies whose business depends on supplying components to ZTE (and other Chinese companies) will be hurt by Trumps actions to sanction ZTE

    China could put them a out of business long term by starting to reduce its dependency on US component manufacturers

    A similar situation will affect airbus who get parts from Boeing

    Airbus have a contract with Iran for 100 aeroplanes

    Americans jobs at risk if contract is affected by sanctions


  10. @Guest: It seems that all this might have been done for a consideration of a mere $500 million in Chinese money to help underwrite a Trump Organization theme park in Indonesia.


    1. Slavdude – I didn’t know about this part of the Deal. Thank you for this information

      Wow – where is the USA strategy in all this?

      China must find Trump really is very easy to read and the theme park feeds his ego.


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