Fareed’s Take: Trump wields power instead of strategy in Davos

Here's my take.

You can say yes

and we will be very appreciative.

Or you can say no and we will remember.

That's what Donald Trump said here

at Davos,

laying out Europe's choices on Greenland.

When I asked a senior European leader

whether there was released

that Trump had stepped back

from the threat of military action,

he answered yes.

But we've now seen a pattern

in his dealings with us.

He treats us with contempt,

and even if this crisis gets resolved,

we will remember.

Trump's approach

to leadership is primarily transactional.

He begins by asking

who has more leverage?

If the answer is him.

He pushes as hard

and as publicly as he can.

Not simply to win, but to dominate.

Extracting the maximum price for him.

Diplomacy is the art of the squeeze.

Trump

enjoys using America's vast strength,

built over generations almost for sport.

He placed tariffs on Switzerland.

He explained,

and then raised them sky high because the

then Swiss president

rubbed him the wrong way.

In his words,

he relished recounting how quickly

the Swiss came to him, seeking release.

This was less strategy than a power play.

Last year,

NATO Secretary General Mark Ruiter

appeared to jokingly liken Trump

to a daddy intervening

in a schoolyard brawl.

And Trump

has repeated that line

with evident pleasure,

including at Davos.

They call me daddy.

He seems to enjoy even insincere flattery

because it shows that he is so powerful.

People have to fake

their admiration for him.

The Europeans

shouldn't take it personally.

Trump uses the same style

on anyone he perceives as weak.

In Ukraine,

his irritation has often fallen

less on Russia, the aggressor,

than on Ukraine,

for refusing to accept subordinate status

in dealing with countries

like Brazil or South Africa.

He is quick to lash out over policies

he dislikes,

but with China

he often sounds deferential

because Beijing possesses tools

that could impose real costs

on the United States.

And of course, he adores

the Gulf monarchies

because they are swimming in cash,

a form of strength he respects.

This is the opposite of

how American leadership

has worked in the modern era.

The United States has been

the dominant power in the world

for close to a century,

but its leaders understood

that primacy was not only about coercion.

It is also about legitimacy, reassurance,

and voluntary cooperation.

They grasped the basic truth.

Power is more sustainable

when it is exercised with restraint,

and influence is larger when allies

feel dignity rather than fear.

Think of Franklin Roosevelt.

America was the indispensable arsenal

for the Allied cause

without American aid.

Britain and the Soviet Union

would have lost the war. And fast.

Roosevelt could have summoned Churchill

and Stalin to Washington

like petitioners.

Instead, despite being confined

to a wheelchair and gravely ill,

he traveled for hours and hours

to get to Casablanca,

Tehran, and Yalta to meet them as equals,

demonstrating in physical form

the idea that partnership matters.

Donald Trump crowed more at Davos

about winning World

War Two

than did the man who

actually did the winning.

Well, consider George H.W.

Bush, watching the Berlin Wall, saw

the United States had won the Cold War

and Bush could have crowed.

He deliberately did not.

He said he did not want to dance

on the wall, in part

because he didn't

want to steal the moment

from Eastern Europeans

who were winning their freedom,

and in part

because he didn't want to humiliate

Soviet leader Mikhail Gorbachev,

who was allowing it to happen.

Bush understood that how you win matters,

and that humiliating

a weakening adversary

can produce backlash and ruin the peace.

Or consider India

over the last quarter century.

The US treated India

as an important world player,

even when it was still, by the numbers

of very poor country.

That respect was not charity.

It was an investment that helped build

strategic cooperation.

Trump sees only the balance sheet.

India's economy is much smaller

than America's.

Therefore, America can squeeze it

by slapping prohibitively high tariffs.

This is the art of the hustle.

Use the leverage you have.

Make the other side

pay the highest price

and treat bruises as proof of success.

It may work in a one off

real estate deal.

It is not how to build

enduring businesses,

let alone lasting global influence.

Since World War two,

there have been many places

that the US has considered

strategically vital

Western Europe, Norway and Finland.

The South China Sea routes,

the Persian Gulf,

the approaches to Japan.

But in that time, America

has never concluded

that strategic importance requires

actual annexation.

It has created security

through alliances,

access agreements and forward presence.

Greenland fits that tradition.

The US already has a base for it,

and it can expand its capabilities

easily through cooperation

rather than coercion.

Whether or not Trump

gets his piece of ice,

as he now calls Greenland,

he has already accomplished

something that will outlast

the headlines.

He start America's allies a lesson.

They will still work with Washington,

of course, because power is real.

But they will trust it less, hedge more,

and quietly plan for a world

in which America no longer leads

by lifting others up,

but by reminding them

they can be squeezed.

As that European leader put it.

With the same cold

clarity Trump

thought belonged only to him.

We will

remember

to talk about Davos

and everything around it.

I'm joined by Martin

Wolf,

chief economic commentator

at the Financial Times.

So, Martin,

what was your takeaway

from this rather unusual Davos.

Well it's sort of shocking.

But what's

strange is

the completely abnormal

is suddenly become normal.

We've been in this period now for a year.

We had of course Trump won.

It wasn't quite like this.

But I did hear him

when he came to speak in that term.

And it's sort of a freak show.

In normal times,

he the way he talks

to, the way he presents himself,

his obvious megalomania,

the way he makes things up.

All right, is

something we've just got used

to have you

step back from that

and look at what is actually happened.

Well, he's withdrawn from the trade war

we thought we were going to be in by now

over Greenland. Or is it Iceland?

So relations seem to have sort of been

calmed down by Mark Rutter and so forth.

That was a really big worry.

He's got some sort of piece board,

which I think actually might even

be relevant in the Middle East.

And I think he might actually be

the only person who could conceivably

do something about the Middle East.

And so when I look at it,

all the economy's doing okay.

I'm rather better than we feared.

So despite all these noise, the

the incredible commotion

around him,

things seem quite normal

and not so terrible.

And then,

you know,

despite the circus of the politics,

as you say, what's striking.

And we saw this at Davos.

Everybody is bullish about America.

And I do you think what explains that.

You know

a world

where the politics seems to be roiling

but the economy is humming.

What we're benefiting from is

the capital knowledge

skills that have been built up

across the economy in the last 20 years.

China has a phenomenally

effective economic machine.

America has phenomenally effective

economic machine.

The technological innovation

is happening everywhere.

So we can be fixated on the noise

and the sound of the fury.

But what I tend to say

is build on the base

of what we built up over

200 years, but particularly since 1945,

the economy of the world is a fantastic

momentum machine.

And stopping that,

that's beyond the powers of these powers.

Do you think you've talked to

so many officials there?

Has trust been eroded?

Oh, yeah, I trust is gone.

And so this relates to the long

term costs.

So will countries, businesses be prepared

to bet their future on trade in general?

It's a very big question.

But on trade with the US in particular,

given

not only

the uncertainty about policy,

but that these trade deals

were extortionate,

literally extortionate.

They took hundreds of billions of dollars

out of this.

The secretary,

he was congratulating himself

in America on

how much money

they'd extracted from all their allies.

People know all this. So.

But the way I put this is everybody now,

being in private sector

or in government has to hedge.

And that was the essence

of what Mark Carney said

in his wonderful speech.

When everybody hedging is costly.

It means there are risks you won't take.

You're not going to bet on a proposition

which depends on access,

stable, secure access

for many, many years,

which is what the GATT

WTO was designed to give in America.

Will you do that?

No, because the deal

could be changed overnight.

So the cumulative costs

of the degradation of principle,

the degradation of predictability

of law,

international and domestic,

in my view, are bound to be very heavy.

But we'll see it slowly.

And he took up enough.

He's been saying this

a very important point, former

chief economist at the IMF,

that if you look at Brexit,

we now know

the costs have been cumulative.

After ten years, we can see them.

It's very wrong

to look at the costs

of what is being done here

in terms of the shock in the day.

The markets will show some of it

because the markets are forward looking,

but the effects

we will see,

and I'm sure they will be

there will be of opportunities

lost, showing in slowing

growth may be offset

by the technological innovation.

I'm not sure.

Martin Wolf, pleasure to have you on.

Pleasure.