ESADEgeo Daily Digest, 04/04/2018

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The New York Times – Ben Hubbard / Saudi prince says Israelis have right to ‘their own land’

  • In this interview, Saudi Arabia’s Crown Prince Mohammed bin Salman said that Israelis, just like Palestinians, “have the right to have their own land” and that formal relations between Israel and the kingdom could be mutually beneficial.
  • Prince Mohammed has come to view Israel as an attractive regional economic and technological hub, as well as a potential partner in Saudi Arabia’s cold war with Iran: “Israel is a big economy compared to their size and it’s a growing economy, and of course there are a lot of interests we share”.
  • “We have to have a peace agreement to assure the stability for everyone and to have normal relations,” said Prince Mohammed.
  • Reflecting a divide in the Saudi leadership over how to approach Israel, Prince Mohammed’s father, King Salman, emphasized Palestinian rights in a phone call with US President Donald Trump.

Foreign Affairs – Philip Levy / Was letting China into the WTO a mistake?

  • In a report released earlier this year, US Trade Representative Robert Lighthizer argued that the US had “erred in supporting China’s entry into the WTO on terms that have proven to be ineffective in securing China’s embrace of an open, market-oriented trade regime.”
  • But, in the case of China’s accession to the WTO in 2001, identifying a preferable alternative is difficult. The US had essentially provided China Most-Favoured-Nation status since 1974, and neither forsaking this commitment nor refusing to make it permanent would have yielded positive results.
  • The US could have also sought to rally other countries to exclude China from the global economy, thereby preventing its rise. But an open intent to block Chinese growth would likely have elicited a hostile response.
  • Neither China’s WTO accession protocol nor the structure of the organization in 2001 was sufficient to ensure ideal Chinese economic behavior in the decades that followed. However, this is a result of the failure to pass new multilateral rules, rather than of the decision to admit China to the WTO.

Financial Times – Martin Wolf / The Chinese economy is rebalancing, at last

  • In 2007, former Chinese Prime Minister Wen Jiabao said that “the biggest problem with China’s economy is that the growth is unstable, unbalanced, uncoordinated and unsustainable”.
  • However, up to 2014, China had merely replaced an excessive current account surplus with still more excessive investment, soaring debt and property bubbles.
  • The past three years have witnessed change at last. In 2017, final consumption contributed 59 per cent of GDP growth. As investment growth has declined, the rise in indebtedness has also (apparently) stopped.
  • It is only because the household savings rate is still very high in China that private consumption is so low as a share of GDP. If the government were to provide an adequate safety net and better health and education services, the household savings rate might fall sharply.
  • In sum, recent developments prove China’s willingness to prioritize quality of growth, rather than quantity of growth. Although the story told by former premier Wen is far from over, China can now at least envisage a happy ending.

Washington Post – Seung Min Kim / Trump floats idea of sending military to guard U.S.-Mexico border but offers no details

  • US President Donald Trump said yesterday that the military will be sent to guard the US-Mexico border, although he offered few details on how and when such a plan might be implemented.
  • “Until we can have a wall and proper security, we are going to be guarding our border with our military. That’s a big step,” said Trump.
  • Sending troops to the border is not unprecedented and has been done by previous presidents, including Barack Obama and George W. Bush, who utilized National Guard troops when concerns over security or humanitarian problems arose.
  • One adviser who speaks often to Trump said that the president has been concerned about his political base since he signed into law last month a spending bill that did not fund the wall or some of his other immigration plans.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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