Trump-Putin call on war in Ukraine is another blow to Kyiv and its allies
Trump-Putin call on war in Ukraine is another blow to Kyiv and its allies
KYIV/BERLIN/PARIS - For Ukraine and its allies, who spent months trying to win Donald Trump over to their cause in the war started by Russia, it is back to square one.
In a two-hour conversation with Russian leader Vladimir Putin late on Monday, the U.S. president dropped his earlier insistence on an unconditional 30-day ceasefire that he hoped would kickstart what promise to be long and tortuous peace talks.
Ukraine backed that proposal while Russia did not.
Trump also signalled that the war he once promised to end in 24 hours was no longer his to fix - a message that leaves Ukraine vulnerable and its allies worried.
It is another blow to Kyiv, coming less than three months after Trump's public falling out with Ukrainian President Volodymyr Zelenskiy. Since then, Europe's leaders have scrambled to repair the relationship and regain the initiative.
In the weeks before the phone call, Trump had threatened to slap tougher sanctions on Russia if it did not show progress towards peace, a move Ukraine hoped would convince Putin to step back from his maximalist demands in any negotiations.
That "stick" approach is gone for now, replaced by the "carrot" of economic partnership with the United States if and when the war ends.
"In the phone call on Sunday with European leaders, Trump had agreed on the proposed approach - ask for (an) unconditional ceasefire and apply sanctions if nothing is moving," said a European diplomat, speaking anonymously to be frank about Europe's disappointment.
"But he obviously dropped this idea when he talked to Putin ... It is impossible to trust him for more than one day. He does not seem to be interested in Ukraine at all."
Trump said Russia and Ukraine would immediately start negotiations toward ending the war, adding later that he thought "some progress is being made."
When Trump spoke with European leaders including Zelenskiy after the Putin call, a person familiar with the discussion described the reaction to Trump's position as one of "shock."
'PLAYING FOR TIME'
Ukraine and its European allies have presented a united front since Monday's call, announcing new sanctions on Russia and vowing to continue to engage with the United States.
They do not discount the possibility that Trump may change his mind again.
But mistrust of Putin runs high. His army is bigger than Ukraine's, it has been eking out gains along a 1,000-km (620-mile) front line for more than a year and Russia insists that any deal should reflect realities on the battlefield.
"Putin is clearly playing for time. Unfortunately, we have to say Putin is not really interested in peace," German Defence Minister Boris Pistorius said on Tuesday.
Orysia Lutsevych, head of the Ukraine Forum at the London-based Chatham House think tank, agreed Putin was in no rush to negotiate a settlement.
"For Russians, the battlefield and diplomacy are two sides of the same coin," she said.
"Putin gets the upper hand on the battlefield through procrastination in diplomacy and by denying Europe an opportunity to ... organize itself."
After speaking to Trump, Putin said Moscow was ready to work with Ukraine on a memorandum about a future peace accord and that efforts to end the war that Russia began with its full-scale invasion in February 2022 were on the right track.
U.S. support has been key to Ukraine's ability to stave off defeat, and Trump's lurch away from his predecessor Joe Biden's support for Kyiv has left it scrambling to keep him engaged.
The United States has been the biggest single contributor to Ukraine's war effort through tens of billions of dollars in military aid, and Kyiv relies on U.S. military intelligence to identify enemy targets and movements in real time.
What happens to that support once the aid agreed under Biden runs out over the summer is a crucial question that Ukraine is seeking to answer. The United States has not made its position clear.
Europe has promised to maintain direct aid and arms purchases, but the United States would have to agree to sell its weapons and there are some U.S. munitions that cannot be replaced, namely air defences and short-range guided missiles.
There is also the economic pressure the U.S. could bring against Russia, whose economy has weathered Western sanctions on the energy and banking sectors, but which is showing signs of strain from the enormous costs of the war.
DASHED HOPES
As they have done since Trump returned to the White House, Ukraine's allies rallied around Zelenskiy after this latest diplomatic setback.
But the outcome of Trump's phone call with Putin will be particularly hard to swallow because they saw signs they were starting to win him over to putting pressure on Moscow.
Several times in March and April, Trump expressed frustration at Putin's apparent foot-dragging, questioned whether he was being played by the Russian leader and threatened tougher sanctions against Moscow.
The stated positions between the U.S. and Europe remained far apart on key points including territory, but Kyiv viewed Trump's pronouncements as positive after the disastrous White House meeting in February when Zelenskiy and Trump publicly fell out.
A minerals deal signed by Ukraine and the United States last month was viewed as a further sign of progress, as were recent negotiations in Istanbul where officials from Ukraine and Russia met directly for the first time in nearly three years.
The disappointment on Tuesday was palpable.
"It's one step forward, two or 10 steps back." said another European diplomat. "We will continue to pass messages to the Trump administration and push, push for it to pressure Russia." REUTERS
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32 minutes ago
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And in line with the US policy of clamping down on goods transshipped from China to evade higher tariffs applicable on Chinese imports, there was a mention of higher tariffs on such goods. The rate was not specified however. It was also made clear that if the nations choose escalation and retaliate with tariffs of their own on US goods, Washington will respond in kind by tacking on more tariffs of equal magnitude. Although Mr Trump opened the letters with a reference to the strength of the trading relationships, he brought up his unhappiness with the large and chronic trade deficits racked up by the US. His message to the recipient nations - and to those who have yet to get their letter - was unambiguous: You have three weeks to cut a deal before the higher tariffs kick in. But his erratic negotiating style also burdens the White House with a credibility problem. Is the next milestone of Aug 1 also a moving goalpost? 'This is a rerun,' said Mr William Alan Reinsch, an expert in economics and international business at CSIS. 'Clarify the threat, extend the deadline, and hope that leads to a deal.' It is an attempt to push the nations to make more concessions since it's clear from the US point of view neither of them has made enough so far, he noted. 'The obvious question, of course, is that as August 1 approaches and there are still no deals, will Trump extend the deadline again - and perhaps increase the tariffs - or will he actually impose the tariffs.' Malaysia, hosting US Secretary of State Marco Rubio and other senior officials in the course of the Asean foreign ministers meeting this week, had repeatedly expressed confidence of negotiating a discount to the 24 per cent announced in April, especially for its most critical export sectors like electronics. 'While we acknowledge the concerns raised by the U.S. regarding trade imbalances and market access, we believe that constructive engagement and dialogue remain the best path forward,' Malaysia's Ministry of Investment, Trade and Industry said in a statement July 8. A senior Malaysian trade official told The Straits Times the silver lining is that Malaysia is 'in the same club' as Washington's allies Japan and South Korea. These three countries had likely expected a reduction in tariffs imposed on their exports from levels that were previously announced. 'We will, of course, continue to negotiate but Trump is doing this independent of (Jamieson) Greer and all the negotiations,' the same official said, requesting anonymity to comment on confidential conversations. Greer is the US Trade Representative. Higher prices and slowing economies The road to tariff agreements has been littered with false starts. Treasury Secretary Scott Bessent had said in late June that the US hoped to wrap up trade talks with them by the start of September. And in April, trade adviser Peter Navarro had suggested 90 deals would be done in 90 days. While this did not transpire, the series of letters released on July 7 announcement appear to hint at an end to the uncertainty even if the impact on trade is unwholesome. It's unfortunate that President Trump has announced 25 per cent tariff hikes for two of its closest allies, Japan and South Korea, said former US trade negotiator Wendy Cutler. 'Both have been close partners on economic security matters and have a lot to offer the US on priority matters like shipbuilding, semiconductors, critical minerals and energy cooperation,' said Ms Cutler who is now vice-president at the Asia Society Policy Institute (ASPI). Companies from both countries have made significant manufacturing investments in the US in recent years and provided high-paying jobs to US workers, she added. And both are key markets for a variety of US goods from pork to planes. Mr Reinsch said there was no good news to be had from the tariffs. 'A 25 per cent tariff will have a major impact on Korean and Japanese exports to the US, including things that are in demand here like autos and semiconductors.' 'They will mean higher prices here and a slowdown in the economies of the other two countries,' Mr Reinsch said. The ongoing Section 232 investigations that may lead to additional tariffs on autos and semiconductors are another worry, he said. The July 7 announcement sends a chilling message to others, Ms Cutler said. It suggests that the US will not be open to reprieves from the Section 232 sectoral tariffs, including on autos, a high priority for both Japan and South Korea. But she also saw a less glum side. 'While the news is disappointing, it does not mean the game is over,' said Ms Cutler. 'We cannot rule out a breakthrough in negotiations in the lead up to Aug 1, when the additional tariff hikes are to take effect,' she said. Waiting in the wings Some excitement surrounds the possibility of a' mini' trade deal with India. Negotiations are believed to be centred around India opening up certain segments of the agriculture and dairy sector while seeking lower than 26 per cent tariffs for the textile and footwear sectors among others. India is also seeking concessions on auto parts apart from reduced tariffs on aluminium and steel. India is unwilling to concede to the US demand for exports of genetically modified crops like corn. Any concessions seen as unreasonable by its strong farm lobby would have a direct political impact on the Narendra Modi government. Sources said India has the July 2 deal struck by Vietnam in mind as they seek an accommodation with Mr Trump. India and Vietnam are competitors in areas like electronics and textiles. 'It's no longer just about tariffs anymore, it's about comparative tariffs since Vietnam has 20 per cent,' said an industry insider. The US-Vietnam deal will see American goods enter Vietnam duty-free while the US charges 20 per cent tariffs on Vietnamese goods instead of the 46 per cent tariffs announced by Mr Trump in April. Goods made in other nations, such as China, that are trans-shipped from Vietnam will be charged a higher tariff of 40 per cent, addressing an issue that has long rankled with the US. The countries' negotiators are, however, still in talks to finalise the details of the deal. China, which had been hit by a different set of tariffs springing from on its role in the fentanyl smuggling and alleged unfair trade practices, also reached a trade truce with the US in late June. However, the details are under wraps and Washington has already complained of slow progress in China's promise to resume tech industry's demand for rare earth-related exports to the US. Stressful times ahead While the government negotiators haggle over clauses, Asia's businesses are gearing up for tough times. The tariffs are expected to slow economic growth, increase consumer prices, trigger job losses, and trigger market volatility in the region. Mr Bai Tsan-jung, chairman of Sun Jen Textile Company in Taiwan, has not slept well since the US announced in April that it would slap a hefty 32 per cent tariff on goods from the island. Should Taipei fail to negotiate a deal with Washington by July 9, around half of Mr Bai's 110-member workforce may have to be furloughed or forced into early retirement. 'This has been the most stressful and challenging period for my company in our 40-year history – this is worse than Covid or Sars,' he told The Straits Times. His business had already seen sales dwindle for some years as customers have turned to China for cheaper materials, but he said that it has survived because of the high quality of the textiles his firm produces. 'But a steep US tax on our goods could be the final blow for us,' he added. Mr Bai's company, which produces nylon and other yarn, does not export directly to the US, but its main customers – garment factories in Taiwan, Indonesia and Vietnam – do. 'US tariffs do not affect only the companies that sell directly to the US – everyone in the supply chain is impacted,' he said. 'If those factories suffer because of tariffs, they won't take orders from my company either.' There is a similar sense of uncertainty over at TopTowel, an original equipment manufacturer of towels for sportswear and lifestyle brands. The US accounts for around 18 per cent of the firm's exports. Mr Bruce Chang, the company's sales manager, said that the firm has been trying to secure orders in more countries. He told ST over the telephone: 'I'm currently in Japan, meeting with potential partners and clients. The huge uncertainty over the US tariffs means that we need to look at opening up new markets, such as Australia and Europe.' Taipei, whose economy is heavily reliant on exports, has scrambled to reach compromise and to show Washington that it takes trade rules seriously as the spectre of hefty US tariffs looms. The island has repeatedly vowed to ensure that it does not become a place for Chinese exporters to dodge US tariffs with fake 'Made in Taiwan' labels. It has also pledged to buy more American goods, including US natural gas, to help narrow the trade deficit. In Kuala Lumpur, analysts believe that a negative impact on the domestic economy is the cards, irrespective of whatever deal is struck. There are growing expectations that Malaysia's central bank will cut interest rates by 25 basis points to 2.75 per cent at its next policy meeting, coincidentally falling on July 9. 'We expect the cut to materialise largely as a means of preempting a potential slowdown in domestic demand,' said a June 25 HSBC report. Additional reporting by Nirmala Ganapathy in New Delhi, Walter Sim in Tokyo, Wahyudi Soeriaatmadja in Jakarta and Philip Wen in Bangkok
