BACK
Experts' Views & Articles
16 NOV 2020
"Impact of Joe Biden’s Presidency on US Foreign Policy, Global Economy & Energy", Opinion Article by Dr. Mamdouh G. Salameh*

Under President Trump, the world has been one of "America First" nationalism, ditching international agreements that he believed gave the US a raw deal. It was a provocative, disruptive and unilateralist policy.

Under a Joe Biden administration, the United States is expected to return to policies based on America's role, interests and shared western democratic values and grounded in international institutions established after World War Two.

What could change under Biden? A few things stand out – foreign policy, the approach to allies, climate change and the Middle East.

US Foreign Policy under Biden

1. Dealing with Allies

At the top of Joe Biden's to-do list is a to repair strained relationships, especially in NATO, with Angela Merkel’s Germany whom President Trump had the temerity of threatening with sanctions for supporting the Russian-led Nord Stream gas pipeline and re-join global alliances.

A Biden administration would also return to the World Health Organization and seek to lead the fight against the COVID-19 pandemic which has wreaked havoc in the United States.

Mr. Biden's campaign framed this as a major reset to rescue America's damaged image and to rally democracies against what it sees as a rising tide of authoritarianism.

His election is an important signal to the allies of US renewed commitment to working together—a reinvestment in multilateral cooperation, international norms, and the global order, which are the only effective means for addressing the urgent challenges they all face together. 

2. The Future of NATO

Throughout his presidency, Trump has frequently dressed down NATO leaders claiming that too many members of the world’s most powerful military alliance do not contribute enough financially.

He also made good on a threat to reduce U.S. military support if allies, like Germany, do not meet 2% of GDP spending, a goal set at the 2014 NATO summit in Wales. Last year, Trump singled out German Chancellor Angela Merkel during a NATO summit in December 2019 for not meeting the 2% goal.

He claimed in a typical Trump boasting that the United States is paying 4%-4.3% when Germany’s paying 1% to 1.2% of a much smaller GDP saying that this is not fair. It transpired, however, that at the time, the United States was spending about 3.42% of GDP on defence and Germany 1.38%, which is an increase of about 11% from 2018.

When asked about the future of NATO, the President-elect said he will quickly call allies to let them know America is back as a reliable and trustworthy partner. A Biden administration would likely rally transatlantic partners to take a firm hand with Russia.

Indeed, there are rumours of a NATO summit early in Biden’s administration that will signal the pre-eminence of the transatlantic relationship and rapidly change the tone of the Trump years.

3. Iran

Tensions between Washington and Tehran have escalated following Trump’s withdrawal in 2018 from the landmark 2015 Joint Plan of Action, or JCPOA accord (better known as the nuclear deal with Iran) brokered by the Obama administration, calling it the worst deal ever. In exchange for sanctions relief, Iran accepted limits on its nuclear program until the terms expire in 2025.

The Trump administration re-imposed harsher sanctions on Iran egged by Israel and some of the US allies in the Arab Gulf and continues to pile on economic pressure, recently blacklisting almost all of Iran's financial sector. In response Iran has stopped observing some of the restrictions on its nuclear activity.

Trump has previously said that he wants to reach a broader deal with Iran that puts stricter limits on its nuclear and ballistic missile work and suppresses the regime’s role in regional proxy wars. Tehran has refused to negotiate while US sanctions remain in place.

Joe Biden says he's prepared to re-join the Iran nuclear deal if Iran returns to strict compliance - but he wouldn't lift sanctions until then. Whether or not that succeeds in pulling Iran back into compliance with its full obligations remains to be seen.

He said that Trump’s "maximum pressure" policy has failed, emphasising that it led to a significant escalation in tensions with allies while Iran is now closer to a nuclear weapon than it was when Trump came to office.

4. Relations with China

Obama’s presidency, during which the United States was supposed to “pivot to Asia” in part to help allies challenge China’s territorial claims, was nevertheless marked by a willingness to make US-China relations work.

President Trump took a different rhetorical stance, insisting that China has taken advantage of the United States. Over the past four years, the Trump administration has placed blame squarely on China for a wide range of grievances, including intellectual property theft, unfair trade practices and recently, the coronavirus pandemic.

Trump insisted on calling the Covid-19 the “China virus” and he vowed that China is going to pay for what the pandemic has done to the United States.

Biden’s administration would have to quickly deal with the large array of high tariffs on Chinese goods. The administration’s first question will be what to do about them: leave them in place, eliminate them, or trade their elimination for some concessions by Beijing on intellectual property and technology transfer rather than Trump’s focus on Chinese purchases of soybeans, autos and energy products.

Biden has previously said he would work more closely with allies in order to mount pushback against China. He has also said that during his political career he has spent more time with China’s leader Xi Jinping and other world leaders than Trump, experience that Trump lacks.

A Biden administration will probably remove tariffs on Chinese exports in an attempt to de-escalate tension and create a better atmosphere for ending the trade war with China. Still, the United States and China are going to be at odds for a long while. The question now is whether or not the United States tries to counter China with its allies and partners, or whether it continues to go it alone.

Retired Army Lt. Gen. H.R. McMaster, who served as Trump’s second national security advisor, said last week that China posed the biggest national security threat to the United States. He added that the winner of the presidential election will need to elicit the help of the international community in order to rein in a more ambitious and aggressive China. Since the 1990s, China has increased its military spending 800%. It’s the largest peacetime military build-up in history,” McMaster said.

Mr McMaster added that “this isn’t just a U.S.-China problem, this is a free world-China problem, and if the world’s largest economies work together to counter what he describes as Chinese economic aggression as well as physical aggression, I think we can go a long way in convincing Chinese President Xi Jinping that his aggressive strategy is not working.

5. The Arab-Israeli Conflict

Trump, who campaigned in 2016 on stopping “ridiculous endless wars” in the Middle East has had four years and has ended no wars. He picked national security advisors and secretaries of State who supported continuing the wars. His policy of menacing Iran makes fully getting out of Syria and Iraq impossible.

Joe Biden welcomed President Trump's agreement between Israel and the United Arab Emirates. Like the Democratic old guard, Mr Biden is a staunch supporter and long-time defender of Israel. Still, his policy on the West Bank is likely to differ from Trump’s.

He is unlikely to adopt the Trump administration's policies towards the occupied West Bank. These include a declaration that Israeli settlements do not violate international law, and tolerance of - if not enthusiasm for - Israeli plans to unilaterally annex parts of the territory.

The Democratic Party's left wing, which has a much more developed and assertive foreign policy coalition than in previous years, is pushing for greater action on Palestinian rights.

Mr. Biden’s one-time rival, Bernie Sanders believes that the United States should have much stronger engagement from Palestinian rights advocates, Palestinian Americans, Arab Americans and also a number of Jewish American groups who understand that ending the occupation is a key issue for United States foreign policy. So that's something to watch.

Biden will likely move toward reducing if not fully ending U.S. war efforts. For Saudi Arabia, there’s a chance U.S. support could cool, and it could focus on the Saudi human rights record, including the disappearance of Saudi journalist Jamal Khashoggi.

He would also end US support for the Saudi-led war in Yemen. The high civilian death toll has built strong opposition to US involvement from the left wing of the party and a growing number of lawmakers in Congress.

In a nutshell, there could be a more pro-Iran policy and a less pro-Saudi policy.

6. North Korea’s Nuclear Ambitions

North Korea, the only nation to have tested nuclear weapons this century, spent most of Trump’s first year in office developing its nuclear arsenal. 

Under leader Kim Jong Un, North Korea has conducted its most powerful nuclear test, launched its first-ever intercontinental ballistic missiles and threatened to send missiles into the waters near the U.S. territory of Guam. It had already made significant progress before the historic dialogue with the U.S. started in 2018.

The two leaders first met in 2018 at a summit in Singapore. That was followed by a second round of talks in Vietnam in February 2019, but that summit abruptly ended after Trump reportedly handed Kim a note demanding he turns over Pyongyang’s nuclear weapons and bomb fuel.

Biden has described Trump’s meetings with Kim as “photo-ops” that have yet to yield any concrete commitments from North Korea. He has also said that he would not pursue diplomatic talks with Kim without securing concessions from Pyongyang first.

He has also stressed that the United States needs to engage its allies and coordinate with China in order to advance negotiations with Kim.

A Biden administration could still get somewhere in talks with North Korea if it accepted that denuclearization isn’t going to happen and went for normalizing relations and reducing tension. 

The Global Economy

Prior to the 2016 US election, Donald Trump made a host of grandiose promises about the transformative impact his policies would have on the US economy. Tens of millions of jobs would be created. GDP would grow at rates not seen in decades. The record has not exactly lived up to that.

By contrast, Joe Biden has been far less modest than Trump about the impact of his own proposed economic policies in the run up to this 2020 presidential election. Is that just a difference in style between the two men?

A return of the United States, the world’s second biggest economy after China based on purchasing parity (PPP), to the fold will provide a great impetus to the global economy as China’s rebound has been doing since exiting the lockdown.

But first the United States has to control the pandemic having been the worst hit with its economy shrinking by 32.9% in the second quarter of 2020 and still continuing to shrink.

The news that a vaccine developed jointly by the American pharmaceutical company Pfizer and the German company BioNTech can prevent 90% of people from getting COVID-19 is a hugely welcome development. It will give a huge glimmer of hope to a market bereft of good news.

What would the impact of a Biden presidency be on the US economy?

In total, analysts and economists estimate that Biden’s administration plans to spend up to $4 tn in additional spending in the three years to 2024 and will raise $1.4 tn of additional taxes over that same period. Joe Biden proposes to borrow an average of $2.5 tn a year in the three years to 2024 – that would be more than the $2 tn average deficits under the current policy baseline.

However, the economic impact of a Joe Biden presidency would depend to a considerable degree on whether the Democrats will be able to reach compromises with a Senate controlled by the Republicans.

Still, analysts and economists alike conclude that Biden’s economic proposals would result in a stronger US economy than Trump’s. This will be largely due to Biden’s substantially more expansive fiscal policies which will enable the economy to return to full employment more quickly coming out of the pandemic than under Trump.

Energy

American presidents have long wanted the US to be self-sufficient when it comes to oil, and President-elect Joe Biden will likely have a similar agenda but with an added emphasis on clean energy.

1. US Shale Oil Industry

It was the Obama administration that presided over the rapid expansion of US oil and gas. They talked about it in terms of independence and a freer hand in foreign policy. President Trump has taken the narrative further to the issue of US oil dominance, where it could be “weaponized” or used as a heavy handed policy lever.

President Trump has championed the US shale oil industry claiming credit for the steep rise in US oil production during his 4 years in the White House when in fact that rise started under former President Obama and former Vice President Biden and accelerated under Trump.

And while President-elect Biden has greener goals for US energy, he will still ensure that no one will undermine the US shale oil industry on his watch. Biden is fully aware of the importance of an industry valued at $8 tn and employing 2% of the US work force to the economy and the geopolitics of the United States. However, he may increase regulation of the sector by limiting methane emissions and fracking on federal land.  

Biden will look at oil prices and oil diplomacy through the lens of the broader global economy, the US economy and US jobs. Whereas, President Trump really thought of the industry as something of a strategic importance and it needed to be protected, for President-elect Biden oil policy will remain important but it will be part of a broader economic input.

2. Natural Gas

A Biden administration would likely see natural gas as an important bridge to cleaner fuels and a reduction in coal usage. It may also see natural gas as an important export, giving the European Union (EU) the option of buying US LNG in addition to Russian natural gas.

3. Climate Change

Joe Biden says he will make fighting climate change a priority and will re-join the Paris Climate Agreement, which is one of the international accords that Trump dumped.

Trump saw tackling global warming as a threat to the economy. He has promoted fossil fuels and rolled back scores of environmental protections and climate regulations.

A Biden administration would push greener fuels. Biden is promoting an ambitious $2 tn plan to cut emissions. He says he would do this by building a clean energy economy, creating millions of jobs in the process.

Conclusions

While Biden may have to contend with a divided Congress to achieve his many domestic priorities, he will have much more power to shape US foreign policy going forward.

Under a Biden presidency, the United States will shift from “America first policy” to a policy that fundamentally believes the United States can achieve more when it works together with its partner. 

This will prominently contrast with a post-Trump Republican party which is likely to continue to be apathetic about the value of international institutions, and skeptical of the utility of multilateral agreements on topics like climate change and arms control.

---------------------------------------------------------------------------------------------------------------

*Dr. Mamdouh G. Salameh is an international oil economist. He is one of the world’s leading experts on oil. He is also a visiting professor of energy economics at the ESCP Business School in London.

Disclaimer: "The contents of this article are the author's sole responsibility. They do not necessarily represent the views of the Hellenic Association for Energy Economics or any of its Members".

Our Corporate Members
Item added to basket.
Click here to log in.
Added
Checkout