Is a Grand Bargain between US and Russia in the works?

The Grand Bargain could lead to a complete overhaul of the global order.

[Originally posted on I-System TrendCompass] Last month Donald Trump suggested that he would end the war in Ukraine as a gift to the Russian people. The terms of that peace, as far as we know from General Kellogg's peace plan are unacceptable to Russia and will certainly be rejected. In a subsequent interview Vladimir Putin suggested that the US and Russia should have friendly relations but that they should discuss bigger issues than the war in Ukraine.

He did not elaborate however, leaving us to try and guess what the big agenda might be. We know that the Kremlin and many other powers including China, India and Iran are keenly interested in redrawing the Eurasian continent's security architecture and also improving global economic, financial and trade relations.

Since the post World War II period, these relations have heavily favored the Western world in general, but especially the United States. As a result, the West will resist any real changes. However, judging by the statements of Trump's Secretary of State during his confirmation hearing last month, the current administration may have adopted a different approach.

Not just obsolete…

Secretary Marco Rubio said that, "The postwar global order is not just obsolete - it is now a weapon being used against us. And all of this has led to a moment in which we must now confront the single greatest risk of geopolitical instability and of generational global crisis..." At the same time, one of Russia's leading intellectuals and an advisor to the Kremlin, Sergei Karaganov may have revealed the Russian thinking in stating that Russia's task was to help the United States transition to the new global order as peacefully and with the least disruption as possible.

But what could that global order be, and how could Russia help America's transition to it? Why would the US want to transition? The Trump administration may have clear domestic and foreign policy agendas, but they also have a major weakness in an unbalanced US economy and its overhang of unpayable debts. I believe that what might emerge from Trump's talks with Vladimir Putin and also with Xi Jinping could be a division of the global spheres of influence between three main blocks plus a number of regional blocks.

Or something…

The three-block architecture has long been an obsession of the British Empire and probably is coherent with the world’s geopolitical realities. The same basic idea also shaped US postwar foreign policy. It is the reason why the Trilateral Commission, formed by Zbigniew Brzezinski and Henry Kissinger has the word "trilateral" in its name.

Three-block agenda and World War II

As I discussed it in my TrendCompass newsletter a few years ago, the three-block agenda was being sold to Adolf Hitler in the run-up to World War II and was the main reason why Great Britain had supported Hitler for as long as they did. After the Munich conference in September 1938 when Czechoslovakia was basically handed to Germany, Lord Halifax, who was one of the main players in British foreign policy, revealed how the ruling establishment envisioned the three blocks:

1. Germany [as] the dominant power on the continent with predominant rights in southeastern Europe,

2. Britain dominating the Euro-Atlantic west in alliance with the United States, and

3. Securing Far-Eastern dominions in alliance with Japan.

In this vision of a global order, Germany would be built up and supported not only as a dominating power in Central and Eastern Europe, but also as a bludgeon to wield against Russia. With that objective in mind, the British foreign policy establishment advanced a seven-point policy toward Germany which was communicated to German officials by various spokesmen from 1937 onward:

1. Hitler’s Germany was the front-line bulwark against the spread of Communism in Europe

2. A four-Power pact of Britain, France, Italy, and Germany to prevent all Russian influence in Europe was the ultimate objective; accordingly, Britain had no desire to weaken the Rome-Berlin Axis

3. Britain had no objection to German acquisition of Austria, Czechoslovakia and Danzig.

4. Germany must not use force to achieve its aims in Europe as this could precipitate a war in which Britain would have to intervene because of the pressure of public opinion in Britain and the French system of alliances; with patience, Germany could get its aims without using force.

5. Britain wanted an agreement with Germany restricting the numbers and the use of bombing planes

6. Britain was prepared – conditionally – to give Germany colonial areas in south-central Africa, including the Belgian Congo and Portuguese Angola.

7. Britain would use pressure on Czechoslovakia and Poland to negotiate with Germany and to be conciliatory to Germany’s desires.

After the Munich crisis and the dismemberment of Czechoslovakia, an eighth point was added to the program, which entailed economic support for Germany. I have elaborated all of the above in detail (with sources cited) in this report and in a YouTube video below (the thumbnail should say, “in Munich, 1938” not 1939).

But both the British Empire's and the American postwar versions of the three-block world were essentially unipolar visions of the world order.

Towards a new & improved 3+ block world

A future, multipolar 3+ block world might envision China as the hegemon in East Asia, Russia in Central and Eastern Europe and the United States in the Americas. Regional powers like India, Iran, Turkey, Brazil, Egypt and South Africa could hold their spheres of influence and become guarantors of peace there. An overhaul of a new global order along these lines could be radical enough that it might warrant significant redrawing of borders, not only in Eastern Europe and the Middle East but also in the Americas, which might explain Trump's ambitions to acquire control of Panama, Greenland and Canada.

Trump serious about Canada

In an interview with Fox News a few days ago, Bret Baier asked Trump if his wish for Canada to become part of the United States is a real thing, and Trump said, "Yes, it is. I think Canada would be much better off being the 51st state..." In all, Trump appears entirely serious about this and has some support in Canada, especially the Western provinces like Alberta. If Alberta, British Columbia and Yukon became parts of the US, its territory would connect to Alaska creating a contiguous land bridge towards Russia.

This vision is not new; it was partly the reason behind Czar Alexander II decision to sell Alaska to the United States in 1867. At the time, plans were being considered to connect the two powers by building a tunnel through the Bering Strait. That project fell into oblivion until 2008 when (then) Prime Minister Putin approved the plan to build a railway to the Strait as a part of Russia's infrastructure development plan to 2030. The development envisioned a 60-miles (almost 100 km) long tunnel between Chukotka in the Russian far east and Alaska.

If the United States also added Canada's Northern Territories and Nunavut, they could territorially connect with Greenland (but for some water in between) and share the Arctic zone with Russia. Could these developments become the object of a future grand deal between Vladimir Putin and Donald Trump? I think that’s possible. From today's perspective all that might seem like a radical and dangerous departure from the postwar status quo, but that status quo may simply have been a pause in geopolitical processes that have started to shape up already in the 1800s.

The signals from both administrations are that they’re talking, but so far they’ve offered no details. On Monday, Trump sent his Middle Eastern envoy Steve Wytkoff to Moscow, ostensibly to pick up Marc Fogel, US citizen just released from prison in Russia. I wonder if this was the only way for Mr. Fogel to return home, or whether Trump sent a private jet with his envoy for more important reasons, perhaps to exchange goods that can’t easily be intercepted or compromised.

Europe left out?

Great Britain and European powers might not like what's coming, but there is probably little they could do about it if Russia and the United States decided to move in this direction. Over the last 30 years they've essentially disarmed and rendered themselves wholly dependent on the United States. The British establishment saw all this coming too: in a report issued by the House of Lords in December 2018 titled, "UK Foreign Policy in a Shifting World Order," they conceded that their "Special Relationship" with the United States was the "top priority and cornerstone of what we wish to achieve in the world." They warned that the second Trump administration could jeopardize, or even end the special relationship. Ouch!

All these developments will, of course, have momentous consequences in the markets and trigger large-scale price events affecting the security markets and currencies of Britain, Canada, the EU as well as the United States. The coming four years should not be boring and I believe that the signals you're receiving in TrendCompass newsletters will generate significant windfalls for investors with the discipline and patience to follow them. Nothing happens overnight, but over weeks, months and years, the changes compound (we just saw this happen in coffee and gold markets).

Update: Putin and Trump spoke on the phone!

Literally minutes after I posted this on TrendCompass, on 12 February at 8:53 AM, President Trump issued this statement on his TruthSocial platform:

​I just had a lengthy and highly productive phone call with President Vladimir Putin of Russia. We discussed Ukraine, the Middle East, Energy, Artificial Intelligence, the power of the Dollar, and various other subjects. We both reflected on the Great History of our Nations, and the fact that we fought so successfully together in World War II, remembering that Russia lost tens of millions of people, and we, likewise, lost so many! We each talked about the strengths of our respective Nations, and the great benefit that we will someday have in working together. But first, as we both agreed, we want to stop the millions of deaths taking place in the War with Russia/Ukraine. President Putin even used my very strong Campaign motto of, "COMMON SENSE." We both believe very strongly in it. We agreed to work together, very closely, including visiting each other's nations. We have also agreed to have our respective teams start negotiations immediately and we will begin by calling President Zelenskyy, of Ukraine, to inform him of the conversation, something which I will be doing right now. I have asked Secretary of State Marco Rubio, Director of the CIA John Ratcliffe, National Security Advisor Michael Waltz, and Ambassador and Special Envoy Steve Witkoff to lead the negotiations which, I feel strongly, will be successful. Millions of people have died in a War that would not have happened if I were President, but it did happen, so it must end. No more lives should be lost! I want to thank President Putin for his time and effort with respect to this call, and for the release, yesterday, of Marc Fogel, a wonderful man that I personally greeted last night at the White House. I believe this effort will lead to a successful conclusion, hopefully soon!

There will bee much weeping, gnashing of teeth in London, Brussels, Kiev and other European capitals. All good news, methinks.

Alex Krainer – @NakedHedgie is the creator of I-System Trend Following and publisher of daily TrendCompass investor reports which cover over 200 financial and commodities markets. One-month test drive is always free of charge, no jumping through hoops to cancel. To start your trial subscription, drop us an email at TrendCompass@ISystem-TF.com, or:

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