End Game (42 page)

‘The upside,’ said Gary Rose, who had sat silently through the discussion, ‘is that the Chinese are probably going to like this.’

The president would have laughed if the situation wasn’t so grotesque.

But Rose was serious. ‘They’ll make their complaint to the WTO, of course, but secretly, they’ll be grateful. If I understand the numbers correctly, put their funds and their foreign reserve together and they’re holding north of three trillion in US stock, bonds and cash. They don’t want to actually dump this stuff – that’s their threat. They want a floor and this gives it to them. This way they don’t look like they’re chickening out. They look like the victim. They look like we’re beating up on them again. They love that. This is perfect for them.’

The president gazed at the national security advisor, still trying to detect if this wasn’t some kind of uncharacteristic joke.

‘From a strategic perspective,’ said Rose, ‘this is a circuit breaker. They understand we have to do something. They know we can’t allow a situation to develop where we can’t sell our government bonds. They must want a halt as much as we do, because what’s happening here doesn’t do any good for anyone. This gives them the halt and we look like the bad guys. It’s win win.’

Tom Knowles thought about it. Maybe Gary Rose was right. Maybe Zhang secretly would be relieved that the US had found a way to break the circuit and let him look like the victim.

It didn’t matter, anyway. It had to be done.

‘So we announce it today?’ he said.

Opitz nodded. ‘After the markets close.’

AT 6PM WASHINGTON
time, Tom Knowles stood at the lectern in the Press Room in the West Wing with Opitz, Strickland and O’Brien, the head of the SEC, flanking him. He announced that he was taking immediate measures to restore confidence in the markets and ensure a return to fairness and transparency. He listed the measures succinctly. Afterwards, the three officials gave a more detailed briefing to the journalists.

He went to bed that night wondering if the measures would work when the markets opened the next day. By the time he got up, the Chinese government had attacked him for discriminatory action in contravention of WTO regulations and announced they would be bringing a case at the world body against the United States.

That was exactly what everyone had predicted, and no one was too worried about it.

But two days later, on the Sunday two days before Christmas, the Chinese government did something else. Saying that China wasn’t prepared to await the outcome of an interminable WTO process, they imposed a stinging set of tariffs, quotas and exclusions on US trade with the People’s Republic. To be enforced immediately.

Knowles felt as if he was locked in a struggle with an opponent who wouldn’t pause, wouldn’t stop, wouldn’t back off, but would escalate and simply hit and hit and hit until … he didn’t know. He felt as if he was suffocating. He couldn’t see an end.

This wasn’t working. Nothing was working.

He called a meeting of the National Security Council for the next day. That would be Christmas Eve and most of the council members had already left Washington over the weekend to head wherever they were going for the holiday. Knowles didn’t give a damn. They could get on a plane and come back.

Over the two years since he had become president, Tom Knowles thought he had put together a pretty good team. Now he was wondering if any of them had the slightest idea of what they were doing.

47

KNOWLES WENT QUICKLY
to the Situation Room. He had just got off an early morning call with the director-general of the WTO, who had pressed him to revoke the measures he had announced, to which the Chinese measures were a response. The director-general assured him that the Chinese would revoke their actions if the US acted first. But he didn’t have answers to the questions Knowles asked him directly. As president, what was he supposed to do as the underpinnings of the American economy were torn out from under it? How else was he supposed to stabilize a market that was sliding into quicksand? The director-general assured him that he was certain the Chinese government had intended no such thing. Tom Knowles assured him the Chinese government had had plenty of opportunity to say so, both in private and public.

The other members of the National Security Council were waiting.

‘I’m sorry to be getting you in here on Christmas Eve,’ he said as he sat down. ‘Wasn’t exactly what I would have planned.’

There were a few rueful smiles in response.

‘Okay,’ he said. ‘Let’s get down to business. Everyone here knows what the Chinese government announced, right?’

Marty Perez had circulated a summary.

‘Gary thought they’d secretly want us to do what we did, didn’t you, Gary? I think you said it was going to be win win.’

‘It was,’ said Rose. ‘This isn’t rational.’

Bob Livingstone, who hadn’t had a conversation with the president in a week, rolled his eyes. ‘Of course it’s rational,’ he murmured. ‘It’s always rational.’

‘What’s that, Bob?’

‘It’s always rational, Mr President. Anything anyone does,
they
see as rational. You just have to understand how they see it.’

‘And how do they see it?’ said Gary Rose.

‘I would say they think we’re attacking them. Over Uganda, over South Africa, over this, over–’

‘Attacking them?’ demanded Oakley. ‘Hell, Bob! We’re the ones under attack here. We’re the ones facing a foreign power that’s infiltrated our markets and our economic institutions and has spent the last two months showing just how much damage they can do. What have we done to them? Huh? What? Gone into some godforsaken jungle to help innocent people who are being killed by the most evil bunch of killers on the planet. Jeez, Bob. Honestly! Whose side are you on?’

‘Whose do you think?’

‘Hold up!’ said the president. ‘We’re on the same side. I won’t have that kind of talk. No one’s saying anyone’s not on the same side.’ He looked around the table. There was an enormous amount of tension in the room and they had barely started. ‘Okay, John? Alright?’

‘Yes, sir,’ murmured Oakley.

‘Okay. We need to figure out what we’re going to do here and I’m not going to let us start squabbling like a bunch of kids. Now, I’m stumped by the sheer aggressiveness of Zhang’s action. It’s everything at once. What else have they got to throw at us?’

‘Very little,’ said Perez.

Gary Rose nodded. ‘It’s like saying, whatever you do, however you try to get yourself up off the floor, we’re going to hit you hard. We’re going to hit you right back down.’

‘And see if you’re prepared to hit us again,’ said Oakley. ‘It’s like saying, do you dare? Are you going to do it or not?’

‘Or they’re hitting out blindly,’ said Livingstone. ‘They feel they’re attacked. What do you do when you’re attacked? You hit out. It doesn’t necessarily mean you think too hard about it before–’

‘Jesus,’ groaned Oakley. ‘More of this under attack stuff. Who’s under attack here, Bob? Don’t you get it?’

‘I’m not saying we’re not. I’m saying–’

‘I think you are. I think you’re saying we’re the ones doing the attacking. I think you’re saying we’re the ones at fault.’

‘I haven’t even talked about fault.’

‘But it won’t be long, will it?’

Livingstone shook his head in exasperation. He took a deep breath, trying to keep his emotions under control. He was at breaking point. The president had ignored him over the last week during the biggest crisis of their political lives and it couldn’t go on. He had come prepared to speak out today, as much as it took. He was going to confront Gary Rose and even John Oakley if necessary. He had no choice. If he didn’t do it today, he felt, he never would.

‘Look,’ he said. ‘We have a difference of opinion here in the way we see this. We all agree that we feel we’ve been attacked. Okay, John? I agree with that. But what I don’t agree with is what you’re saying when we look at how they feel. You’re painting them as if everything they’re doing is to attack us.’

‘Isn’t it?’

‘Let me finish! You’re painting them as if they’re on this premeditated kind of campaign. And I’m saying, they might be thinking the same thing about us. Everything we do that we see as defensive, they might see as offensive.’

‘They’d be wrong,’ muttered Oakley.

‘Doesn’t matter if they’re wrong! Jesus Christ, what matters is what they think! Can’t you see that?’

‘Calm down, Bob,’ said Walt Stephenson, the vice-president, beside him. He chuckled. ‘You’ll have a heart attack.’

Livingstone took another deep breath. ‘Mr President, what matters is what they think. Maybe they think they’re being attacked. Maybe they think the rest of the world thinks that as well. If that’s the case, they’ll do anything not to look weak. Maybe that’s why they announced these measures. They don’t want to do it, but they have to, because otherwise they think everyone else is going to look at them and think they’re backing down. Isn’t that a possibility?’

‘Well, if it’s a possibility,’ said Oakley, ‘we need to teach them you don’t do that kind of thing. They need to learn a lesson.’

Livingstone closed his eyes for a second. ‘Right,’ he said. ‘They need to learn a lesson. Absolutely, John. And I guess now, when we’re in a position of
such
strength, is the time for us to teach them.’

The president watched him closely. ‘Bob, do you have any evidence for this?’

‘Marion Ellman had a conversation with the Chinese ambassador at the UN. He was talking to her personally. Her feeling is that Zhang’s under internal pressure over this.’ He looked at Ryan Ferris. ‘Have you followed that up?’

Ferris shrugged. ‘We’ve got nothing from our sources.’

‘Ambassador Ellman’s view is interpretation,’ said Gary Rose. ‘There’s nothing more to it than her interpretation of what she heard in a single conversation. Are we really going to make decisions on the basis of that?’

‘Show me something better,’ said Livingstone impatiently. ‘Gary, you ask for the evidence and you sit there rolling your eyes and you don’t want to listen to it. Then you say it’s interpretation. And in the meantime, what have we been doing? That hasn’t been based on interpretation? Everything we’ve done so far has been on the basis of the interpretation that the Chinese are trying to smash us, and if you ask me, on the face of it, what we’ve done hasn’t worked. Maybe you think it has, but I don’t. So if you ask me, maybe it’s time to stop making the same mistake over and over and start thinking about an alternative interpretation.’

‘I wouldn’t have asked you,’ muttered Oakley.

‘Well, the president did, John!’ Livingstone stopped. His heart was thumping so hard he almost felt ill.

‘Okay, guys,’ said Knowles, ‘this isn’t getting us anywhere.’

There was a tense, angry silence.

‘Sir,’ said General Hale. ‘As a military man, I would have to say that the actions of the Chinese are a typical strategy to keep your opponent off balance. In terms of a military campaign, to harry him, if you will, so you knock him off balance and he can’t regain stability.’

‘This isn’t a military campaign, General,’ said Livingstone curtly. ‘Perhaps that’s escaped your notice.’

‘This is not constructive,’ said the president. ‘Bob, let’s try and make some progress.’ The president looked at the Treasury secretary. ‘What’s the damage here?’

‘Once they implement these measures?’ said Opitz. ‘We’re still working on that but ball park, it’s serious. It’s big.’

‘What about them?’

‘It’ll have an effect. I don’t think there’s any doubt about that. How big it’ll be … that’s harder to say. It also depends on how we respond.’

‘Their press has been loud on the measures once they were announced,’ said Ryan Ferris. ‘They’re saying the Chinese economy is a lot more independent of ours this time round and they don’t think there’ll be an effect at all.’

‘That’s the line for domestic consumption. It’s got to have an effect.’

‘They’re saying they’re going to boost the domestic economy, fiscal stimulus, etc., etc. They’re also saying a lot of the slack will be taken up by exports to Europe and other economies.’

‘That depends on what the Europeans do.’

‘What are they going to do?’ said Rose. ‘This is a WTO dispute between us and them. The Europeans aren’t getting involved.’

‘So bottom line,’ said Knowles, ‘we take a hit. What happens to them?’

‘They’ll take a hit,’ said Opitz. ‘How big it’ll be, we need to work on that.’

‘No way Zhang would take a risk of a serious hit,’ said Rose. ‘No way he’s putting Chinese workers out of jobs.’

‘No way he’s going to put a huge stimulus in, not after what happened last time.’

‘He’ll crack down hard. He’ll crack down hard and early.’

‘Gary, that doesn’t change the fact that they’ll take a hit. They have to. That’s
if
they implement the measures they announced against us. Mr President, that’s not a given, by any means, certainly not in full. They’ve got a track record of talking louder than they act.’

‘Let’s call their bluff,’ said Oakley.

The president looked around the table. ‘Do we agree on that?’

‘What exactly does that mean?’ said Livingstone. ‘Calling their bluff. What are you trying to say?’

‘I’m saying let’s match them,’ retorted Oakley.

‘You mean we take those kind of measures as well?’

‘Absolutely. What we’ve done to protect our markets isn’t illegal. It doesn’t contravene any rules.’

‘Well, I think you might find that–’

‘National emergency. Isn’t that what Susan’s told us, we have a national emergency derogation under WTO rules? I don’t know what we’ve got here if we haven’t got a national emergency so that gives us the right to do what we’re doing.’

‘I don’t think they see it–’

‘They’re the ones in breach! There’s a process in the WTO for complaint if they have a complaint and they’ve chosen to circumvent that and take the law into their own hands. Well, fine. You want to do that, we can do it too.’

Livingstone stared at the defense secretary. He felt faint. He pulled at his necktie.