Thanks for the opportunity.
I received a list of nine questions, which could take hours to answer, but I'll try to do it in eight minutes. Hopefully we'll get somewhere on this.
The essence of a few things that I see here is that—as many of you who watch the news as much as I do know—there is a lot of unpredictability going on. We don't know what's happening out of the White House, so it's really difficult to determine exactly what U.S. foreign policy is from one week to the next. It's just so in flux that way.
The challenges I see here are that, as we all know, there is a bit of a personalization of foreign policy. I think the U.S. President has often acted on a knee-jerk reaction, and is very much swayed by unpredictable factors. We're in new territory.
I've been working in Washington quite a bit recently, both with the IMF and Brookings, with which I'm affiliated. Much of my conversation with bureaucrats inside the U.S. administration, whether it's treasury, state, or parts of defence, suggests that there isn't a lot of bureaucratic buy-in. There's a lot of frustration within Washington proper.
Added to that is the fact that they're really short-staffed. There is a great deal of unease in D.C. generally about the lack of capability and the lack of expertise. It doesn't help that the White House itself seems to be lacking on that front. There is a great deal of uncertainty as to whether or not people like Jared Kushner and Ivanka Trump have a lot of weigh-in and sway with U.S. foreign policy, which again is highly unpredictable. Frankly, there is no expertise in either of their repertoires, so it becomes far more difficult.
That sort of personalization of foreign policy means that there need to be contingencies. There needs to be a number of best-case and worst-case scenarios on all foreign policy issues related to the U.S., because things are very much in flux. One can't help but see that this week alone, five major foreign policy positions were completely reversed by Trump himself, from China's currency manipulation, to questions about Russia, to questions about NATO: suddenly it's no longer obsolete. There is so much flip-flopping here that it makes many of us dizzy trying to analyze this.
In terms of issues that need to be watched for, I think the deregulation of the financial industry is something that Canada needs to be careful about. There are a lot of potential spillovers for Canada, maybe positive and negative, depending on how things go. There is going to be a lot of money pouring in as some of the Dodd-Frank regulations become deregulated and we start to see smaller banks in the U.S. become empowered. This is something the Trump administration is very keen on. One thing he does have is a high number of Goldman Sachs advisers, who are also very much in favour of dismantling this once-hated regulation in the financial industry. I think that's something to be watched.
On the trade front, I noticed the committee had quite a few questions on trade. This is something to be watched, of course. The expected or potential trade war that many had been talking about between China and the U.S. may now be averted. It seems as though the Trump administration is backing down on its idea that China is a manipulator of currency. The truth of the matter on that question is that China is a manipulator of currency, but that's not the point. China's currency has actually risen in recent years as a way to thwart money leaving China, but that was for its own domestic political reasons, not for a trade advantage. In terms of the time to ask China to overvalue its currency, he's probably about three or four years too late.
Federal interest rates are something to be watched. There are planned interest rate increases. Janet Yellen has already noted that. We're at least expecting another two increases between now and the end of the year. Keep in mind that Trump wants them to be lowered; he does not want to see rates increased, so there may be a clash forthcoming. Again, this is a president who doesn't realize there is such a thing as central bank independence, so that's something to be watched. Of course, for Canada, any sort of interest rate movement on the U.S. side is something of interest to us.
Your fourth question asked what this would mean for border issues. I think we have to keep in mind that many of those who surround Trump continue to propagate the myth that a 9/11 bomber came through the Canadian border. That's something that unfortunately still resonates in the fake news and Breitbart type of folks who really surround Trump, so it needs to be heightened, I think, in terms of our awareness on that issue. I don't think we're necessarily expecting to see real changes in terms of border security, but I think the messaging and the leeway that many U.S. border guards have been given, thanks to some of these executive orders, does in fact mean that if this myth propagates itself and is indeed internalized by these agents, it may mean more difficulty for Canadians crossing. I think that's a real issue.
Of course, these executive orders need to be continued to be watched, because they disproportionately affect Canadians from different backgrounds. I can speak from personal experience that if you have several Middle East stamps on your passport, you may be interrogated far differently than if you don't. There is an issue that Canadians need to be concerned about. The government needs to think about how it will deal with discrimination, potentially, at the border on these issues.
There's another thing that I think is important to point out on the Russia front, and it's really quite an exciting one. To go back to an earlier point, there has been a lot of change in the past week alone on a number of issues. While we expected a sort of increased détente between Trump and Putin, it seems as though that may be more rocky. As to how this will affect the NATO alliance, I think it's comforting to hear people like Trump and Tillerson now re-engage in NATO and the alliance. Of course, if it rears its ugly head again in terms of calling NATO obsolete or again putting down the alliance, that's problematic.
In terms of allies in eastern Europe, there is still obviously a rush, a clamouring, to try to get into NATO as fast as possible. Russian troops are approaching Belarus, for example. One can't ignore, of course, the continued occupation of Crimea, eastern Ukraine, and Georgia. I think, from my attendance at a number of security conferences in eastern Europe, eastern European leaders are very, very afraid. They are constantly bombarded by a great deal of fake news in their own language. They don't have the same state news or, I should say, even private news supports or a plethora of views that often can counter some of this fake news. You do have a preponderance of Russian or Russian-backed media in many parts of eastern Europe that are really putting a lot of fear in allies. It's quite powerful messaging, so I think we can't discount that.
Of course, as we head into very important elections in Germany and France, Russia's penetration there is well documented. Whether it's support for Le Pen and other ultra-nationalists in Germany or just the preponderance of fake news, it's something to be watched. As far as the Trump administration is concerned, last week I would have said it was completely trying to sideline this argument, and now, just this week, we've heard Tillerson talk about Russian fake news in eastern Europe. It's really hard to break that down.
I'll spend the few minutes I have remaining to talk about U.S. policy toward the Middle East and the JCPOA. As far as U.S. foreign policy toward the Middle East is concerned, of course everything we've seen this past week has shaken a lot of our long-standing assumptions. However, I do think that the engagement or the strike against Syria by the U.S. administration is a limited, one-time thing. I don't expect to see more escalation of that. I don't think the Americans are interested in putting more boots on the ground. They already have about 5,000, maybe a bit more, between Iraq and Syria in the fight against ISIS. I don't see much appetite there.
One has to read the very sensible analysis of people like Mattis and others in the U.S. Pentagon who I think are also very cautious about getting involved or further entangled in the Middle East. The strike itself, 59 Tomahawk missiles on the Syrian air base, probably didn't do a lot of damage in terms of really thwarting Syria's capability, but it did produce a positive signal, at least to the Assad regime, that one type of arsenal is not acceptable—i.e., chemical weapons.
That, of course, does not stop the Syrian regime from continuing the very cruel assault with conventional weapons on its people. That will continue.
If I may, I will just very quickly talk about the Syrian situation and where I think that's going. I think we're seeing that the Syrian government and the Russian government have a plan to basically continue to depopulate and strike at places like Ghouta, Daraya and other parts of Madaya, basically trying to reclaim the very few pockets left in the southern part of the country and around the capital. They are trying to get continued swaths of population such that the rebels in those areas put down their arms and basically agree to be resettled in Deir ez-Zor in the north.
As long as the Syrian regime can regain the Aleppo-Damascus highway to the coast, I think they're quite happy. That's what many internal Syrian regime operatives keep calling the useful part of Syria. I think there is an effort to do that. I think there's a three- to four-year time horizon in that effort.
As far as the fight against ISIS goes, just more generally, it's gone very well in parts of Iraq obviously. Although I think what may not have reached the radar of many is that parts of Iraq like Ramadi have seen a re-entrance of ISIS because of no governance or no central government capacity to actually go in and stabilize the situation. There is a risk, just as in Palmyra, that governments, both Syrian and Iraqi, are not well equipped to actually hold the cities that they liberate. That's a real concern.
As far as Mosul is going, of course eastern Mosul has been liberated. Western Mosul is slow, which is a good thing because it's very, very dense. There will be a rush to try to finish this before the heat comes on, because Mosul's heat or Iraq's heat generally is quite intolerable. This is a street-by-street battle. Of course, the Americans have changed their rules of engagement. I think anybody who denies that is foolish. There's been a change in the rules of engagement, which means that sort of command to the Americans to step up aerial assault on western Mosul has gone up. That has led to the increase in civilian deaths. I would caution against that.
Do we still have time to speak about the JCPOA or do I need to wrap it up?
