Russia Starts To Worry Trump Really Will Make America Great Again

New York businessman Donald J. Trump, left, and Vladimir Putin. (Photo: Andrew Harnik/AP; Reuters)

In a far-ranging interview to the Russian TV station and social media outlet Tsargrad, Mikhail Dimitriev, a leading Russian political economist expressed concerns for the future of Russia’s economy in the aftermath of Donald Trump’s election.

The three primary vulnerabilities of Russia’s economy in this context are Russia’s inability to transition from a resource-driven economy to a manufacturing-driven economy, the subsequent dependence of Russian state revenues on the prices of crude oil, and the dominant share that China has in the Russian oil export market.

In Mr. Dimitriev’s view, China’s economy is overheated simultaneously in the equity, bond, and real estate markets, leading to a perfect storm scenario in which a crash can lead to a drop in GDP of as much 25%.

Currently, China is staving off this calamity by continuously devaluing the Yuan and thus artificially underpinning its exports. However, this strategy is in danger as it flies in the face of Mr. Trump’s campaign promise to fight currency devaluation by all necessary means, including the introduction of punitive tariffs on Chinese imports to America.

The implementation of such a policy would in Mr. Dimitriev’s opinion, result in a hard crash of the Chinese economy with disastrous effects on the Russian economy due to both sharply reduced volumes of Chinese crude oil imports from Russia and a likely sharp drop in world oil prices to perhaps as low as USD25 per barrel.

The United States, with its highly developed internal markets and diversified economy is likely to be the least affected by a Chinese hard landing among all major world economies. This fact gives the US a strategically superior negotiating position vis-à-vis both China and Russia when it comes to geopolitical hotspots such as the South China Sea and Eastern Europe.

In response to the interviewer’s question on parallels to the protectionism that led to both world wars and the pause that the horrendous outcomes of these conflicts may give any responsible actors in the Trump Administration, Mr. Dimitriev opined that even when undesirable outcomes may be predicted sovereign states act in their own self-interest.

A soft landing of the overheated American equity markets while rebuilding the American domestic manufacturing base may be the primary interests of the Trump administration, even at the risk of international turmoil. In summary, it could be said that any American willingness to withdraw from the globalist playbook, is at once empowering to American interests and frightening to the Russians and the Chinese.

This article first appeared on Tsarizm.com, bringing news you need to know RIGHT NOW about Russia, the former Soviet Union and Eastern Europe.

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