Safeguarding A Rules-based Trading System against America First Trade Economics


October 16, 2018

Safeguarding A Rules-based Trading System against America First Trade Economics

by Dr. Mari Pangestu, Universitas Indonesia

http://www.eastasiaforum.org

 

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“Without concerted effort and a coalition of willing leadership, including from the EU and East Asia, the future of the rules-based trading system will remain under threat.”–Dr. Mari Elka Pangestu

Despite expectations that the US Federal Reserve would raise interest rates, capital flows to the United States have led to the appreciation of the US dollar against most major currencies.

The hardest hit countries are Argentina and Turkey, which are experiencing fiscal issues complicated by their political situations. Brazil, South Africa and the emerging countries in Asia have also been affected — albeit at a lower rate of depreciation of their currencies in the 10 to 12 per cent range. Even Australia and China have experienced depreciation of around 8 per cent and 5 per cent respectively.

The level of depreciation experienced by different economies reflects how investors perceive their different fundamental macroeconomic conditions, especially the level of their current account and fiscal deficits and policy outlooks.

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The rising US dollar raises questions about the capacity of emerging economies to service their dollar-denominated debts and the vulnerabilities this could expose in their financial systems. Even if the current economic conditions point to a low potential for contagion from Argentina and Turkey, IMF Managing Director Christine Lagarde recently warned that ‘these things could change rapidly’. The uncertainty that already exists is a clear and present danger.

The uncertainty in the world economy has been increasing since Brexit and the election of President Trump in 2016, and in 2017 as the United States left the Trans-Pacific Partnership and announced many threats to impose trade restrictions. This uncertainty has heightened since January 2018 when US President Donald Trump made good on his threats to remedy bilateral trade deficits — what he sees as ‘unfair trade’ practices against the United States — by imposing tariffs on imported solar panels and washing machines, followed by aluminium and steel.

Since March, the greatest uncertainty has been from the brewing tit for tat trade conflict between the United States and China, which started with the imposition of 25 per cent tariffs on US$50 billion worth of China’s exports to the United States. China retaliated with the same sized tariffs on the same amount of trade from the United States. Trump then escalated the trade war further in September with the announcement of 10 per cent tariffs on US$200 billion worth of China’s exports to the United States.

The US–China trade conflict and the uncertainty surrounding it is expected to have knock on effects on global trade and investment flows. The impact of the reduction in China’s exports to the United States on China’s growth will reduce China’s imports, which in turn will impact the many countries that China has become a major trading partner for.

This means that China and other countries facing US trade restrictions will look for new markets for their goods. The situation has already led some countries to impose restrictions or initiate trade remedy investigations, for instance on steel. This uncertainty has and will continue to influence trade and investment, as businesses evaluate how the increased restrictions will affect their supply chains.

It is too early to tell how large the disruption will be, as it is not easy to dismantle supply chains. But the costs down the line could be great as businesses re-evaluate their trade and investment decisions to insulate themselves from tariffs rather than to maximise their competitiveness.

The most concerning aspect of all this is that, after 75 years of being its greatest advocate, the United States is now the biggest threat to the future of the rules-based trading system that has provided predictability and fairness in the way the world engages in trade. There is no clear light at the end of the tunnel.

The key question is: what is Trump’s intention? Is it to change the rules of the game to benefit the United States and address China’s ‘non-market-oriented policies’ or is it just anti-trade and America First? Assuming it is the former, there are at least three important responses needed.

First is safeguarding the stability of the World Trade Organization (WTO) as the overarching framework to provide predictability, fairness and stability. To this end, it is vital that the WTO dispute settlement mechanism continues to operate. The test case is the Chinese and EU case against US steel and aluminium tariffs and getting past the blocking of panel judge nominations by the United States.

Ensuring that the United States does not use blunt unilateral instruments to address its concerns also means that reforms to the WTO rule book are needed. More must be done to address concerns around intellectual property rights, investment, the environment, labour, competition policy, subsidies, tax, digital data and the treatment of developing countries.

Second, the process of opening-up must continue, with or without the United States. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership is a good start. And it is of the utmost importance that the Regional Comprehensive Economic Partnership negotiations are concluded in November this year. These are all important processes to signal the continued commitment of East Asia to expanding markets and fostering flows of trade and investment.

Third, and what most will agree is the most important process, is unilateral reforms. Given increased global uncertainty and limited policy space for fiscal stimulus, structural reforms are a must for East Asian countries, especially China. These range from trade and investment reforms, as well as reforms related to competition policy, intellectual property, the role of state-owned enterprises and sustainability. As in the past, unilateral reforms are more successfully undertaken when there is peer pressure and benchmarking from international commitments.

Without concerted effort and a coalition of willing leadership, including from the EU and East Asia, the future of the rules-based trading system will remain under threat.

Dr. Mari Pangestu is former Indonesian trade minister and Professor at the University of Indonesia.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘Asian crisis, ready or not’.

Trump’s Unilateralism, US Dollar and Its Discontents


October 12, 2018

Trump’s Unilateralism, US Dollar and Its Discontents

by Barry Eichengreen

https://www.project-syndicate.org/commentary/dollar-could-lose-global-hegemony-by-barry-eichengreen-2018-10

Having unilaterally reimposed sanctions on Iran, US President Donald Trump’s administration is threatening to penalize companies doing business with the Islamic Republic by denying them access to US banks. But that could hasten the dollar’s demise as the main global currency.

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Trump is squandering US leverage

BRUSSELS – US President Donald Trump’s unilateralism is reshaping the world in profound and irreversible ways. He is undermining the working of multilateral institutions. Other countries, for their part, no longer regard the United States as a reliable alliance partner and feel impelled to develop their own geopolitical capabilities.

Now the Trump Administration is eroding the dollar’s global role. Having unilaterally reimposed sanctions on Iran, it is threatening to penalize companies doing business with the Islamic Republic by denying them access to US banks.

The threat is serious because US banks are the main source of dollars used in cross-border transactions. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), dollars are used in nearly half of all cross-border payments, a share far greater than the weight of the US in the world economy.

In response to the Trump administration’s stance, Germany, France, and Britain, together with Russia and China, have announced plans to circumvent the dollar, US banks, and US government scrutiny. “Plans” may be a bit strong, given that few details have been provided. But the three countries have described in general terms the creation of a stand-alone financial entity, owned and organized by the governments in question, to facilitate transactions between Iran and foreign companies.

Those companies will presumably settle their claims in euros, not dollars, freeing them from dependence on US banks. And insofar as the Europeans’ special-purpose financial vehicle also bypasses SWIFT, it will be hard for the US to track transactions between Iran and foreign companies and impose penalties.

Is this scheme viable? While there is no purely technical obstacle to creating an alternative payments channel, doing so is certain to enrage Trump, who will presumably respond with another round of tariffs against the offending countries. Such, unfortunately, is the price of political independence, at least for now.

Having learned a painful lesson about dependence on the dollar, will other countries move away from it more generally? The fact that the dollar is used so widely makes doing so difficult. Banks and companies prefer using dollars because so many other banks and companies use dollars and expect their counter parties to do likewise. Shifting to another currency would require coordinated action. But with the governments of three large European countries having announced just such coordination, such a scenario can no longer be excluded.

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It is worth recalling how the dollar gained international prominence in the first place. Before 1914, it played essentially no international role. But a geopolitical shock, together with an institutional change, transformed the dollar’s status.

The geopolitical shock was World War I, which made it hard for neutral countries to transact with British banks and settle their accounts using sterling. The institutional change was the Federal Reserve Act, which created an entity that enhanced the liquidity of markets in dollar-denominated credits and allowed US banks to operate abroad for the first time. By the early 1920s the dollar had matched and, on some dimensions, surpassed sterling as the principal vehicle for international transactions.

This precedent suggests that 5-10 years is a plausible time frame over which the US could lose what Valéry Giscard d’Estaing, then France’s Finance Minister, famously called the “exorbitant privilege” afforded it by issuing the world’s main international currency. This doesn’t mean that foreign banks and companies will shun the dollar entirely. US financial markets are large and liquid and are likely to remain so. US banks operate globally. In particular, foreign companies will continue to use dollars in transactions with the US itself.

But in an era of US unilateralism, they will want to hedge their bets. If the geopolitical shock of Trump’s unilateralism spurs an institutional innovation that makes it easier for European banks and companies to make payments in euros, then the transformation could be swift (as it were). If Iran receives euros rather than dollars for its oil exports, it will use those euros to pay for merchandise imports. With companies elsewhere earning euros rather than dollars, there will be less reason for central banks to hold dollars in order to intervene in the foreign exchange market and stabilize the local currency against the greenback. At this point, there would be no going back.

One motivation for establishing the euro was to free Europe from excessive dependence on the dollar. This is likewise one of China’s motivations for seeking to internationalize the renminbi. So far, the success of both efforts has been mixed, at best. In threatening to punish Europe and China, Trump is, ironically, helping them to achieve their goals.

Moreover, Trump is squandering US leverage. Working with the Europeans and the Chinese, he could have threatened Iran, and companies doing business there, with comprehensive and effective sanctions had there been evidence that the country was failing to live up to its denuclearization obligations. But working together to ensure Iran’s compliance was, of course, precisely what the Joint Comprehensive Plan of Action, renounced by the Trump administration earlier this year, was established to do.

 

 

America’s “Chaos President” makes Iran’s Hardliners Right, says Dr. Fareed Zakaria


May 14, 2018

America’s “Chaos President” makes Iran’s Hardliners Right, says Dr. Fareed Zakaria

https://fareedzakaria.com/columns/2018/5/10/trump-has-proved-irans-hardliners-right

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Jeb Bush said Donald Trump would be a “chaos president.” And this week, President Trump lived up to the billing, choosing to defy virtually the entire world, including America’s closest European allies, and raising tensions in the most unstable part of the globe, the Middle East.

It is hard to understand the rationale behind Trump’s decision to withdraw from the Iran nuclear deal. If Iran is as dangerous and malign an actor as he says, surely it is best to have its nuclear program frozen at a pre-military level and monitored 24/7. The chances of getting Tehran to agree to more stringent terms are close to zero. If the terms of the Iran deal were applied to North Korea, it would require Pyongyang to destroy its nuclear weapons — the fruits of a decades-long effort — and agree to invasive inspections and foreign surveillance in a country so closed it is known as the Hermit Kingdom.

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If there is a strategy behind Trump’s move, it is probably regime change. His closest advisers have long championed regime change and have argued that the best approach toward Iran is a combination of sanctions, support for opposition groups and military intervention. As a congressman, Secretary of State Mike Pompeo criticized the Obama administration for negotiating with Tehran and instead suggested that the United States launch close to 2,000 bombing sorties against Iran. National security adviser John Bolton has been even more forceful in pushing for regime change, advocating much greater support for the Mujahideen-e Khalq (MEK), a militant opposition group with a checkered past and little support within Iran. Both Bolton and Trump attorney Rudolph W. Giuliani have given paid speeches for the MEK, and in Paris last July, Bolton declared that the United States should pursue regime change in Iran so that the Islamic republic would not celebrate its 40th birthday (which would be in 2019). Thus, three of Trump’s closest advisers have views on Iran that are so extreme that it is hard to think of anyone outside of Saudi Arabia or Israel who shares them.

 

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John, Mike and Gina

Iran is a repressive and anti-American regime that has spread its influence in the Middle East, often to America’s detriment. But it is also an ancient civilization, with centuries of power and influence in the region. The notion that the United States could solve all of its problems with Tehran by toppling the regime is fanciful. It has withstood U.S. pressure and sanctions for nearly four decades. And even if it were somehow possible to topple it, look around. The lesson of the past two decades in the Middle East is surely that regime change leads to chaos, war, refugee flows, sectarian strife and more. It opens a Pandora’s box in a land already rife with woes.

Look beyond the Middle East at the record of regime change. Whether it was an unfriendly ruler such as Guatemala’s Jacobo Arbenz or a friendly one such as South Vietnam’s Ngo Dinh Diem, regime change was followed by greater instability. Look at Iran itself, where a British-American-sponsored coup dislodged the elected government, which was one of the factors that led to and still legitimizes the Islamic republic. Consider also America’s heavy-handed intervention in the Cuban liberation movement at the turn of the 20th century, which left a legacy of anti-Americanism that the Cuban Communists exploit to this day. Misjudging and mishandling nationalism may be the central error in American foreign policy.

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By contrast, when the United States has helped open countries to capitalism, commerce and contact, these acids of modernity have almost always eaten away at the nastiest elements of dictatorships. For all its problems, China today is a much better and more responsible country than it was under Mao Zedong. People often point to President Ronald Reagan’s campaign against the Soviet Union as one in which pressure against an evil empire helped produce regime change. But they remember only half the story. Reagan did pressure the Soviets. But as soon as he found a reformer, in Mikhail Gorbachev, he embraced him, supported him and made concessions to him. So much so that he drew furious opposition from conservatives in the United States who called him “a useful idiot” who was helping the Soviet Union win the Cold War.

Iran is a complicated country with a complicated regime. But it does have moderate elements within it that were clearly hoping the nuclear deal would be a path to integration and normalization with the world. Those forces do not have the dominant hand, but they do have power, not least because President Hassan Rouhani has popular backing. But Iran has always had a strong hard-line element that believed that America could never be trusted, that the Saudis were mortal foes, and that self-reliance, autarky and the spread of Shiite ideology was their only strategy for self-preservation. Trump has just proved them right.

(c) 2018, Washington Post Writers Group

 

Trump Destroys the Iran Deal—and a Lot More


May 10, 2018

Trump Destroys the Iran Deal—and a Lot More

After months of threatening, President Trump withdrew from the historic Iran nuclear deal on Tuesday, unraveling the Obama Administration’s signature foreign-policy achievement and putting the United States on a collision course with allies, as well as with Tehran. “This was a horrible, one-sided deal that should have never, ever been made,” the President said. “It didn’t bring calm, it didn’t bring peace, and it never will.” Trump also announced that the United States is re-imposing economic sanctions on Iran and, over time, on companies in other countries that do business with the Islamic Republic.

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President Donald Trump announced on May 08 that the US will withdraw from the nuclear deal with Iran and reinstate economic sanctions against Tehran. “We will be instituting at the highest level of economic sanction; any country that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States,” Trump said.

 

Trump said that he was prepared to negotiate a new deal, but it would have to cover several issues beyond Iran’s controversial nuclear program—including Tehran’s ballistic-missile program, its support for extremist groups, and other “malign” activities in the wider Middle East. In a rebuke to Trump, however, the leaders of Britain, France, and Germany expressed “regret” over Trump’s decision and vowed to remain in the pact, which also includes Russia and China. “We urge all sides to remain committed to its full implementation and to act in a spirit of responsibility,” they said. China also indicated that it would adhere to the accord.

In an initial reaction, Iran also appeared to reject new negotiations—and indicated that it might even stick to the original agreement, which curtails significant aspects of its nuclear program. President Hassan Rouhani said that his government would review the prospects of continuing to collaborate with the other five signatories of the pact, formally the Joint Comprehensive Plan of Action, or J.C.P.O.A.

“If, at end of this short period of time, if we come to the conclusion that with the collaboration of five countries it is feasible to attain what the Iranian people wish, despite the views of the U.S. and Zionist regime and also the impolite remarks by Trump, we should see whether it is possible to just keep up with J.C.P.O.A. and also take steps in line with regional peace and tranquility,” he said. (Iran refers to Israel as “the Zionist regime.”) But Rouhani—who won office in 2013, on a platform of negotiating a nuclear deal with the United States and getting a reprieve from economic sanctions in return—also suggested that Tehran was prepared for “subsequent measures, if needed,” including “starting industrial enrichment without limitations.”

Trump’s decision means that, technically, the United States is the first nation to violate the accord. The International Atomic Energy Agency, which is the U.N. nuclear watchdog, has issued ten reports that Tehran is in full compliance with its obligations. Iran is under the toughest inspections and verification-inspections regime ever imposed in an arms-control deal. In a rare public comment on Trump’s foreign policy, former President Barack Obama noted that the right to inspections disappears if the agreement ends.

“Every aspect of Iranian behavior that is troubling is far more dangerous if their nuclear program is unconstrained,” Obama said. “Our ability to confront Iran’s destabilizing behavior—and to sustain a unity of purpose with our allies—is strengthened with the J.C.P.O.A., and weakened without it.”

Critics were scathing about the U.S. withdrawal. James Dobbins, a former U.S. Ambassador to the E.U., who negotiated with Iran after the U.S. invasion of Afghanistan and now works at the RAND Corporation, said that the decision “isolates the United States, frees Iran, reneges on an American commitment, adds to the risk of a trade war with America’s allies and to a hot war with Iran and diminishes the prospects of a durable and truly verifiable agreement to eliminate the North Korean nuclear and missile threat.”

Trump’s decision is likely to have far-reaching impact. The premise of diplomatic outreach was to create conditions for eventual coöperation with Iran on other flashpoints in the world’s most volatile region. Instead, danger looms for deepening tensions in hot spots such as Syria, Iraq, Lebanon, and Yemen—countries where the United States and Iran have rival interests. “By forfeiting American leadership in the one successful multilateral deal in the volatile Middle East, Trump could possibly make a bad situation worse,” Wendy Chamberlin, a former career diplomat who is now the president of the Middle East Institute, in Washington, told me.

Tensions between Israel and Iran have increased recently over Syria, where the Iranian Revolutionary Guard Corps and Lebanon’s Hezbollah have established footholds in three dozen military facilities during its seven-year civil war. Israel has launched more than a hundred air strikes on Syria, the majority on Iranian and Hezbollah targets. “Israel and Iran are headed toward a dangerous confrontation,” Chamberlin said.

The withdrawal from the agreement comes days before the U.S. moves its Embassy in Israel from Tel Aviv to Jerusalem, another controversial decision that has inflamed anti-American passions. “Trump is pouring gasoline on a Middle East in flames already, with his Iran and Jerusalem decisions,” Bruce Riedel, a former C.I.A., White House, and Pentagon staffer who is now at the Brookings Institution, told me.

Trump’s decision also undermines the transatlantic alliance, crafted after the Second World War, between the United States and Europe. The President defied a determined last-ditch pitch by America’s three most important European allies, made during visits by French President Emmanuel Macron, German Chancellor Angela Merkel, and the British Foreign Secretary, Boris Johnson.

Trump’s decision to nix rather than fix the deal fits his “America First” agenda. “Withdrawal from the Iran nuclear deal—alongside withdrawal from the Trans-Pacific Partnership and the Paris Accord [on climate]—completes Trump’s reneging on U.S. commitments and undermining of U.S. credibility,” Daniel Kurtzer, a former Ambassador to Israel and Egypt now at Princeton University, told me. “The United States used to be the leader, the convener, and the engine of international diplomacy. Trump’s actions have turned us into an untrustworthy and erratic diplomatic outlier.”

The Europeans are clearly hoping that the deal—the crowning achievement of the E.U.’s diplomacy as a continental body—will survive without the United States.

Re-imposing sanctions on Iran will create the greatest division between Europe and the U.S. since the Iraq War, Mark Fitzpatrick, the executive director of the International Institute for Strategic Studies office in Washington, told me. “Only this time it will be worse, since not a single European state sides with the U.S. on this matter.” Beyond Europe, American credibility worldwide “will go down the tubes,” he said. “Who will ever want to strike a deal with a country that, without cause, pulls out of a deal that everyone else knows has been working well? America will be seen as stupid, arrogant, and bullying. Pity the poor U.S. diplomats who have to explain this illogical decision to their host countries.”

Trump’s decision even benefits America’s adversaries, including Russia’s President, Vladimir Putin. “We’re playing into Putin’s hand,” Michael McFaul, a former U.S. Ambassador to Russia, now at Stanford University, said on CNN. “For Putin, it means that the U.S. is on the outside—and Putin is still on the inside. Why are we isolating ourselves when we need other countries to coöperate with on issues like North Korea?”

The U.S. decision will have fallout both economically and politically inside Iran, where foreboding about Trump’s long-threatened decision has already had a psychological impact. The value of Iran’s currency has plummeted by a third since December. The timing intersects with systemic change—and uncertainty—in Iran over dramatic demographic changes, aging leadership, and long-standing structural deficiencies. “The post-revolutionary baby boom is inching toward middle age, with nearly universal access to information and communications technology and after decades of thwarted hopes for economic improvements,” Suzanne Maloney, a former State Department policy-planning staffer now at the Brookings Institution, told me.

“I don’t see a revolution on the horizon, but I think we are witnessing the slow-motion metastasis of the revolutionary system that is echoing through the economy and the establishment,” she said. “I don’t think this is solely or even primarily provoked by the collapse of the deal but, rather, the culmination of a range of internal forces: long-simmering frustrations, the stalemate of two decades of gradualism, demographic pressures, communications technology, and the anticipated imminence of leadership succession.”

As dramatic as Trump’s curt announcement was, the repercussions of his decision—one of the most important of his sixteen months in office—may take months to play out in Iran, among allies, and even among adversaries. At a White House briefing, the new national-security adviser, John Bolton, said that the Administration will continue to talk with allies, starting on Wednesday, about ways forward. But the prospect of healing the policy divide with the world’s other five major powers—much less getting Iran to agree to a new deal—seems remote, at best.

 

Fareed Zakaria on Macron’s State Visit to Washington DC


April 29, 2018

Fareed Zakaria on Macron’s State Visit to Washington DC

by Dr. Fareed Zakaria

ttps://fareedzakaria.com/columns/2018/4/27/macron-is-trying-to-save-the-west

Emmanuel Macron came, saw and conquered Washington this week. But the French President is trying to do something much harder than generate buzz and goodwill. He is trying to stop President Trump from dividing the Western alliance and disrupting the (already turbulent) Middle East. Watching him at work — flattering Trump, then politely disagreeing with him, all while proposing compromise solutions — is like watching a skilled dancer execute a complex set of moves. It remains to be seen whether Macron can pull it off, but thank goodness he is trying.

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“Emmanuel Macron came, saw and conquered Washington this week. But the French President is trying to do something much harder than generate buzz and goodwill. He is trying to stop President Trump from dividing the Western alliance and disrupting the (already turbulent) Middle East. Watching him at work — flattering Trump, then politely disagreeing with him, all while proposing compromise solutions — is like watching a skilled dancer execute a complex set of moves.”–Dr. Fareed Zakaria

 

Macron thinks that “Donald Trump will get rid of the Iran deal for domestic reasons,” he told me and a small group of journalists on Wednesday. What will ensue, he predicted, is “a period of tension.” That might be an understatement. Tehran has signaled that if Trump pulls out of the deal on May 12 — when he faces a deadline on whether to restore sanctions on Iran — the most likely result is that Tehran would also withdraw. And as Iran’s foreign minister, Mohammad Javad Zarif, told me on Monday, “Once we withdraw, all the restrictions on our nuclear program end.”

Zarif said that, in the accord, Iran made a much stronger pledge than most realize. “President Trump does not seem to have read the agreement. The third line of it states: ‘Iran commits to never developing nuclear weapons.’ There is no time restriction on that. The word we use is ‘never.’ The time restrictions relate to voluntary limits on our nuclear energy program that we have undertaken to give the international community confidence that we are sincere in our intentions.”

Macron is not so sure that Iran would withdraw from the deal. “If Iran pulls out as well, the U.S. might put very tough sanctions on it and things would spiral downwards,” he said. He plans to urge President Hassan Rouhani to temper the Iranian reaction and agree to find a new way forward.

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Macron has pushed Trump privately and publicly to keep the Iran deal. “It sets a terrible precedent for the world’s leading power to renege on an agreement that it spearheaded and signed,” he said. And Macron sees it as part of a dismaying pattern from an administration that has decided to pull out of the Paris climate accord and the Trans-Pacific Partnership, weakened its commitment to the World Trade Organization and now seems determined to scuttle the pact with Iran.

But Macron is also critical of Iran. “Since the agreement was signed, Iran has made some decisions. It expanded its regional interventions [in Yemen, Lebanon and Syria]. It has strengthened its ballistic missile arsenal. It appears to have used the proceeds from sanctions relief to fund its militias and external operations more than provide relief to its population. All these decisions have consequences,” he said.

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French President Emmanuel Macron answers a question from student in the audience during a town hall meeting at George Washington University in Washington, April 25, 2018.

In any event, Macron is determined not to wring his hands, but rather to find a way forward. Hence his artful proposal for a new nuclear deal. While this may sound like Trump, Macron is actually suggesting something quite different. The first pillar of his new approach is adherence to the existing nuclear deal, unamended and unabridged. But he proposes three additional pillars that would address Iran’s ballistic missile program, counter Iranian influence in the Middle East, and extend the commitments Iran has made beyond various timelines in the current deal (which range from eight to 25 years).

In other words, were Iran to agree to start discussing these topics, the current deal would stay intact. It’s not clear that the Iranian government would accept this demand. And it’s not clear that Trump would agree to a framework in which the agreement that he has branded “the worst deal ever negotiated” would remain in place. Both sides would have to climb down from their positions.

One Iranian who is well-versed in the issues made an interesting observation about why the nuclear deal has had so many critics in both Washington and Tehran. For 40 years, the United States and Iran have settled into a pattern of behavior. The United States sees its role as applying pressure and threats to Iran, while Iran thinks its role is to bravely resist. The nuclear deal was an effort to break with the past and create a new dynamic of dialogue. But it generated a backlash in both countries.

Macron is trying to forge a new path for dialogue and diplomacy. If he fails, it will be because too many in Washington, and even in Tehran, have gotten comfortable with the old pattern. By mindlessly sticking to it, they seem to be leading us down a path of tension, conflict and, perhaps, even war.

c) 2018, Washington Post Writers Group