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The G-7 Summit in France
The three day G-7 summit it France is behind us. Prior to the start, many analysts wondered if it would be a G-7 summit or a G5+2, with the US and the UK forming the +2. It is still unclear as there have been conflicting messages, but French President Macron tried to end the summit on a positive note in what some now refer to as “Macron’s Iranian Drama”. After US President Trump pulled out of the Iran nuclear deal, tensions with Iran have increased. The UK seized an Iranian oil tanker, Iran retaliated, drones were shot down and Iran has pressured France to get the US back to the deal or everything which was previously negotiated is off the table.
At the end of the summit, Macron attempted to the get the US and Iran to sit down and talk. He juggled flattery with facts when dealing with Trump in order to create a working environment with him. He offered the US the lead role in the failed Iran nuclear deal and stated “I’m convinced a deal could be found if Rouhani and Trump meet.” Trump reluctantly acknowledged that he would meet Rouhani if the circumstances were right, echoing his approach before he met North Korean leader Kim. President Rouhani noted that Iran will not agree to a meeting unless the US removes all sanctions. Macron’s political maneuvering appears to have yielded a short-term victory for the time being. Trump is also known to change his mind and so the Iranian drama extends.
The Trump-Macron Relationship
Trump wants to host the 2020 G-7 Summit at his golf resort in Miami. Images from last year’s G-7 gathering were still fresh, with German Chancellor Merkel leaning over a seated Trump with her arms crossed. This time around the overall atmosphere was warmer. Macron set the right tone with Trump after he landed in France on Saturday. Macron invited him to an unplanned one-on-one lunch which set the agenda. Trump added “He wasn’t trying to impress his people, I wasn’t trying to impress his people. We were just trying to impress each other. We’ve never had a better relationship.”
US officials initially complained about the G-7 agenda and pointed out it was designed to embarrass Trump, but the mood improved. Even the visit by Iranian Foreign Minister Zarif didn’t cause any turbulences. Trump retreated to his hotel and Zarif met with France, Germany and the UK. Trump also pressed for Russia to be re-invited and make it the G-8 once again. By the end of the summit, Trump praised Macron for a “truly successful G-7” hosted by a “spectacular leader”. After Trump left the podium, one reporter asked if the G-7 summit saw the rebirth of Macronian diplomacy to which Macron responded “That’s not for me to answer.”, with a proud smile. Is Macron’s optimism misplaced or will his hard work on Iran yield positive results?
UK PM Johnson Weighs In on Iran
While President Trump wants to complete a “very big trade deal” with the UK after Brexit, one thing he should not count on is support from the UK on his Iran stance. According to UK diplomatic sources, the UK’s support for the Iran deal remains. The official, who commented on the condition of anonymity, stated “I don't think you will find any change in the British government position. I think on this issue there is a sort of expectation that we are going to have a meeting with the American president and our position will change. But our position on Iran is well known.” Macron acknowledged that there were disagreements within the G-7 on how to proceed with the Iran deal brokered in 2015, but that he would try to find a compromise.
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Trump Urged to End Trade War with China
At the G-7 Summit, Trump was urged by other leaders to find a resolution with China and end the trade war. Macron told reporters that “Our deep wish is for an agreement to be found between the United States and China concerning trade because I think that would be something positive for everyone.” Trump has remained his course and added “It’s the way I negotiate. It’s done very well for me over the years. And it’s doing even better for the country.” Will Trump give in to domestic as well as global pressures and change his approach to the trade war he started with China?
The biggest confusion for Trump over the G-7 Summit, was a statement by Chinese lead negotiator Vice Premier Liu He who repeated that “China is willing to solve the problem through consultation and cooperation with a calm attitude. We firmly oppose the escalation of the trade war.” This is the position China has had from the start. Liu is a key advisor to Chinese President Xi, but Trump confused Liu’s position and mistakenly believes that he is the vice president of China. This position is held by Wang Qishan.
Macron added “There has to be a balanced agreement that will be good for everyone.” After he left the stage, Trump expressed his frustration with President Xi and stated “Now, when I raise and he raises, I raise and he raises, we can never catch up. We’re down on the floor, lower than the floor. We can’t make a 50-50 deal. This has to be a deal that’s better for us. And if it’s not better, let’s not do business together. I don’t want to do business.” It is unlikely that a trade deal will be reached under Trump’s pre-conditions. He was asked if he might change his position to which he responded “Yeah, sure. Why not? I have second thoughts about everything.” How will this impact your forex portfolio and what should you do in order to profit from it?
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