ESADEgeo Daily Digest, 14/03/2019

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Financial Times – Edward Luce / Why America cannot fly alone

  • President Trump’s stance regarding the grounding of Boeing’s 737 Max planes offers a unique example of the world spurning America’s lead on airline safety. His reversal is a “teachable moment” on the realities of a fast-changing world.
  • The biggest factor is falling global trust in US institutional probity. The same can be said of US diplomacy. More than halfway through Trump’s term, 1 in 7 US ambassadorships are still unfilled. Former Deputy Secretary of State William Burns speaks of America’s “unilateral diplomatic disarmament”.
  • Trump has hinted that he would withdraw the US extradition request for Meng Wanzhou, Huawei’s chief operating officer, in exchange for China’s trade concessions. In so doing, Trump appears to be signaling that US courts are no longer independent of political whim.
  • Perhaps the most teachable aspect of the Boeing 737 controversy is the reality of the global economy. When China and the EU agree to the same regulatory standard, the US has little choice but to fall in line.

Foreign Policy – Arvind Panagariya / India is Trump’s next target in the trade war

  • Trump has opened a new front in his trade war: India. Last week, he notified Congress of his intention to end the favorable treatment India has enjoyed under the Generalized System of Preferences (GSP), which allows many products from India and other developing countries to enter the US duty-free.
  • From an economic perspective, Trump’s withdrawal of GSP won’t make relations much worse. From a political perspective, though, Trump’s move is dangerous. At this time, it would be imprudent for the US to push India any further on trade issues.
  • India is in the midst of parliamentary elections, and Narendra Modi’s government can ill afford to appear weak. It would likely deny concessions that it would be willing to grant under other circumstances. The government may even choose to retaliate.
  • Once the Indian elections are over, the new government should review all its trade policies and regulations. It should reassess the wisdom of the country’s recent turn to protectionism and import substitution. In parallel, the US needs to appreciate that democracy places some limits on India’s leadership.

The Guardian / Senate passes resolution to end US support for Saudi war in Yemen

  • The Senate has voted to end US support for the Saudi Arabian-led coalition’s war in Yemen, bringing Congress one step closer to a unprecedented rebuke of Donald Trump’s foreign policy.
  • Lawmakers have never before invoked the decades-old War Powers Resolution to stop a foreign conflict, but they are poised to do just that. Trump has already threatened to veto the resolution, which the White House says raises “serious constitutional concerns”.
  • “By defining ‘hostilities’ to include defense cooperation such as aerial refueling,” a White House statement said, the Yemen resolution could “establish bad precedent for future legislation”.
  • The Congressional measure was co-sponsored by Senator Bernie Sanders and the Utah Republican Mike Lee. Next, it will move to the Democratic-controlled House, where it is expected to pass.

Financial Times – Rochelle Toplensky, et al. / Nord Stream 2 eyes way to curb EU oversight of $9.5bn pipeline

  • The group building the Nord Stream 2 pipeline to import Russian gas into Germany is exploring plans to hive off its last 50km into a separate company, a move that would undermine EU plans to regulate the entire project.
  • While this German section would be subject to EU rules, the rest of Nord Stream 2 — nearly 1,200km through the Baltic Sea — would remain outside the bloc’s jurisdiction.
  • Applying EU rules — including measures insisting on non-discriminatory tariffs and access for third parties — was expected to change the project’s economics. If the rules are limited to the portion of the pipeline in German waters, this impact would be limited.
  • The proposal to split the offshore portions of Nord Stream 2 has not yet been discussed with German regulators, who will be responsible for applying EU rules.

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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