The ESADEgeo Daily Digest, 10/07/2017

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Financial Times—L. Summers / Donald Trump’s alarming G20 performance

  • The fact that a common communiqué was reached at the G20 summit, which some see as an achievement, is no indication of normality in relations between the US and other countries.
  • For the first time in G20 meetings, there was a serious possibility that a common statement would not be agreed upon.
  • The content of the communiqué confirms the breakdown of international order. For instance, partly because of American attitudes, the G20 was mute on international migration at a critical moment.
  • President Trump’s behavior was unsettling to US allies and is the greatest threat to American security.
  • Invoking the idea of the West against the rest, as Trump did in his pre-G20 speech in Poland, is an even graver misstep than President Bush’s “axis of evil” rhetoric.

Al-Monitor—M. Sonmez / One year on, Turkey’s coup attempt has impacted economy

  • In the third quarter of 2016, a period that includes the July 15 coup attempt and its immediate aftermath, the Turkish economy contracted for the first time in a long while, after growing at a pace of 5% in the first half of the year.
  • Ironically, the still ongoing state of emergency instituted after the coup attempt became instrumental in generating a fresh growth momentum. In the fourth quarter of 2016, the Turkish economy grew at 3.5%.
  • In the weeks after the group attempt, Ankara created a sovereign wealth fund, which was progressively beefed up via legislative decrees. This raised concerns in Parliament about lack of accountability.
  • Starting in February 2017, short-term investment started to return to the country, driven by positive global financial trends. In the first quarter of 2017, Turkey posted a 5% economic growth.

The New York Times—B. Plumer / When will electric cars go mainstream? It may be sooner than you think

  • The conventional view holds that electric cars will remain a niche product for many years, heavily dependent on government subsidies.
  • However, a new report by Bloomberg New Energy Finance suggests that the price of plug-in cars is falling much faster than expected, spurred by cheaper batteries and aggressive policies promoting zero-emission vehicles in China and Europe.
  • The report predicts that plug-in vehicles will become cost competitive between 2025 and 2030, even without subsidies and before taking fuel savings into account.
  • Bloomberg projects that plug-in hybrids and all-electric vehicles will make of 54% of new light-duty sales globally by 2040.
  • A sharp rise in electric vehicles would displace 8 million barrels of transportation fuel each day. The world currently consumes around 98 million barrels per day.
  • Still, consumer psychology is difficult to predict, and lack of proper infrastructure remains a hurdle.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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The ESADEgeo Daily Digest, 07/07/2017

Al-Monitor—B. Kayaoglu / EU parliament votes to halt accession talks with Turkey

  • Yesterday, the European Parliament called “on the Commission and the member states … to formally suspend the accession negotiations with Turkey without delay if the constitutional reform package is implemented unchanged.”
  • Turkey’s Minister of EU Affairs Omer Celik criticized the European parliamentarians, saying they had “no right to make such a call.”
  • Turkish Prime Minister Binali Yildirim, whose post will be abolished once the constitutional amendments come into effect in 2019, called the EU decision “null and void.”
  • EU Parliament’s decision is not legally binding, and EU-Turkey relations will not break down entirely. Neither side is upset enough to complete the breakup.

The New York Times—G. Thrush & J. H. Davis / Trump, in Poland, asks if West has the “will to survive”

  • In his speech in Warsaw, US President Donald Trump said nothing about the right-wing government’s crackdown on judges and journalists and its refusal to accept more migrants, policies that have upset EU leaders.
  • Trump instead praised Poland as a defender of liberty in the face of existential threats. “The fundamental question of our time is whether the West has the will to survive.”
  • The US President delivered a mixed message on Russia, which included the sharpest criticism of the Russian government since taking office. Trump called the Kremlin to “cease its destabilizing activities in Ukraine and elsewhere and its support for hostile regimes, including Syria and Iran.”
  • Trump also made a full-throated endorsement of the collective defense principle that undergirds NATO: “The United States has demonstrated not merely with words but with its actions that we stand firmly behind Article 5.”
  • About North Korea, Trump stated the following: “We’ll see what happens — I don’t like to talk about what we have planned — but I have some pretty severe things that we’re thinking about.”

Project Syndicate—J. Nye / Trump’s gift to Europe

  • By most accounts, Trump’s presidency has been terrible for Europe. But his very unpopularity in the region has helped to reinforce European values.
  • The populist wave seems to have crested with Trump’s election.
  • For the EU to reach a satisfactory Brexit deal—which could imply the creation of a Euro-British entity—its federal goal would have to be abandoned, and a metaphor of different levels would have to replace that of different speeds.
  • Proponents of this approach point out that three different levels of participation already exist in Europe: the customs union, the euro currency, and the Schengen Agreement on the removal of internal borders. Defense could become a fourth, given the fact that Trump has raised doubts about American reliability.

Project Syndicate—D. Rodrik / The G20’s misguided globalism

  • The G20 has its origins in two ideas, one relevant and important, the other false and distracting.
  • The relevant and important idea is that developing and emerging market economies such as Brazil, India, Indonesia, South Africa, and China have become too significant to be excluded from discussions about global governance.
  • The less useful idea underpinning the G20 is that solving the pressing problems of the world economy requires ever more intense cooperation and coordination at the global level.
  • Although this applies to certain areas (e.g., climate change), on the economic side the failure to maintain open trade policies is not really a failure of global cooperation or a result of insufficient global spirit. It is essentially a failure of domestic policy.
  • Exhortations at G20 summits will not fix any of these problems. If we want to avoid misguided protectionism, or to benefit from better economic management in general, we need to start by putting our own national houses in order.
  • The G20’s globalism feeds into the populist narrative. Globalism-as-solution is easily transformed into globalism-as-scapegoat.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.  

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The ESADEgeo Daily Digest, 06/07/2017

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The Washington Post—K. Thomas & D. Superville / Trump opens second visit to Europe in Poland

  • Donald Trump arrived in Warsaw late Wednesday for a 16-hour stop. Polish President Andrzej Duda met with him yesterday, having said that he wanted to focus the talks on concrete issues like energy security, and not on “some general talk about world security.”
  • The leaders will also discuss further deliveries of U.S. liquid gas to Poland and the region.
  • President Trump plans to highlight a regional effort to boost energy independence from Russia by meeting with a dozen central and eastern European leaders collectively known as the Three Seas Initiative.
  • Poland is one of five NATO members that spend at least 2 percent of their GDP on the military, hosts several thousand U.S. troops, supports U.S. and NATO forces in Iraq and Afghanistan, and is a regular buyer of U.S. military equipment.

POLITICO—H. Von der Burchard & J. Hanke / EU and Japan hit back at protectionism with trade deal

  • After four years of tough negotiations, Japan and the EU delivered a significant riposte to the protectionist agenda of President Trump on Wednesday by striking the world’s biggest trade agreement.
  • Japan’s PM Shinzō Abe will attend a summit with the EU on Thursday, where he is expected to sign the political agreement for a free-trade deal. This political agreement covers more than 90% of the issues under discussion, and the whole accord could be wrapped up by the end of the year.
  • The free trade deal will cover more than 25% of global economic output. 99% of goods are on course to be traded tariff-free between the EU and Japan.
  • Cecilia Malström, EU Trade Commissioner: “We hope that we could triple our agriculture exports [...] EU exports to Japan overall could, according to our calculations, be boosted by one-third.” The Commission predicts that EU exports of processed food could rise by up to 180 percent and export of chemicals could surge by more than 20 percent.
  • Investment protection is excluded from the agreement, as well as some questions on regulatory cooperation that both sides want to iron out in coming months.

The New York Times—A. E. Kramer / Russia deploys a potent weapon in Syria: The profit motive

  • The Kremlin is using market-based incentives tied to oil and mining rights to reward private security contractors who secure territory from ISIS in Syria.
  • The Russian company Evro Polis is set to receive profits from oil and gas wells it seizes from ISIS using contract soldiers. Another Russian company, Stroytransgaz, signed a phosphate-mining deal for a site that was under militant control at the time.
  • The agreements are seen as incentives for companies affiliated with Russian security contractors, who reportedly employ about 2,500 soldiers in the country.
  • Most Middle Eastern wars are suspected of having some variant of this deal, which in this case is made with the approval of the Syrian government, but it is seldom made as explicit as in the Russian contracts.

Brookings—C. I. Bradford / The Hamburg G-20 summit: Reshaping the economy to serve people and society

  • At the G-20 summit starting tomorrow, China stands to gain stature, as U.S. President Donald Trump seeks to “represent Pittsburgh rather than Paris,” withdraw from world trade commitments, and play the “America first” role.
  • The growing preoccupation that the global economy serves the few rather than the many—which has had very important political consequences since Brexit—is shifting the focus of the G-20. Making the global economy, trade, and financial systems serve people and society rather than only grow the economy may become the new mantra for managing the global economy.
  • It is already clear within the G-20 preparatory processes among non-governmental groups that the challenges now facing the global community are more interrelated, more synergistic, and more sweeping in terms of their social effects than previously realized.
  • Business and the private sector have the greatest stake in maintaining public confidence in the market economy. The fact that the SDGs exist at this moment provides a framework that can be used to mobilize society, business, labor, and government toward common goals for the common good.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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The ESADEgeo Daily Digest, 05/07/2017

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South China Morning Post—S. Lau & Z. Lu / Xi Jinping and Putin join forces to halt North Korean crisis

  • The presidents of China and Russia called on North Korea to freeze its nuclear and missile programmes and also urged the US and South Korea to halt large-scale military drills.
  • A separate joint statement by the foreign ministers of China and Russia criticised North Korea’s latest test launch as “unacceptable” and a grave violation of UN Security Council resolutions.
  • The statement said that military means to solve the issue should not become an option. Instead, the UN resolutions should be fully implemented, North Korea’s reasonable concerns should be respected, and all countries should make efforts to make the resumption of dialogue possible.
  • The UN Security Council, of which China holds the presidency this month, will hold an emergency meeting later on Wednesday.

The New York Times—S. Reed / Qatar to ramp up gas production amid feud with Arab neighbors

  • Amid tensions with its neighbors, Qatar said on Tuesday that it would dramatically increase its production of natural gas — the fuel that made the tiny emirate rich and gave it regional influence. Qatar is already the world’s biggest producer of Liquefied Natural Gas (LNG).
  • Qatar Petroleum, the national oil company, said that the country’s output of LNG would rise 30 percent over the next five to seven years. The increase would be the equivalent of adding about 8 percent to the world’s current supplies of the gas.
  • The decision is probably driven by Qatar’s worries over losing market share to emerging competitors like the United States.
  • Countries opposed to Doha may pressure the companies that have business interests throughout the gulf to avoid dealing with Qatar. Therefore, the emirate may be forced to dip into its own pocket for the billions required for new drilling and chilling facilities.

Foreign Policy—C. Lynch & R. Gramer / Tillerson ready to let Russia decide Assad’s fate

  • US Secretary of State Rex Tillerson reportedly told the U.N. Secretary General Antonio Guterres during a private meeting last week that the fate of Syrian leader Bashar Al-Assad now lies in the hands of Russia.
  • According to three diplomatic sources familiar with the exchange, Tillerson said that the Trump administration’s priority is limited to defeating ISIS.
  • Tillerson also signaled that US military action against Assad’s forces in recent months is intended to achieve only limited tactical goals, and not to weaken the Assad government.
  • This comes a month after Tillerson’s warning at the G7 that Assad’s reign was “coming to an end.”

Financial Times—G. Rachman / Merkel, Trump, Xi and the contest for global leadership

  • If it was up to the citizens of the world, it seems that Angela Merkel would get the job of global leader.
  • A Pew poll published last week showed that in a cross-section of 37 countries, 42 per cent expressed confidence in the German chancellor to “do the right thing” — compared with 28 per cent for Xi Jinping and just 22 per cent for Donald Trump.
  • All three of them—Merkel, Xi and Trump—have pros and cons as candidates for “global leader”. Russia is on a second tier, as it is too economically weak and diplomatically isolated to provide a plausible alternative pole of leadership.
  • It is not clear where the other G20 leaders will look at the summit on Friday and Saturday.

Euractiv—S. Morgan / Commission funds France-Ireland power link that bypasses UK

  • The European Commission has allocated €4 million to a project that will link the French and Irish electricity grids via an undersea cable.
  • Irish lawmakers have touted the plan as an “obvious solution” to Ireland’s energy reliance on a post-Brexit United Kingdom.
  • The project will be capable of providing enough electricity to power 450,000 homes and surplus renewable energy will be able to go where there is high demand.
  • When finished, it will be Ireland’s only interconnector link to an EU member state, given that the United Kingdom intends to leave the bloc in early 2019.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.

Política Internacional | Permalink

The ESADEgeo Daily Digest, 03/07/2017

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South China Morning Post—S. Jiangtao / Trump calls Xi as tensions escalate over Taiwan, North Korea

  • Tensions between the USA and China have resurfaced over Taiwan, how to handle North Korea’s nuclear weapons programme, and disputes in the South China Sea.
  • The USS Stethem, a guided-missile destroyer, sailed within 12 nautical miles of Triton Island, part of the Paracel Islands in the South China Sea, on Sunday. This was the second freedom-of-navigation operation conducted under Trump.
  • During a phone call with President Trump on Monday morning, President Xi was quoted as saying the following: “We attach great importance to the US government’s reaffirmation of the one-China policy and hope the US side will properly handle the Taiwan problem by adhering to the one-China principle and the three communiqués between the two sides.”
  • “Both leaders reaffirmed their commitment to a denuclearised Korean peninsula. President Trump reiterated his determination to seek more balanced trade relations with America’s trading partners,” the White House said.
  • Richard Bush, senior fellow at the Brookings Institution: “The steps announced [last] week occurred a week after the first diplomatic and security dialogue between China and the US and [days] before Trump’s meeting with Xi in Hamburg. In a way, Washington is ‘laying the table’ for the summit.”

Project Syndicate—J. Stiglitz / Trump and the truth about climate change

  • By announcing the US’ withdrawal from the Paris Agreement, President Trump took another major step toward establishing the US as a rogue state.
  • The Paris accord is very good for America, and it is the US that continues to impose an unfair burden on others, contrary to what Trump suggests.
  • The US has added disproportionately to the rising concentration of greenhouse gases in the atmosphere, and among large countries it remains the biggest per capita emitter of carbon dioxide by far – more than twice China’s rate and nearly 2.5 times more than Europe in 2013.
  • By imposing a tax for CO2 emissions, firms and households would have an incentive to retrofit for the world of the future. Furthermore, the tax would help to address the problem that many countries’ governments face revenue shortfalls.
  • One of the world’s best-performing economies, Sweden, has already adopted a carbon tax at a rate substantially higher than that discussed in the report published by the global High-Level Commission on Carbon Prices. And the Swedes have simultaneously sustained their strong growth without US-level emissions.

The New York Times—T. Erdbrink / French energy giant to invest $1 billion on Iran gas field

  • The French energy giant Total has agreed to invest $1 billion in Iran to develop a huge offshore gas field. The other partners are the China National Petroleum Corporation and the Iranian company Petropars.
  • The agreement is the largest by a Western energy company in Iran since the 2015 deal to curb Tehran’s nuclear program. In February, the agreement was put on hold as Total waited to see how the Trump administration’s policy toward Iran would proceed.
  • Other European companies are expected to follow in Total’s footsteps. Royal Dutch Shell, another energy giant, has signed several memorandums of understanding for projects in Iran, as have dozens of other companies.
  • The Trump administration is undertaking a 90-day review of its policies toward Iran. At a meeting on Saturday in Paris, the former US ambassador to the United Nations, John Bolton, said he was certain the Trump administration would make a change in the leadership in Tehran a priority of its Iran policy.

Financial Times—A. Barker / EU presidency highlights think-big confidence of tiny Estonia

  • During its presidency of the Council of the European Union, Estonia is hoping to disrupt Europe’s analogue economy by pushing ideas on e-government and the free flow of data across Europe.
  • However, Estonia will be facing a bigger challenge: the east-west divide across a host of legislation, which either seems stuck (asylum reform), highly divisive (French-led efforts to tighten terms for “posted workers”) or destined to be difficult (the Russian Nordstream 2 gas pipeline across the Baltic Sea to Germany).
  • During its presidency, Estonia must oversee the drafting of a mandate for the European Commission to negotiate with Russia over the Nordstream 2 pipeline. Kersti Kaljulaid, Estonia’s President: “I stand here and say it is a political project which has no economic reasoning.”
  • As Estonia launched its presidency, Moscow was preparing to move approximately 100,000 personnel for military exercises in September close to the border of Baltic countries that were under the Soviet yoke for half a century.

 The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

Política Internacional | Permalink

The ESADEgeo Daily Digest, 30/06/2017

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South China Morning Post—Z. Lu & R. Delaney / US decision to sell arms to Taiwan ‘violated consensus’ reached by Xi, Trump in Florida

  • The decision by the United States to sell arms to Taiwan—in a deal worth US$1.4 billion—violated a consensus reached by President Xi and President Trump at Mar-a-Lago, according to Beijing.
  • “We have expressed firm opposition to the US and we will reserve our right to take further action,” said the Chinese Ambassador to Washington.
  • A Chinese Foreign Ministry spokesman stated the following: “We urge the US to honour its commitment on the Taiwan question, immediately stop military contact and arms sales to Taiwan and avoid causing damage to the bilateral relationship and bilateral cooperation in a broader range of areas.”
  • The US State Department said that “there is no change to [the United States’] longstanding ‘one-China’ policy based on the Three Joint Communiques and the Taiwan Relations Act [which guarantees US support for the self-governing island’s defence capacity].”
  • Every US president has approved arms sales to Taiwan since the Taiwan Act became law in 1979. The announcement comes a week ahead of Xi’s planned meeting with Trump on the sidelines of the G20 summit in Hamburg, Germany.

Bruegel—G. B. Wolff / Eurozone or EU budget? Confronting a complex political question

  • In its recent Reflection Paper on the future of the EU budget, the Commission presents a clear question: should there be a euro-area budget distinct from the overall EU budget?
  • Of the three functions of government (allocation, redistribution and stabilization), the clearest case for a euro area budget distinct from an EU budget lies in the latter. It is clear that the euro area has created a set of problems regarding stabilization policy that is distinct from the EU budget.
  • However, this is mostly a political matter. The key difference between competing visions is about whether the EU or the eurozone is the core political unity.
  • The real question is whether further political integration steps, if they happen at all, shall happen at the EU or at the euro area level or perhaps even at smaller sub-sets of the EU.

Project Syndicate—K. Hamada / The rebirth of the TPP

  • When President Trump announced that the US would not participate in the TPP, many assumed the agreement was dead. However, Japan and New Zealand announced that they would seek an agreement with other signatories by November to move the TPP forward.
  • The TPP’s mega-regional approach can bring greater economic gains than a bilateral deal. The involvement of many parties can also dilute the authority of a major country and thus limit its ability to strong-arm its negotiating partners into an unbalanced agreement.
  • But, unlike the WTO approach, the mega-regional approach does not encompass such diverse parties. This is what makes an agreement like the TPP easier to reach.
  • Trump favors bilateral deals, but sometimes these don’t deliver. The TPP was extremely beneficial for the US despite encompassing many countries, because it encouraged them to accept a set of rules and standards in exchange for expanded trade and investment flows.
  • Columbia’s Jagdish Bhagwati: “the TPP was a bit like allowing people to play golf in a club, but only if they also attended a particular church over the weekend.”

Financial Times—D. Sheppard & H. Foy / Rosneft in talks to develop disputed oilfields with Iraqi Kurdistan

  • Russia’s state-controlled oil company, Rosneft, is in discussions with Iraqi Kurdistan over helping it develop oilfields in disputed territory at the heart of tensions with Baghdad.
  • The move is the latest suggestion that Moscow is using Rosneft to bolster a more aggressive foreign policy stance in the Middle East.
  • Rosneft: “If the Iraqi government offers us projects on conditions that will be commercially acceptable for the company and adequate to the market, we will be interested to consider them.”
  • The presence of a Russian state-backed company on the eastern Syrian border may raise tensions with Kurdish militias who have been fighting ISIS with US support. The Kurdish YPG militia in Syria has at times clashed with the forces of Syrian president Bashar al-Assad, whom Moscow supports.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.

Política Internacional | Permalink

The ESADEgeo Daily Digest, 28/06/2017

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POLITICO—E. Geller / NSA-linked tools help power second global ransomware outbreak

  • Like May’s attack using the WannaCry malware, yesterday’s ransomware outbreak is spreading via a Microsoft flaw originally exposed in a leak of apparent NSA hacking tools.
  • Experts say hackers have likely been working to tweak the WannaCry malware, potentially allowing new versions to skirt the digital defenses that helped stall the first global assault.
  • Most of the infections on Tuesday were in Ukraine, with Russia the next hardest hit, according to the security firm Kaspersky.
  • Researchers have not yet linked the latest attack to any specific hacking group or nation-state, unlike May’s digital ambush, which technical specialists and reportedly intelligence officials in the U.S. and U.K. traced to North Korean-backed hackers.

Financial Times—M. Wolf / The economic origins of the populist surge

  • Cultural change and the economic decline of the working classes increased disaffection, which is the root cause of Brexit and Trump’s election. But the financial crisis opened the door to a populist surge.
  • Among the G7 countries plus Spain, the four most adversely affected of these economies in the long term were (in order) Italy, Spain, the UK and US. Post-crisis, the most adversely affected were Spain, the US, Italy and the UK.
  • It is not surprising, then, that Canada, Germany and Japan have been largely immune to the post-crisis surge in populism, while the US, UK, Italy and Spain have been less so, though the latter two have contained it relatively successfully.
  • One could think that, as economies recover and the shock dwindles, the rage and despair it caused will also fade. But because of long-term sources of fragility, as well as the devastating potential of recent political choices, the wave of populist anger is likely to be sustained.

South China Morning Post—L. Zhen / Asia’s biggest, most advanced warship finally launches as China strengthens naval presence

  • China launched what it calls the most advanced and largest warship in Asia on Wednesday.
  • The new destroyer will be similar in size to the 8,000-10,000 tonne Arleigh Burke class destroyers, the main type currently in use with the US Navy.
  • The new ship—which is being publicized as a major step forward for Chinese sea power—will undergo equipment and sea testing, and is expected to enter service next year.

The Economist / Why the North Korean economy is growing

  • Sanctions, even those that are broad-based, have not had much effect on the North Korean economy. Though measuring the country’s economy remains educated guesswork at best, most experts agree that it is probably growing at between 1% and 5% a year.
  • The UN has attempted to block North Korea’s access to hard currency by capping the amount of coal the state can export. But North Korean vessels have continued to dock at China’s coal ports. And the North also earns foreign currency in other ways: by using foreign agents as a front, the regime sells drugs, weapons and counterfeit goods. Kim Jong-un’s government also earns more than $1bn a year by forcibly sending labourers abroad.
  • Though still officially illegal, private enterprise has grown since reforms encouraged by Kim Jong-un made it possible for individuals to generate profit.
  • Countries or individuals that help North Korea do business have not been subject to “secondary sanctions” that would further isolate the country.

The selected pieces do not necessarily reflect the view of Javier Solana and ESADEgeo. 

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