ESADEgeo Daily Digest, 27/06/2018

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Al-Monitor – Laura Rozen / Syria cease-fire deal unravels as Trump, Putin prepare to meet

  • As US President Donald Trump and Russian President Vladimir Putin tentatively prepare to meet next month, one of the few tangible successes of US-Russian cooperation since Trump came into office is on the verge of collapse.
  • Syrian army forces, backed by Russian airstrikes, have been advancing against rebels in the southern Syrian city of Daraa, in violation of a southwest Syria de-escalation zone agreement that was negotiated by the United States, Russia and Jordan last year.
  • On June 19, the US Embassy in Amman, Jordan, sent a stark message to rebels in southern Syria, telling them essentially that the United States would not use military force to protect them from the Russian-backed Syrian regime advance.
  • “It’s pretty clear, what they [the US government] are trying to do is send a message to the rebels that there is an international consensus that they need to cut a deal with Assad, and there is no military solution to their problems,” said Nicholas Heras, a Syria analyst at the Center for a New American Security.

The New York Times – Gardiner Harris & Stanley Reed / Roiling markets, US insists world must stop buying Iranian oil

  • The US said on Tuesday that it will impose sanctions against all importers of Iranian oil by November 4.
  • The policy shook financial markets that had become accustomed to waivers for American sanctions that in years past had been granted to companies in countries like India and China as long as they showed steady reductions in their imports of Iranian oil.
  • But a senior State Department official said Tuesday morning that such routine waivers were not likely to be issued by the Trump administration, although he did not rule them out entirely.
  • The Trump administration may be signaling an unusually tough position to gain leverage ahead of the first official meeting in Vienna of the remaining signatories to the Iran nuclear deal since Trump announced in May that he would cease to implement the accord.

Foreign Policy – Jason Bordoff / This isn’t your father’s OPEC anymore

  • Just two years after trying to put a floor under prices, OPEC+ last week was called on to put a ceiling on prices. As oil spiked above $80 per barrel following Trump’s announcement that he would re-impose sanctions on Iran oil sales, the US along with other consuming countries like India and China pressured OPEC+ to open the taps back up.
  • Despite some ambiguity, OPEC reasserted its relevance in Vienna through its willingness to cap prices, underscoring its reputation as a responsible supplier to the market. But, even as OPEC reasserts its traditional role, the organization has been reincarnated in new form.
  • First, Saudi Arabia’s role in the organization is bigger than ever. The price-capping decision in Vienna was effectively taken by Saudi Arabia, not OPEC. After all, only Saudi Arabia has any meaningful amount of spare capacity.
  • The second major change in OPEC is that its second-most important player, after Saudi Arabia, is now Russia, despite not being an official member of OPEC at all. Deepening and possibly formalizing the Saudi-Russian oil alliance marks a potentially historic shift for OPEC, as past attempts to cooperate with Russia have consistently failed.
  • The third major message from last week’s OPEC meeting is that America’s shale energy boom hasn’t increased US influence over global oil markets. Oil remains a geopolitical vulnerability for the US and talks of its “energy dominance” has been overhyped.
  • The OPEC also has its limitations. An output hike would leave OPEC with a very small buffer of spare capacity, so there is a limit to what OPEC can do to keep prices from spiking if Venezuelan production plummets, Iranian sanctions bite, or countries like Libya and Nigeria see further unrest.

Financial Times – Martin Wolf / Work in the age of intelligent machines

  • Adair Turner, former chairman of the UK’s financial regulator and chairman of the Institute for New Economic Thinking, believes intelligent machines will ultimately be able to perform most forms of current work better than people and at lower cost. This, he argues, is a question of when, not if.
  • Turner argues that what is happening explains the “productivity paradox” — rapid innovation, but low productivity growth. Of the 10 US sectors with the biggest forecast growth in employment between 2014 and 2024, which are expected to generate 29 per cent of all new jobs, eight have median wages below the national median.
  • This then is the picture for the medium-term future: sluggish overall productivity growth and worsening inequality. This is inconsistent with stable democracy. The outcome could be plutocracy, populist autocracy, or a blend.
  • So long as there is a reasonable prospect of jobs for people who want to work, the crucial policy will be subsidizing jobs. It is also vital to fund high-quality public services for all, notably, health, education and transportation. Moreover, we will need higher taxation of wealth and top incomes, including land and intellectual property.
  • In the longer term, the world might become techno-feudal, with an owning elite hiring great numbers of cheap human servants not for their value, but for the pleasure of domination.

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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