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Playing Poker with Russia and China

US used to play one off against the other...
WITH all the world's attention on the situation in Ukraine, I want to focus in on the larger geopolitical picture involving the US, Russia and China, writes Jim Rickards for The Daily Reckoning.
There's an old saying in poker: If you're in a three-way poker game and you don't know who the sucker is, you're the sucker.
The idea is that in a three-handed game, two players will disadvantage the sucker by coordinating their betting and not raising each other. Eventually, the sucker is cleaned out and the two survivors can then turn on each other.
The world is in a three-handed poker game today.
Russia, China and the US are the only true superpowers and the only three countries that ultimately matter in geopolitics. That's not a slight against any other power. But all others are secondary powers (the UK, France, Germany, Japan, Israel, etc) or tertiary powers (Iran, Turkey, India, Pakistan, Saudi Arabia, etc).
This means that the ideal posture for the US is to ally with Russia (to marginalize China) or ally with China (to marginalize Russia), depending on overall geopolitical conditions.
The US conducted this kind of triangulation successfully from the 1970s until the early 2000s.
One of the keys to US foreign policy in the last 50 or 60 years has been to make sure that Russia and China never form an alliance. Keeping them separated was key.
In 1972, Nixon pivoted to China to put pressure on Russia. In 1991, the US pivoted to Russia to put pressure on China after the Tiananmen Square massacre.
Unfortunately, the US has lost sight of this basic rule of international relations. It is now Russia and China that have formed a strong alliance, to the disadvantage of the United States.
One leg of the China-Russia relationship is their joint desire to see the US Dollar lose its status as the world's dominant reserve currency. They chafe against the ways in which the US uses the Dollar as a financial weapon.
But ultimately, this two-against-one strategic alignment of China and Russia against the US is a strategic blunder by the US
The US is the sucker in this three-way game of poker. The fact is Washington has squandered a major opportunity to turn it in America's favor.
When future historians look back on the 2010s they will be baffled by the lost opportunity for the US to mend fences with Russia, develop economic relations and create a win-win relationship between the world's greatest technology innovator and the world's greatest natural resources provider.
It will seem a great loss for the world. Here's the reality:
Russia is the nation that the US should have tried to court and should still be courting. That's because China is the greatest geopolitical threat to the US because of its economic and technological advances and its ambition to push the US out of the Western Pacific sphere of influence.
Russia may be a threat to some of its neighbors (ask Ukraine), but it is far less of a threat to US strategic interests. It's not the Soviet Union anymore. Therefore, a logical balance of power in the world would be for the US and Russia to find common ground in the containment of China and to jointly pursue the reduction of Chinese power.
Of course, that hasn't happened. And we could be paying the price for years to come. Who's to blame for this US strategic failure? You can start with the globalist elites...
The elites' efforts to derail Trump gave rise to the "Russia collusion" hoax. While no one disputes that Russia sought to sow confusion in the US election in 2016, that's something the Russians and their Soviet predecessors had been doing since 1917. By itself, little harm was done.
Yet the elites seized on this to concoct a story of collusion between Russia and the Trump campaign. The real collusion was among Democrats, Ukrainians and Russians to discredit Trump.
It took the Robert Mueller investigation two years finally to conclude there was no collusion between Trump and the Russians. By then, the damage was done. It was politically toxic for Trump to reach out to the Russians. That would be spun by the media as more evidence of "collusion".
Whatever you think of Trump personally, the collusion story was always bogus.
So Russia became public enemy No.1 because of politics. Ironically, the same people who were soft on the Soviet Union today are often the biggest Russia hawks.
A strategic goal of the US has been to ensure that no power, or combination of powers, could dominate the Eurasian landmass.
But Russia and China could be cooperating to do just that, to strategically encircle Eurasia. Here's what I mean:
Much of the early exploration by Europeans of New England and the Canadian Maritime provinces was not based on a desire to settle and farm but was driven by a search for the "Northwest Passage".
This was the name given to a hypothetical sea route from the Atlantic to the Pacific somewhere between North America and the North Pole that would allow direct sea transportation from Europe and Asia without having to navigate the Cape of Good Hope or Cape Horn around Africa and South America, respectively.
Early voyages up the St. Lawrence, Hudson and Delaware rivers were driven as much by the hope that explorers would find a Northwest Passage as they were by indigenous exploration.
The Northwest Passage was never found. It existed on a map north of Canada, but that route is frozen most of the year and extremely dangerous because of ice and bad weather, even when it is not entirely frozen.
But that was then. Today, with some help from warmer temperatures, improved icebreakers and GPS navigation, vessels can now routinely make the passage.
China and Russia are now prepared to pick up where the 17th-century explorers left off. Russia has its own Arctic passage between its northern territory and the Arctic Circle similar to Canada's. It has also made strides in opening up its Arctic sailing routes through the East Siberian, Kara and Barents seas with connections to Moscow, St. Petersburg, the Baltic Sea and the ports of Europe.
Meanwhile, China has been building a new maritime "Silk Road" around South Asia, Africa and the Middle East that would facilitate Chinese trade with countries in those regions (and, not coincidentally, enhance the operational flexibility of an expanding Chinese navy).
The combination of an Arctic passage and China's Maritime Silk Road would encircle much of the Eurasian continent by sea. That opens up potential for wealth creation (and military dominance) that early explorers could only dream.
The US would largely have itself to blame.
Lawyer, economist, investment banker and financial author James G.Rickards is editor of Strategic Intelligence, the flagship newsletter from Agora Financial now published both in the United States and for UK investors. A frequent guest on financial news channels worldwide, he has written New York Times best sellers  Currency Wars (2011),  The Death of Money (2014) and The Road to Ruin (2016) from Penguin Random House.
See the full archive of Jim Rickards' articles on GoldNews here.


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