Donald Trump’s influence trade uses power as a global currency—which poses challenges for India

Trump appears to be trading influence—in his personal as well as national capacity—to gain a variety of benefits for himself and the US. Venezuelan politician María Corina Machado recently traded in her Nobel Peace Prize: she gifted it to Trump, apparently in return for his influence over who holds office as Venezuela’s president.

While the Nobel committee has voided this ‘transfer,’ Trump has not recanted his earlier public statement that she lacks leadership nous. Yet, he said he was happy to accept the gift from Machado.

World leaders nominating Trump obsequiously for the Nobel Peace Prize have been promised dubious collateral benefits. Trump extended the US’s considerable security and economic umbrella to Pakistan in exchange for Islamabad’s gushing admiration and, unsurprisingly, a Nobel nomination. It did not matter that it was Pakistan’s top military general and de facto ruler who came bearing gifts.

In August, the EU struck a curious trade deal with Washington, agreeing to zero duty on most US goods but a 15% duty on a large number of EU goods exported to America. EU negotiators agreed to this lopsided deal in return for US security assurances in Ukraine, including intelligence sharing.

As a prelude to the agreement, EU leaders were made to sit in front of Trump’s desk in the Oval Office in an undisguised display of power play. Many participants defended their trip to the White House as providing stability to the “special relationship."

That deal, however, looked short-lived after Trump threatened fresh tariffs against certain EU members for publicly voicing their opposition to a US plan to acquire Greenland, a threat that he later withdrew at Davos, saying that a framework agreement over the island was in the making.

There is a lesson to be learnt from this new currency trading arrangement: an agreed swap can be torn and thrown away, depending on the mood of only one party to the deal. Canadian Prime Minister Mark Carney’s speech at Davos captured the week’s zeitgeist: “There is a strong tendency for countries to go along, to get along. To accommodate. To avoid trouble. To hope that compliance will buy safety. It won’t."

Trump is also expanding the Gaza-centred Board of Peace to resolve broader international conflicts and invitations have been sent out to various world leaders, including Indian Prime Minister Narendra Modi.

It now appears that permanent members will have to cough up $1 billion as fees without any clarity on how the money will be used. The Board is being viewed as a substitute for the United Nations, and if you thought the multilateral body had serious shortcomings, take another look at the Board: compared with the asymmetric power vested with the UN Security Council, under which only five members have a veto power, the Board has invested its chairman, President Trump, with the sole veto.

Trump’s invitation is a form of influence-trade: join, kiss the ring and enjoy protection against invaders or high US tariffs or both. French President Emmanuel Macron’s refusal to join has invited Trump’s wrath, with renewed threats to impose steep duties on French wines and champagne. Here’s another facet of this currency trading scheme: accept the trade or face consequences.

Curiously, though, this influence-trade may end up accelerating the tide of dedollarization, despite Trump’s fervent desire to slow it down. A Reuters news report states that the Reserve Bank of India has proposed a linkage between the CBDCs of central banks in the Brics grouping to ease cross-border payments and reduce reliance on the dollar as an intermediating currency.

There has also been a steady increase in Chinese exports and imports being settled in renminbi: about 40% of China’s $6-trillion trade.

One question needs to be asked: Did the crash of cryptos cause this hard pivot to influence-trade? Cryptos have repeatedly failed the currency test since they do not fulfil three critical functions of money: as a store of value, unit of account and medium of exchange. They are also not assets because they have no underlying cash flows. Cryptos are just speculative instruments, hobbled by multiple structural shortcomings, not to mention risks.

The emergence of official digital currencies like stablecoins and CBDCs has also undermined unofficial crypto products. Ironically, Trump’s tariff tantrums may have further darkened prospects for cryptos, which seem to be his favourite asset class, with all crypto products witnessing deep value erosion over the past few weeks. Emerging links between the influence-trade and equity market movements also merit examination.

Influence-trade poses challenges for India’s avowed policy of strategic autonomy. Any sign of hesitation or refusal to participate in US plans could invite reprisals. On Greenland, Trump told EU representatives at Davos, somewhat ominously: “You can say yes, and we will be very appreciative. Or you can say no, and we will remember."

The path ahead will require India to proverbially feel the pebbles, measure each step carefully and tread gingerly. In short, it will require India to put its best diplomatic foot forward.

The author is a senior journalist and author of ‘Slip, Stitch and Stumble: The Untold Story of India’s Financial Sector Reforms’ @rajrishisinghal.