ESADEgeo Daily Digest, 11/07/2018

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Financial Times – Demetri Sevastopulo & Michael Peel / Trump accuses Germany of being ‘captive of Russia’

  • In the opening hours of the NATO summit, US President Donald Trump has accused Berlin of being “captive of Russia” for allowing a new Moscow-backed gas pipeline project (Nord Stream II) to be built to northern Germany and accused Chancellor Angela Merkel of failing to spend enough on Europe’s defense.
  • “It’s very sad when Germany makes a massive oil and gas deal with Russia . . . We’re supposed to be guarding against Russia and Germany goes out and pays billions and billions of dollars a year to Russia,” Trump said.
  • The US has moved to impose sanctions on Russia over the pipeline project, Nord Stream II, which has angered Washington and some of its eastern European allies because it bypasses them to deliver Russian gas directly to Germany.
  • NATO Secretary General Jens Stoltenberg has tried to persuade Trump that the US’s NATO allies have “turned a corner” on military spending, but still need to do more. NATO says the US’s allies have agreed more than $250bn of extra defense budget money by 2024.

Project Syndicate – Dani Rodrik / How to avoid a trade war

  • Trump’s kneejerk protectionism defies common sense and business and financial elites, and at the same time it does little to help the working class that helped elect him.
  • Trump may well want a trade war, but he cannot have it on his own. A trade war requires other economies to retaliate and escalate. And there are compelling reasons why they should not do so.
  • If Europe, China, and other trade partners were to retaliate in response to Trump’s tariffs they would simply reduce their own gains from trade without reaping any of the advantages of protectionism. And they would be doing Trump a favor by lending surface plausibility to his complaints about the “unfairness” of other countries’ trade policies vis-à-vis the US.
  • Besides, if Europe and China want to uphold a rules-based multilateral trade regime, as they say they do, they cannot mirror Trump’s unilateralism and take matters into their own hands. They need to go through the World Trade Organization.

Financial Times – James Kynge / China’s Belt and Road difficulties are proliferating across the world

  • The instances of Chinese infrastructure schemes overseas running into publicly-reported “trouble” are proliferating, besmirching the reputation of the Belt and Road Initiative.
  • A new study by RWR Advisory Group, a Washington-based consultancy, shows that some 14 per cent, or 234 out of 1,674, Chinese-invested infrastructure projects announced in 66 Belt and Road countries since 2013 have hit trouble so far.
  • Analysts say the agreement of big China-financed infrastructure projects is often accompanied by a thumping political soundtrack that makes it hard for the recipient country to raise objections if feasibility studies throw up problems.
  • The Export-Import Bank of China and its sister organization, the China Development Bank, are the most powerful global forces in development finance, lending more internationally than the six western-led multilateral development banks combined.
  • The two institutions resist open, competitive tenders for contractors. This has almost always meant that lucrative contracts were awarded to members of a charmed circle of Chinese state-owned enterprises. Senior management teams are appointed by the Communist party, says Yu Jie, head of China Foresight at LSE Ideas.

The New Yorker – Adam Entous / Israeli, Saudi and Emirati officials privately pushed for Trump to strike a “grand bargain” with Putin

  • Officials from Israel, Saudi Arabia and the United Arab Emirates have repeatedly encouraged their American counterparts to consider ending the Ukraine-related sanctions to Russia in return for President Putin’s help in removing Iranian forces from Syria.
  • Experts say that such a deal would be unworkable, even if Trump were interested. They say Putin has neither the interest nor the ability to pressure Iranian forces to leave Syria.
  • A senior Israeli official said that “Israel does believe it is possible to get a US-Russian agreement in Syria that would push the Iranians out,” and that doing so “could be the beginning of an improvement in US-Russian relations over all.”
  • During a dinner at the G-7 summit in Canada, Trump reportedly said that Crimea was Russian because the people who lived there spoke Russian. Several weeks later, when asked whether reports that he would drop Washington’s long-standing opposition to the annexation of Crimea were true, Trump responded, “We’re going to have to see.”

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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