The ESADEgeo Daily Digest, 30/06/2017

South China Morning Post—Z. Lu & R. Delaney / US decision to sell arms to Taiwan ‘violated consensus’ reached by Xi, Trump in Florida

  • The decision by the United States to sell arms to Taiwan—in a deal worth US$1.4 billion—violated a consensus reached by President Xi and President Trump at Mar-a-Lago, according to Beijing.
  • “We have expressed firm opposition to the US and we will reserve our right to take further action,” said the Chinese Ambassador to Washington.
  • A Chinese Foreign Ministry spokesman stated the following: “We urge the US to honour its commitment on the Taiwan question, immediately stop military contact and arms sales to Taiwan and avoid causing damage to the bilateral relationship and bilateral cooperation in a broader range of areas.”
  • The US State Department said that “there is no change to [the United States’] longstanding ‘one-China’ policy based on the Three Joint Communiques and the Taiwan Relations Act [which guarantees US support for the self-governing island’s defence capacity].”
  • Every US president has approved arms sales to Taiwan since the Taiwan Act became law in 1979. The announcement comes a week ahead of Xi’s planned meeting with Trump on the sidelines of the G20 summit in Hamburg, Germany.

Bruegel—G. B. Wolff / Eurozone or EU budget? Confronting a complex political question

  • In its recent Reflection Paper on the future of the EU budget, the Commission presents a clear question: should there be a euro-area budget distinct from the overall EU budget?
  • Of the three functions of government (allocation, redistribution and stabilization), the clearest case for a euro area budget distinct from an EU budget lies in the latter. It is clear that the euro area has created a set of problems regarding stabilization policy that is distinct from the EU budget.
  • However, this is mostly a political matter. The key difference between competing visions is about whether the EU or the eurozone is the core political unity.
  • The real question is whether further political integration steps, if they happen at all, shall happen at the EU or at the euro area level or perhaps even at smaller sub-sets of the EU.

Project Syndicate—K. Hamada / The rebirth of the TPP

  • When President Trump announced that the US would not participate in the TPP, many assumed the agreement was dead. However, Japan and New Zealand announced that they would seek an agreement with other signatories by November to move the TPP forward.
  • The TPP’s mega-regional approach can bring greater economic gains than a bilateral deal. The involvement of many parties can also dilute the authority of a major country and thus limit its ability to strong-arm its negotiating partners into an unbalanced agreement.
  • But, unlike the WTO approach, the mega-regional approach does not encompass such diverse parties. This is what makes an agreement like the TPP easier to reach.
  • Trump favors bilateral deals, but sometimes these don’t deliver. The TPP was extremely beneficial for the US despite encompassing many countries, because it encouraged them to accept a set of rules and standards in exchange for expanded trade and investment flows.
  • Columbia’s Jagdish Bhagwati: “the TPP was a bit like allowing people to play golf in a club, but only if they also attended a particular church over the weekend.”

Financial Times—D. Sheppard & H. Foy / Rosneft in talks to develop disputed oilfields with Iraqi Kurdistan

  • Russia’s state-controlled oil company, Rosneft, is in discussions with Iraqi Kurdistan over helping it develop oilfields in disputed territory at the heart of tensions with Baghdad.
  • The move is the latest suggestion that Moscow is using Rosneft to bolster a more aggressive foreign policy stance in the Middle East.
  • Rosneft: “If the Iraqi government offers us projects on conditions that will be commercially acceptable for the company and adequate to the market, we will be interested to consider them.”
  • The presence of a Russian state-backed company on the eastern Syrian border may raise tensions with Kurdish militias who have been fighting ISIS with US support. The Kurdish YPG militia in Syria has at times clashed with the forces of Syrian president Bashar al-Assad, whom Moscow supports.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.

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