Putin’s the Winner From Trump’s Syria Pullout

(Bloomberg) --

Donald Trump’s declaration of victory in Syria leaves Russian President Vladimir Putin looking like a winner.

The U.S. president’s abrupt decision to call home American troops sets Putin up as the pivotal figure in resolving the Syrian war and strengthens his hand across the Middle East. Trump’s declaration fulfills a long-standing Russian demand for a U.S. withdrawal from Syria.

Putin bet big in Syria, sending in air forces to save President Bashar al-Assad from defeat by U.S.-backed rebels. The U.S. went from “Assad must go” to a demand under Trump for Iranian forces that also back the Syrian leader to leave the country. Now the U.S. is exiting with neither goal achieved.

Russia has forged an alliance with Turkey and Iran to decide Syria’s fate. Turkey already plans offensives against Kurdish fighters in northern Syria that it regards as “terrorists.”

Putin followed up his Syrian gambit by striking an oil partnership with Saudi Arabia and cultivating Egypt’s strongman ruler. With the U.S. all but absent, he’s made Russia the power broker in deciding on a potential new leader for Libya.

As Trump boasts of “historic victories” over Islamic State as reason to leave Syria, to the shock of his own advisers, it’s Putin who can be satisfied at the success of his mission to restore Russia’s Soviet-era influence in the Middle East.

Global Headlines

Note to readers: Balance of Power will take a short break starting Dec. 24. Normal publication will resume Jan. 2. 

Safe for now | Special Counsel Robert Mueller will be cautious about implicating Trump — or even a thinly disguised “Individual-1” — directly in criminal activity in legal filings over the next few months, Chris Strohm exclusively reports. Mueller is likely to save any findings that touch personally on Trump for his final report, which will almost certainly be reviewed by Democrats — who will take control of the House next month — as they consider whether to impeach the president.

Tightrope walk | The Trump administration is engaged in a high-stakes balancing act between pressuring Russia over election interference and easing penalties on the world’s second-largest aluminum maker. The U.S. sanctioned 15 Russian spies yesterday and agreed to drop penalties against companies tied to Oleg Deripaska in exchange for the Russian billionaire cutting his stake in Rusal, one of largest companies ever targeted by the U.S. 

Costly hike | Fed Chairman Jerome Powell’s latest interest-rate increase may add almost $1 million to the Trump Organization’s annual borrowing costs, raising the president’s cumulative hit from the U.S. central bank’s hikes since his inauguration to $6 million per year, according to a Bloomberg News analysis. The Fed has been the target of sustained criticism from Trump over its rate increases.

Behind bars | Brazil’s former president Luiz Inacio Lula da Silva looks set to remain in prison after the country’s chief justice struck down a ruling that would have freed up to 169,000 prisoners jailed before the end of their appeals process. Lula is currently serving a 12-year sentence for corruption and money laundering, after losing his first appeal against his conviction.

Taking a toll | The costs of Poland’s collision with the European Union over democratic standards are starting to pile up. The nationalist government is facing rising borrowing costs and falling investment as foreigners reassess the business climate. The EU is looking to cut a quarter of Poland’s aid funds after 2021 and impose rules undercutting its $57 billion low-cost logistics industry — threats the increasingly isolated country will find hard to counter.

What to Watch

• The U.S. House is set to vote as early as today on legislation to avert a partial government shutdown following Senate passage of the measure, which defers a fight with Trump over money for his proposed border wall.
• The Democratic Republic of Congo’s electoral body said it’s continuing to prepare for presidential elections on Dec. 23, amid reports it may postpone the vote.

And finally...When Paul Romer sees the U.S. and China locked in a trade war, his thoughts turn to robots. Romer, who won this year’s Nobel economics prize for his work on how technology drives growth, sees the risk of a unusual kind of protectionism: one in which Washington and Beijing fight to control fields like artificial intelligence — claiming ownership of breakthroughs which could benefit all humanity, if only they were set free.

--With assistance from Kathleen Hunter and Michael Winfrey.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net

©2018 Bloomberg L.P.