Monday, June 25, 2018

NATO..EU UNDER PRESSURE...Advantage to US

The way the global economic trade problems are growing it's better to have a world war 3 and just like World War 2 where many economies agreed for building the broken infrastructure, the history can be repeated.   The German economy is going to face slowdown and also those economies where trade and tariffs have been amplified. Global inflation will spook up, investments will slow down and further GDP growth will be hampered. The story becomes more dangerous when the European economy is broken and China business policies are never user-friendly.  

 The unemployment number is currently under comfortable zone but it seems to be short-lived. The immigration problem has pushed the Eurozone into broken state and the results of the same are dangerous for the long-term economic high tides.  The ship may not sail and might get further fragmented before the collapse of the Euro. Merkel has become such figure that she could hardly be replaced by any

one else after s such a long stint of being Chancellor.  The current trade indication and rules for the German car market is an alarm for the EU, since European countries account for the highest dollar value worth of cars amounting to $405.4 billion which stands at 54.8% of the international car sales. Out of this Germany alone holds 21.35% share of the car sales. In US the German export comprises around 205 followed with spare parts another few percentages. Immigration has divided societies and creating repulsive government election mindset.

The article 5 of NATO is the key to be protected which is under the Threat of Trump. Article 5 is an article which was activated during 9/11 which states that when any country is threatened then the defense of other countries would fight against that threat. Even in case of Syria and the Ukraine matter article 5 was activated. Now I hope who will get the most benefit if US breaks the NATO or reduces its funding. Trump is actually favoring Russia who is looking for fragmented Euro-zone as Putin wants to have the revenge of breaking his USSR during his times.  The political revenge is more polite compared to personal revenge as the later destroys economies over the long term. The depth of Friendship of  Trump and Putin will be tested in NATO  conference to be held in July. Now if the defense goes for toss then EU will find fruits like Brexit.

Don’t forget that US is focused towards increasing the budget and meeting the target of other nations of NATO towards defense. Since if defense spending goes up US arms and ammunition deals would go up. There has been a revision in the U.S. weapons export policy also and it has been done keeping the long-term growth derived from NATO. Well, Trade barriers and other things are just threat to get more buyers of defense equipment and investments into US economy. NATO is just growth model for the US economy now.

Some of the data relating to US Arm Demand in relation to different countries. This will get an idea of how much NATO is important to US economy and how they will bargain with other countries to increase spending:
  • The Trump Administration notified Congress of $82.2 billion in offers for new major arms sales in 2017. This was an increase from the last year of the Obama administration when offers totaled $76.5 billion.
  • The top six recipients of U.S. arms sales notifications in 2017 were in order Saudi Arabia, Poland, Japan, Canada, Romania, and Bahrain.
  • The Trump Administration favored major arms deals of missiles and bombs in 2017 over other categories of weapons.
  • Saudi Arabia and U.A.E. received around $659 million in weapons for likely use in combat operations in Yemen.
  • A total 25 countries were slated to receive major firearms sales in 2017, including Bahrain, Honduras, Ukraine, and Turkey.
  • The Trump Administration proposed a total of 16 major arms deals that would support the manufacturing of arms abroad
The top ten recipients of U.S. arms sales notifications in 2017 were, in order, Saudi Arabia, Poland, Japan, Canada, Romania, Bahrain, Australia, United Kingdom, United Arab Emirates, Greece, and Singapore (see Table 1 below). This was in part due to the fact that one major deal can have a major impact on a country’s rank and many countries do not engage in major deals in consecutive years.



The above data reflects that US is looking ahead for increasing the defense spending by other countries since some of the countries may not repeat the same order demand. This is the key reason for NATO to be squeezed by Trump.


US trade war and the way the G7 summit ended speaks enough for the upcoming problems for the EU. NATO is the next threat for the global economy. Mr. Trump currently himself is the WORLD TRADE CENTRE designing policies across the globe. Defense spending is under big question mark and US contributes around 22% of the NATO Allianz common funding which is spent on projects like military readiness, join exercise and initiatives to counter cyber warfare. It’s responsible for 70% of the total defense spending among alliances. Trump will be negotiating and would threaten to cut down expenses if trade balances are not reversed. This situation would be turning into a nightmare for the EU as, without much support of US, the recent immigration might turn out is a disaster. If US soldiers are removed from EU then Merkel and the whole of EU will get broken.

Merkel is focusing on creating Bilateral and unilateral trade deals as she can see in the long distance that EU will be broken due to the wrong decision of getting immigration policy adopted and implanted by her. The bilateral and unilateral trade deals would protect even in case of a referendum where Brexit type of things happens in the long term. All it can be said she is trying to keep the EU intact despite whatever happens. Further, as EU and China are developing bilateral trades Trump is bound to react at the NATO summit.  He will create policies to impact trade and tariffs across the EU unless they reduce their love towards China.

Global GDP and investments are going to face more problems as every economy is on the verge of collapse due to macro and unstable government policies. We are all preparing for some collapse in the year 2019 and the recipe is being cooked now.

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