ESADEgeo Daily Digest, 05/07/2019

The New York Times – Paul Krugman / Trump is losing his trade wars

  • Donald Trump isn’t winning his trade wars. True, his tariffs have hurt China and other foreign economies. But they’ve hurt America too; economists at the New York Fed estimate that the average household will end up paying more than $1,000 a year in higher prices.
  • Moreover, there’s no hint that the tariffs are achieving Trump’s presumed goal, which is to pressure other countries into making significant policy changes. In particular, the idea that China of all nations will agree to a deal that looks like a humiliating capitulation to America is just crazy.
  • In addition, when you tax goods assembled in China but with many of the components from Korea or Japan, assembly doesn’t shift to America, it just moves to other Asian countries like Vietnam.
  • Finally, Trump’s trade war is unpopular, and so is he. This leaves him politically vulnerable to foreign retaliation. Trump’s vision of an easy trade victory is turning into a political war of attrition that he, personally, is probably less able to sustain than China’s leadership.
  • Washington Post – Peter Jamison, Samantha Schmidt, Hannah Natanson & Steve Hendrix / Trump’s Fourth of July celebration thrills supporters, angers opponents

Politico – David Patrikarakos / Greece’s Trojan Trump

  • In a country strafed by austerity and poverty, the expected victory by Kyriakos Mitsotakis (the leader of the nominally center-right New Democracy party) in Sunday’s Greek general election has been widely portrayed as a return to normal for Greek politics. That may not be the case.
  • New Democracy’s leader may be a moderate centrist; the rest of the party is anything but. If Greek voters reject Prime Minister Alexis Tsipras’ “radical left” Syriza party in favor of Mitsotakis’ — as polls widely expect them to — they’ll be exchanging one set of populist politicians for another.
  • Mitsotakis owes his very election to the leadership to New Democracy’s hard-right faction — led by former prime minister and party leader Antonis Samaras, and Adonis Georgiadis, its vice president and a former minister of health in Samaras’ government.
  • New Democracy is surging to victory on the back of its opposition to the 2018 Prespes Agreement between Greece and North Macedonia. “Since [New Democracy] could not oppose implementing the memorandum [the agreement between Athens and its creditors], it had to oppose Syriza’s policies on matters like human rights and so called ‘national issues,’” said journalist Augustine Zenakos.

The Economist / A change of direction under Christine Lagarde is unlikely

  • Christine Lagarde will bring solid political and communication skills to the European Central Bank. But when combined with other recent changes at the top, her nomination means that the bank loses technical expertise even as threats to the economy loom.
  • Fortunately, Lagarde is admired for her willingness to listen to a variety of opinions, and her consensus-building ability. Lagarde’s comments over the years suggest that she will steer broadly the same course as Mario Draghi. She supported his pledge to do “whatever it takes” to preserve the euro and was an early advocate of quantitative easing.
  • However, whereas Lagarde’s role at the fund is broad, her new job is narrower, and more technical. Draghi may have been able to make bold policy calls because he understood markets and economics so well.
  • When Lagarde starts in November, the ECB board will have as many lawyers as economists. Philip Lane, the chief economist and a former academic, may find himself deploying a powerful hand on the tiller.
  • Euractiv / EU socialists play hard-ball over Commission chief nominee

The New York Times – Declan Walsh / Sudan power-sharing deal reached by military and civilian leaders

  • Sudan’s military and civilian leaders announced on Friday that they had reached an agreement to share power until elections, promising an end to the standoff that has paralyzed the African country since the ouster of President Omar Hassan al-Bashir in April.
  • The two sides have agreed to form a joint military-civilian authority to run Sudan during an interim period of just over three years, a senior protest leader said. Power will rotate between military and civilian leaders during the transitional period, a mediator from the African Union said. Then, elections are to be held and the military is to return to its barracks, ushering in democratic rule.
  • The two sides also agreed to open what they said was an independent investigation into the violence that began on June 3 when military forces cracked down on protesters, which has led to at least 128 deaths, according to the protesters. The government admitted 61 deaths.

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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