K. T. McFarland on the Communist China Threat & the Unique Workings of Trump Foreign Policy [CPAC 2020]

401 G.C. customers , this is a reprint of an article dated March 9th, 2020 that we feel could affect the investing world. Note : Be advised diplomacy with China and the current interruption of these policies has stalled what Ms. McFarland is advocating in this article.

Best Regards,

Jack Dempsey, President

401 Gold Consultants LLC

(jdemp2003@gmail.com)

(March 9th , 2020) -In this episode of American Thought Leaders 🇺🇸, we sat down with K. T. McFarland, former deputy national security advisor under Gen. Michael Flynn, to discuss how she came to work for the Trump administration.

Unlike many of her peers, McFarland believed for the last decade that the threat of communist China—not terrorism in the Middle East—should have been the focus of US foreign policy. The communist China threat is far-reaching—from the Belt and Road Initiative to the threat of Huawei 5G—and the US needs to adequately respond.

Jan Jekielek: K.T. McFarland, so wonderful to have you on American Thought Leaders.

K.T. McFarland: Thank you.

Mr. Jekielek: So you have this amazing book, an insider look into the Trump White House, “Revolution: Trump, Washington, and ‘We the People,’” and you’re promising to offer this kind of unvarnished look inside under the hood and how things happen. Tell me a little bit about the inspiration behind this book.

Mrs. McFarland: Okay, so I should explain who I am. I was in the Nixon, Ford, and Reagan administrations. [I was a] traditional Republican foreign policy expert belonging to the Council on Foreign Relations, [with all the typical] graduate degrees, but in the last 10 years, I have become very dissatisfied and really unhappy with the direction that the Republican Party was taking the American foreign policy community. I thought that we were way too focused on the Middle East. We have missed the ball on focusing on China, and the United States needed to get off of Middle East oil. All the stuff that sort of nobody was saying, but then Trump comes along.

And I thought, well… I’m a foreign policy person. He’s not, but he’s the guy getting it all right. I was very intrigued. I started giving him some advice during the campaign. During the transition, he was elected, and I supported him for the following reasons. He understood that you needed to first fix the American economy because without economic growth, we don’t have any leverage over anybody. He secondly realized these endless wars in the Middle East, which we were not winning, we were expending American blood and treasure, and they were getting us not what we wanted.

Finally, they were focusing our attention so much on the Middle East and terrorism, which were important but not the first priority. The first priority should have been China, the growing threat of China, not only economic but military, and potentially a digital cyber threat. We were ignoring all that.

So when Trump comes along, and he says “China, China, China. I’m going to make America win. I’m going to rebuild the military.” I was very intrigued. So I went to work for him. I was one of the only major figures in the Republican foreign policy community to support him. I think it was the right thing. …

I was very honored to be in the Trump administration from the very beginning. What I did in my job as Deputy National Security Adviser was to review the Obama foreign policies, and to redirect them across the board, and to take Trump’s campaign promises, which were just little lines here and there and make them coherent policies.

So the policies were driven by the following architecture. Number one, fix the American economy. Number two, encourage American fracking, so we could become not only independent of foreign oil and natural gas, but we could export it. We could be the new economic center for energy supplying to the world. He understood [what I consider to be] what was an important element that nobody else really focused on because he was a businessman. He realized, by the trade deficits that we had, [that] the Chinese need to sell more stuff to us than we need to sell to them. The Iranians need to sell more stuff than we need to sell to them. The Germans need to sell more stuff to us than we need to sell to them.

So we could go to those countries with a trade war and say, we want you to renegotiate our trade agreements, They’re lopsided. You have very high tariffs against our stuff. You’re taking advantage of our generosity that we did fifty, sixty and seventy years ago. We just want a new deal. We don’t want [to have] no trade agreement. We just want a fair one, a reciprocal one. He understood that would be the leverage.

So I was very happy to be part of that and to create a new foreign policy around it. I think it has been remarkably successful, for the American economy is the strongest economy in the world. We have pulled out of the Iran nuclear deal. It was a flawed deal, and Trump understood that the economic weapon was far more powerful than any military weapon would be against them. For Afghanistan and Iraq. We’re not in the Middle East fighting wars we can’t win. And particularly, he’s been the first president to stand up to China, and I think quite effectively so.

Mr. Jekielek: This is actually quite interesting, because my recollection is that pretty much in every presidential election cycle, China is an issue. What made you realize that Trump was serious about China?

Mrs. McFarland: The thing about Trump is he says a lot of stuff, but watch what he does. What he always does is he’s the tough guy, he’s a negotiator. He saw that you could make deals there. I thought he was willing to stand up to China and he did. He was willing to play real hardball with China, using the economic weapon. Again, using the trade war weapon, going to them saying you can’t do this militarily, you can’t do this economically. And [he did that] knowing that with time, it would have far more effects on their economy than it would on ours. I think that was the right thing to do. It hasn’t been completely successful, but phase one is done. I think the phase two trade agreement with the Chinese will be in the second term. Chances are that it rewrites the world economic trading situation, not just with China and the United States, but with China and all the other countries in the West.

Mr. Jekielek: Since we’re talking about this foreign policy now, there’s a lot of folks that believe that China will never agree to any deal that isn’t explicitly better for itself. They won’t agree to a fair deal ultimately, even though they might do a phase one, which seems fair. Any thoughts on that?

Mrs. McFarland: So I think they will agree to what they have to agree to. They’re not going to give us anything. It’s been China first. America has had not an America first [policy, but] a China first policy for years, and as a result of our generosity in the 80s and 90s, we gave them preferential trade terms. We gave them preferential investment terms. They stole our technology if they couldn’t buy it. And what I think Trump is planning to do, or what I hope he plans to do in a second term, is to take the new trade agreements he’s gotten. We have Canada, Mexico, the United States, South Korea, and Japan. I think we will get a new trade agreement with the Brits, now that they’re out of the European Union. Those negotiations are ongoing.

Mr. Jekielek: And they decide to do something with Huawei.

Mrs. McFarland: We’ll talk about that in a minute. But I think Trump gets them all together. And then we all have the same complaints with the Chinese, particularly over technology. We go to them and say “we are now representing 70% of the world’s trade, and you have no choice, you really have to deal with us in a different term.”

You mentioned Huawei, and the reason I think that’s an important issue is because they are building a strong military called Bluewater Navy. They have taken the South China Sea, and they are claiming it now as an internal Chinese lake. They have created a series of ports that go from Asia through South Asia, to the west coast of Africa and up to the Middle East. They have a maritime trade route. They are creating a land trade route called One Belt, One Road, which is to take land routes that go from Asia, all the way to Central Asia, into the Middle East, on up to Europe, and then potentially over into Africa.

So what they’re trying to do is create, in my opinion, the equivalent of what the Roman Empire did. A trade bloc and trade route that they control with Chinese terms and Chinese standards. Then for example, the 70 countries along the One Belt, One Road, have to play by China’s rules.

So I think they’re doing that, number one. Number two, what they’re doing is something called “Made in China 2025”, where they have said that their goal is to dominate the 10 technologies of the future. So it’s everything from artificial intelligence to robotics. Things like self-driving cars, microprocessors, and bioengineering. A whole series of things that are the technologies of the future.

Huawei is a large part of that, because it is the Chinese company that plans to build the infrastructure of the Internet of the future called 5G. A lot of people think that just means, “oh we’re going to download movies faster.” “It’s going to be great. We don’t have to wait for Netflix.”

But what it really does, is give the Chinese control over the infrastructure of the internet with all communications. Because of the way the Chinese government and military are structured, they have the right to go into Huawei’s infrastructure, and listen in to every phone call, every email, every text message, everything that is going to travel, every bit of communication, every cloud communication that is going to travel on this infrastructure. The Chinese have access to [all of this].

Now, I do not want to give that to anybody, but I sure do not want to give that to the Chinese. And I do think that will be the big issue in the next couple of years. Does the world, country by country, choose to have the Chinese run things? Or do they choose America? Or some mix? I think it is a big mistake if we let the Chinese run the infrastructure of the Internet of the future.

Mr. Jekielek: I love this conversation. We will talk about the book in a moment. I am going to keep going.

Mrs. McFarland: I write about this a lot in my book. I talk about the foreign policy and the reason I did not like the other guys, and why I did like Trump, and his foreign policy. I want to preface it by saying it was not a dumb idea initially. After World War Two, Europe was devastated, Japan was devastated, after the Korean War, Korea was devastated, so we helped them all. We gave generously. We had trade agreements which subsidized their economic development. We had security agreements where we underwrote most of the mutual security agreements.

It was a very deliberate idea that we will help and encourage them to build modern societies and strong economies. They will be our allies, our trading partners. They will be open and democratic societies. It worked, and was a great success. So much so, that we do not have to keep subsidizing them.

We assumed the same thing would happen with China, and it did not. So in the 1980s, 90s, and the year 2000, when they joined the World Trade Organization, we assumed that the Chinese—as they developed a middle class and became more prosperous—would be like Korea, Japan, Germany, and the European countries. [We expected that] they would be a more open society and economy. In fact did just the opposite. They have become a far more authoritarian country, [with a] closed and manipulated economy.

So we bet wrong on China. It was time to reassess and renegotiate. Not politely asking for something, because the Chinese are going to play real hardball, so you need to play hardball back.

Mr. Jekielek: How do you think America can catch up in 5G to compete with Huawei which is already well established in 70 countries?

Mrs. McFarland: And also massively underwritten, so it is cheaper. But why is it cheaper? Because the Chinese government is underwriting it.

I think and hope that President Trump in a second term does the equivalent of a Manhattan Project with high tech. For example, we, in America, invented the television age, telephone, and computers. We are the high tech kings of the world. But you have to keep reinvesting in technology, or somebody else becomes the new high tech king. The Chinese have invested greatly in technology. They’re not very good at inventing it, but they’re great at buying it, stealing it, and reproducing it.

I think the United States should do what we’re good at. We are great inventors, we always have been. I’m not a big government person, but I think in this case, [there should be] tax incentives to companies that do raw research, government research and development, tax incentives to kids who want to get an education but don’t want to major in French literature, and want to major in science, technology, engineering, mathematics. [We should] have an all-of-government-approach, and to encourage and make it cool again to study math.

My daughter went to the Naval Academy, and she has an engineering degree. Every kid in America can get an engineering degree. They may have other specialties, but they should have fundamental understandings of those things. And with that, we don’t necessarily need to catch up, we need to maintain and continue to advance in a whole series of areas.

My goal for American foreign and domestic policy, would be to invest in the technologies of the future, and then close the barn door. Don’t let anybody steal it. Don’t give it away. Don’t make it a condition. The Chinese make it a condition of investment, and that we have to share their technology. No, we’re not going to share the technology. … Guess what, we’re going to invest in Vietnam instead. So I think that we should play tough in that regard to maintain the technology high ground that we have always enjoyed.

Mr. Jekielek: So you seem very positive about the administration. You were obviously a big part of it, especially on the foreign policy side. Why did you leave?

Mrs. McFarland: I left for two reasons. One reason was because my immediate boss, General Flynn, was fired three weeks into the administration. Then a new boss came, and he decided that he wanted his own people. It took him about five months to find a replacement. But President Trump asked me to go to Singapore as the ambassador instead, which I was eager to do.

What happened to me was that I got caught up in the Mueller and Russia investigation. Although I’d never met any Russians [and] I had no dealings with any Russians, I was targeted by the Mueller investigation, the FBI, and the people who wanted to take Trump down. They targeted the people around Trump to try to get them to plead guilty for crimes they didn’t commit, and to implicate Trump in crimes he didn’t commit. What we’ve seen in the impeachment investigation is very similar.

I got caught up in all that, and it took me about six months to break free of it. I refuse to plead guilty to crimes I didn’t commit. As a result, I was really taken through the wringer financially by the Justice Department. Anyway, you don’t need to worry about those things. That’s over. It’s done.

But at that point, I really needed to get off and do some thinking of my own. I did, and I think I have written a very thoughtful book. I wrote it all by myself, and I did not have some ghostwriter write it.

It is a very thoughtful explanation of what I’ve just told you. Why I rejected traditional Republican foreign policy, why I embraced Trump and his ideas, [and] what happened in the early days of the Trump administration to put this economic policy, foreign policy, and international economic policy into place.

But then finally I realized, (which is, I think, what a lot of Americans feel) is that the country is in a weird place right now. I mean, we’re all fighting like cats and dogs. … Instead of fixing it, we’re arguing over whose fault coronavirus is. We’re in a very bad place as a nation.

Now does that mean it is the end of America? Some people think it is, some people think that it has never been worse.

But I did a lot of reflecting, and reading, and what I concluded was that because we are a dynamic, changing, and nimble society, we need a government that keeps up with us. And government, by its very nature, doesn’t. It digs in. It is the status quo. It wants to reinforce privileges, positions, and powers that it has had before.

So governments go along like this, but the American society [has] immigration, technological investment, geographic movement, demographic movement, and so we are growing away from the government. The government can’t solve our problems.

So, say every 40 years, we throw the government out, and we get new guys. I think that’s what we’ve done ever since the founding of the Republic, and I think that’s what we’re going through now.

Mr. Jekielek: When I was reading about your book, because I haven’t had a chance to read it yet, I see you’re trying to frame all of this in a historical context. So, in a nutshell, give me a thumbnail of what that means.

Mrs. McFarland: So I think the Republican Party had a civil war in 2016. The war I fought, Donald Trump versus traditional Republicans, Trump won. The Democrats are having a civil war right now. Bernie Sanders versus traditional Democrats. My guess is Bernie Sanders wins.

What both of those tell you is that the country at large doesn’t like the guys in Washington. They aren’t getting the job done. They want to kick the bums out.

I think that what we are seeing is a grassroots National American movement. And we have these. It was what the American Revolution was about. That was what the Jacksonian revolution was about in the 1830s. That’s what the Civil War was about. That’s what Teddy Roosevelt and the Industrial Revolution was about. That was what happened after the Great Depression and World War Two, the Reagan Revolution, and now the Trump Revolution.

And I think that it’s a very healthy thing. I was collateral damage, and I don’t like that, but I think it’s really how America reinvents ourselves, and no other country does that. Everybody else, [they] rise, they shine like the British Empire, for example, and then they decline. Or the Persian Empire. They rise, they shine, they decline. [Same with] the Roman Empire.

What does America do? We rise, we shine, we decline a little bit. We reinvent ourselves, we rise again and shine. And I think that is the heart of American exceptionalism.

You know, you’re Canadian. You came to America to create a new life for yourself, right? You reinvented yourself. Everybody in America reinvents themselves. But the value and genius of America is that the nation reinvents itself.

Mr. Jekielek: It’s kind of true what you’re saying about me. I think I’m one of these rare American exceptionalist Canadians. Actually, since we were talking about China, you do mention that you have some thoughts on the President’s relationship with a few of these characters in Asia, like Xi Jinping of China. So tell me, I would love to know what “Revolution” says about Xi Jinping in that relationship.

Mrs. McFarland: Okay, so let me tell you the story that I tell in my book. I cleared it with President Trump, I can talk about it.

So [at] the beginning of the Trump administration, the Chinese sent over a Chinese senior delegation to arrange a summit meeting with President Trump. Now normally, these meetings with the Chinese—especially the Chinese, but all presidential meetings—are very carefully choreographed. And so they start out with a low level, and they think, “well, these are the items on our agenda, what’s on your agenda?” And, then, “we’re going to talk about this, we’re going to work briefly on that.” And they kind of move up the food chain. And so by the time the head guy is meeting the other head guy, everything’s already been decided.

So Trump wants to do it completely differently. He’s a real estate guy from New York. In New York, the real estate empires are owned by families. And it’s the patriarch who’s the boss. They own the whole company, their own stockholders, and the family members work for the boss, and the boss makes all the decisions. So when one boss of one real estate empire works with a boss of another real estate empire, the two bosses shake hands and negotiate. They play tough, but they make the decisions. So in Trump’s experience, only the top guy can make the big bold choices and the big bold decisions.

So the Chinese delegation comes to the White House and meets in my office. They’ve got their briefing papers and they say “these are our vital national interests, check, check, check.” And they waited for me. And I said, “well, President Trump would prefer to meet Xi Jinping personally. And then get a sense of the relationship and then we can deal with these issues.” They were so frustrated. I mean, the Chinese leaders expected my list. I didn’t have a list. And I said, “instead, let’s have a meeting. And they’ll see if they get along.” Well, you know, for the Chinese, that’s the last thing they want. An unscripted meeting with a boss? Anything could happen.

So we did have that unscripted meeting with Trump and Xi Jinping. The way I explained it to the Chinese was, “you know, [at] the beginning of the US-China relationship in 1976, I went to China in 1972. I worked for Henry Kissinger when he went in 1971. When the leaders of our two countries met, they didn’t haggle out the little issues of this or that or trade or whatever. They talked about big picture stuff. Where does China want to be? Where does America want to be in twenty, fifty years? Trump is like that. He wants to have a talk and dialogue with Xi Jinping at the very highest level first, so that then it will set the stage for what happens next.” Chinese guys didn’t like it, but they went along with it.

So fast forward, Trump is in Mar-a-Lago with Xi Jinping for the first US-China summit meeting. They are having their meeting, everything is going along nicely. But this was going to be the weekend that we bombed where chemical weapons were used in Syria, air attacks against their own people. So Trump made the decision before going to Mar-a-Lago. We’re going to bomb the Syrian fields where the chemical weapons were used, and I’m going to go on to my meeting with Xi Jinping.

So Trump’s carrying on the meeting. I’m in the Situation Room with the Vice President. Trump is acting like nothing is happening. We know that the American destroyers are about ready to launch the Tomahawk missiles into Syria. We are nervously looking, everything goes fine. We give President Trump the word everything’s fine. He’s in the middle of a state dinner with Xi Jinping.

So while they’re having dessert, Trump leans over to the Chinese president—who doesn’t like unscripted moments—and he says, “we’ve just bombed and destroyed the airfields in Syria, which were used for chemical weapons attacks against the Syrian people. It was our red line. They crossed it. We have destroyed them.” So Trump says, and he would repeat the story for weeks afterwards, he said that the Chinese President looked at him. It was all done through an interpreter. After the interpreter said [that] this is what President Trump said, Xi Jinping looks at him and says, “repeat.” And so Trump repeated it, the translator repeated it, and Xi Jinping hears it, and then says, “repeat again.” At which point, Trump offers them the beautiful chocolate cake and they had a great dinner.

So I’m telling this very long story by way of saying that Trump wanted a personal relationship, and personal diplomacy with the Chinese leader instead of the traditional old “let everybody in the staff agree on this and that,” because Trump wanted a more bold relationship.

Mr. Jekielek: We are going to finish up in a moment here. But in the Chinese community, there was a lot of discussion about whether this was actually intentional timing and so forth. It sounds like it wasn’t right?

Mrs. McFarland: It wasn’t unintentional. Trump understood the risks of it, if it had gone wrong with the whole world watching, and the Chinese leader in the most important summit meeting, in the most important relation. So it was a risk.

Mr. Jekielek: Suffice it to say it wasn’t something that Xi Jinping expected. So it very much set the tone for the future, I think.

Mrs. McFarland: The advantage that Trump has is he likes to be unpredictable. … He’s very thoughtful when he acts unpredictable. But the Chinese like everything in a certain order and [to be] predictable. And “we’ve all agreed on this in advance.” And so for Trump, it’s a distinct advantage in his negotiating, because he could come out of anywhere with them. He could make any different proposal, and it puts them off balance. They’re very good at these scripted negotiations. They think of everything. They research every angle, but how do they prepare for a negotiation with Trump? When Trump doesn’t want to engage, it goes nowhere. So I think it’s actually for him, in this particular relationship, a distinct advantage.

Mr. Jekielek: Okay, so K.T. McFarland, “Revolution, Trump, Washington and We the People.” I’m going to be reading it. Such a pleasure to have you.

Mrs. McFarland: It’s a great pleasure to meet up again.