ESADEgeo Daily Digest, 15/11/2018

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Financial Times – The Editorial Board / The Brexit illusions shattered by Theresa May’s impending deal

  • Advocates of the draft Brexit deal argue that Prime Minister Theresa May is respecting the outcome of the referendum. But the draft deal shatters the illusions about Brexit: the idea of a clean break from the EU; and the notion that a new trade deal with the EU would be achievable by the end of 2019.
  • Compared to remaining in the EU, May’s deal is manifestly inferior. It moves the UK away from its most important trading partner while giving it less say over the rules that govern its economy.
  • On balance, however, it is probably the best deal available given the prime minister’s self-imposed red lines. The talk of “betrayal” by some Brexiters is nonsense. The real betrayal is by those who promoted falsehoods during the referendum.
  • If a deal passes parliament, there may be a brief uptick in investor confidence. But there is little long-term detail — Brexiters and Remainers are correct to argue that the UK’s future relationship with the EU is in limbo. Clarity is unlikely to arrive until the middle of the next decade.
  • Politico – Charlie Cooper / UK Brexit Secretary Dominic Raab resigns
  • The Guardian – Jessica Elgot / How will parliament’s many tribes vote on the Brexit deal?

Project Syndicate – Ricardo Hausmann / How not to fight income inequality

  • Many in Mexico welcomed the decision of President-Elect Andrés Manuel López Obrador (AMLO) to lower the salaries of the higher echelons of the civil service, including himself. But what appears to be a well-articulated preference will prove to be a serious mistake.
  • AMLO’s decision to lower the wages of public employees has already led many high-ranking officials to seek employment elsewhere. Those who are entitled to early retirement are taking it, rather than waiting for AMLO’s cut.
  • Many in AMLO’s own party will celebrate, because they can fill the vacancies with loyalists. But these benefits will come at the cost of a less capable state that is less able to deliver on AMLO’s most cherished goals.
  • Trying to achieve greater equality through mandated wage compression is not just an odd preference; it is a mistake. It will deliver a state less able to contribute to a more just society.

Foreign Policy – Keith Johnson / Why American oil hasn’t been a total game-changer

  • America’s position as the top oil producer in the world isn’t enough to shield it from rising prices, free it from Middle East entanglements, strangle foes with sanctions, or even give it many additional foreign-policy tools. The notion of energy dominance is at heart a hollow idea.
  • “Ironically, the precise strength of the US energy sector—that it is driven by the market and not by a government—also means that it is not a stick to beat people with,” said Bruce Jones, the director of the foreign-policy program at the Brookings Institution.
  • Saudi Arabia produces less oil every day than the US, but it plays an immeasurably bigger role in the world oil market than America does or ever will. That’s because Saudi Arabia has most of the world’s spare production capacity, with millions of barrels that can quickly be brought on line or shut down.
  • “The Western concern is a stable oil market. As the world’s largest oil exporter, Saudi Arabia is crucial—and will be until electric cars are more common than gasoline ones,” said Simon Henderson, the director of the Washington Institute’s program on Gulf and energy policy.

Financial Times – Lucy Hornby / Xi versus Deng, the family feud over China’s reforms

  • As China prepares for the 40th anniversary of the reforms next month, a battle that combines politics, history and power is being fought by China’s two most powerful families.
  • For Chinese President Xi Jinping and his family, the anniversary is an opportunity to set the historical record straight about the role that his father, Xi Zhongxun, played in pushing the reforms.
  • The perception that Xi is downgrading Deng Xiaoping’s role has added to fears that a new cult of personality is developing around the current leader.
  • In a September speech, Deng’s son Deng Pufang called for a return to the reform era priorities of fixing China’s domestic problems while maintaining stable external relations.
  • Despite declaring that China will be “more and more open”, Xi has presided over the revival of statist policymaking and a new reverence for Marxist-Leninist orthodoxy. He has tamped down divergent voices within the party and tightened the screws on civil society.

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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ESADEgeo Daily Digest, 14/11/2018

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Financial Times – George Parker & Alex Barker / UK and EU hammer out draft terms of Brexit divorce

  • Today, Theresa May faces the most dangerous moment of her premiership. A historic cabinet meeting comes after negotiators in Brussels ended months of talks by agreeing Britain’s terms for leaving the EU. May now has to sell it to her cabinet and parliament.
  • Tory Brexiters and the Democratic Unionist party denounced the expected deal and warned that they would vote it down. Former foreign secretary Boris Johnson said the deal, which would leave Britain following EU rules on issues including the environment, state aid and employment law, was “vassal state stuff” and that he would vote against it.
  • The draft exit treaty is understood to include a UK-wide customs backstop plan to avoid a hard border in Ireland. The EU would have a say over when Britain left such a UK-wide customs union.
  • Pro-Europeans in Theresa May’s cabinet said they were “optimistic” she could face down her critics, paving the way for a special European Council meeting on November 25 to ratify Britain’s exit terms.

Politico – Matthew Karnitschnig / Merkel’s big EU speech: What she said, what she meant

  • Yesterday, Angela Merkel delivered what may well be her last speech at the European Parliament. The German chancellor said “we should work on the vision to one day create a true European army,” making it clear that she stands alongside Emmanuel Macron and is ready to invest more.
  • But Europeans can’t agree on a definition for “European army”, much less its mission. That’s one reason why ditching NATO is not an option, which is why Merkel was careful to underscore that “no one is questioning the alliance.”
  • Merkel added that “the times that we could rely on others without reservation are over. That means we Europeans have to take our destiny into our own hands if we want to survive as a community.” While Merkel has made similar statements before, she had never cast them in life-or-death terms.
  • In a direct jab at Italy, Merkel said that “whoever tries to resolve problems by just taking on more debt, while ignoring previous commitments, is placing the fundamentals of stability and strength that underpin the euro into doubt.”
  • Politico – Benjamin Haddad / Trump is getting the European army he wanted

Al-Monitor – Ayla Jean Yackley / ‘Atrocious’ recording of Khashoggi’s killing shocks listeners

  • A recording made during the killing of Saudi journalist Jamal Khashoggi is so “atrocious” that it shocked a Saudi intelligence officer who heard it, Turkish President Recep Tayyip Erdogan said.
  • Erdogan claimed that he had told the leaders of the US, Germany and France during a trip to France to mark the 100th anniversary of the end of World War One that the plot was carried out on “high-level” orders from Riyadh.
  • The New York Times reported that the recording includes the voice of one of the killers saying on the phone in Arabic to “tell your boss” the deed was done, a reference that US intelligence officials believe was to MBS. But US National Security Adviser John Bolton appeared to contradict that assessment on Tuesday, saying the crown prince was not implicated in the audio tape.
  • “For Erdogan, Muslim unity trumps other issues, and I can see him letting MBS off the hook — though not letting him smell of roses — if Saudi Arabia agrees to end Qatar’s isolation,” said Soner Cagaptay, the director of the Turkish Research Program at the Washington Institute for Near East Policy.
  • Al-Monitor / Trump names new US ambassador to Saudi Arabia

Euractiv – Sam Morgan / Spain targets 100% renewable power by 2050

  • In its draft law presented yesterday, the Spanish government outlines its plans for 2030 and 2050, as EU countries put pen to paper on national climate strategies, legally required by Brussels. According to sources, the draft law will be submitted to Spain’s parliament before the end of the year.
  • The main goal will see Spain source 70% of its electricity from renewables by 2030 ahead of relying 100% on wind, solar, hydropower et al by the turn of mid-century.
  • Greening the electricity sector also means that Spain will aim to reduce its greenhouse gas emissions by at least 20% by 2030 and as much as 90% by 2050. Current levels are 17% over the baseline 1990 levels.
  • In order to ween its energy mix off of coal, oil and gas, Spain will also stop issuing exploration licences, ban fracking and scrap new fossil fuel subsidies, with existing investments up for review.
  • The draft law also reveals that Madrid is keen to go beyond the targets adopted under the EU’s clean energy package. EU member states will have to contribute to an EU-wide target of 32% for renewable energy generation and 32.5% for energy efficiency uptake. But the draft Spanish legislation wants to meet a 35% target for both renewables and energy efficiency.

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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ESADEgeo Daily Digest, 12/11/2018

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Washington Post – Ishaan Tharoor / Macron’s pyrrhic victory over Trump

  • At the commemoration of the 100th anniversary of the World War I armistice, Macron offered a sharp rebuke of Trump’s ideology: “Nationalism is a betrayal of patriotism. By putting our own interests first, with no regard for others, we erase the very thing that a nation holds dearest, and the thing that keeps it alive: its moral values.”
  • “I think [Macron] has shed any illusion about Trump that flattering him will be a way of getting concessions,” said Thomas Wright of the Brookings Institution. “But he is hesitant to push back hard because he’s not sure what that will get him. It’s cautious realism.”
  • “Europeans are too deeply divided among themselves — and on the fundamentals,” said Dominique Moïsi, a foreign policy analyst at the Institut Montaigne. “[Macron] is weakened by the fact that he’s orphaned by Merkel and he’s weakened inside by the spectacular fall of his popularity.”
  • “There is a clear north-south division over the euro crisis and an east-west division over migration and Russia,” said Mark Leonard of the European Council on Foreign Relations. “You also have highly polarized societies in most member states, and that does mean that having a single leader of Europe is kind of utopian at the moment.”

The New York Times – David M. Halbfinger / Deadly Israeli Gaza raid threatens nascent cease-fire

  • At least seven Palestinians (including one senior Hamas military commander) were killed in the first known Israeli ground incursion into Gaza since Operation Protective Edge, in July 2014. An Israeli lieutenant colonel was killed in the operation and another officer was wounded.
  • Palestinian militants responded with waves of rockets aimed at Israeli communities near Gaza, and Israeli aircraft pounded targets in Gaza for a time.
  • The impetus for the Israeli operation and its nature were unclear. Reports in the Israeli news media generally described it as an intelligence mission that went awry.
  • The fighting threatened to damage, if not scuttle, delicate multilateral efforts to calm the Israel-Gaza border. Israel has been allowing fuel and cash shipments into Gaza.

Financial Times – Wolfgang Münchau / Do not assume the EU will give the UK time to rerun Brexit vote

  • British MPs who think about voting against a withdrawal treaty to force a second referendum would have to make a careful judgment of the EU’s intentions.
  • The EU cannot decide on its own to extend the deadline. The UK government would have to request it. Extension would require a unanimous vote by the other 27 members. If the UK government itself does not want it, it is over.
  • A decision to extend Article 50 would become an unwelcome campaign issue for many EU leaders in the 2019 European elections. Populist parties would undoubtedly characterize a vote to extend Article 50 as an attempt to undermine democracy.
  • The EU would, of course, accept a Brexit reversal request by the UK government. But we should not overestimate the political capital the EU is willing to pay to make this possible.
  • The Guardian – Sam Jones / Spanish PM: ‘If I was May, I would call a second referendum’
  • The New York Times – Stephen Castle / Britain’s Brexit endgame is close. Here’s how it may play out.

Project Syndicate – Dani Rodrik / Reclaiming community

  • Two books, one forthcoming from Raghuram Rajan and another published this month by Oren Cass, revisit our economistic worldview and argue that we should instead put the health of our local communities front and center.
  • Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, and sometimes markets and states undermine them.
  • Rajan calls community the “third pillar” of prosperity, as important as the other two pillars – the state and market. No less than excessive centralized state power, he writes, unmanaged globalization can tear apart the fabric of local communities.
  • Ultimately, it is only through the creation and expansion of well-paying jobs that local communities can be made vital. Cass’s proposal is to encourage employment through wage subsidies. Rajan emphasizes the role of local leaders who can mobilize community assets, generate social engagement on the part of local residents, and create a new image – all in the context of more supportive state policies and managed globalization.

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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ESADEgeo Daily Digest, 08/11/2018

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Washington Post – Rosalind S. Helderman, Matt Zapotosky & Carol D. Leonnig / Sessions’s ouster throws future of special counsel probe into question

  • The future of the special counsel investigation into Russian interference in the 2016 campaign was thrown into uncertainty Wednesday after President Trump ousted Attorney General Jeff Sessions.
  • Trump named as acting attorney general Matthew G. Whitaker, Sessions’s chief of staff, who as a legal commentator last year wrote that special counsel Robert S. Mueller III appeared to be taking his investigation too far.
  • As acting attorney general, Whitaker could sharply curtail Mueller’s authority, cut his budget or order him to cease lines of inquiry.
  • Within hours of his appointment, there were mounting calls by congressional Democrats and government watchdog groups for Whitaker to recuse himself, just like Sessions did. Whitaker has not been confirmed by the Senate and can serve for only 210 days before he must be replaced by someone who has been confirmed. That period could be extended if Trump nominates a replacement who is not immediately confirmed.
  • The New York Times – Derek Watkins, K. K. Rebecca Lai, Larry Buchanan & Karen Yourish / Sizing up the 2018 blue wave
  • Financial Times – John Burn-Murdoch & Aleksandra Wisniewska / US midterms: What we learnt from the election in five charts

Euractiv – Jorge Valero / Spain’s trade chief: China’s commitment to open its economy is ‘unquestionable’

  • Spain and China celebrate this year the 45th anniversary of their bilateral relations. The Spanish secretary of state for trade, Xiana Margarida Méndez, attended the first China International Import Expo (CIIE) in Shanghai. In order to continue strengthening the bilateral bond, Chinese President Xi Jinping will travel to Madrid in the coming weeks.
  • “We are already seeing that Beijing is opening its markets. In the case of Spain, exports to China increased threefold over the past eight years. This is a fact. This process of opening up will take whatever time it may need, but it is happening,” said Margarida.
  • “Right now, we are optimistic because the trade tensions have decreased. We have to find common issues to work with the US in defending multilateralism and fair and transparent rules, as President XI mentioned during the opening of the CIIE,” added Margarida.

Foreign Policy – Robert Zaretsky / We are all Isaiah Berliners now

  • At his Houston rally on Oct. 22, Donald Trump got one of his loudest cheers when he brayed: “You know what I am? I’m a nationalist. OK? I’m a nationalist.” But what, precisely, does it mean to be a nationalist?
  • The best guide to our current encounter with nationalism happens to be celebrating its 40th birthday. In 1978, the renowned political theorist and historian of ideas Isaiah Berlin published “Nationalism: Past Neglect and Present Power.” Berlin referred to nationalism as “the most powerful, single movement at work in the world today.”
  • According to Berlin, nationalism claims that all human beings belong to particular groups whose way of life differ from one another. It portrays a given group as a kind of biological organism, one whose development and ends are primordial. It declares that the beliefs and principles of this group are to be privileged precisely because they are the group’s. And it holds that a group has the right to force other groups to yield should they come into conflict with it.
  • Berlin described nationalism as a “state of wounded consciousness,” one that lashes out at either its real or imagined enemies. At other times, though, he seemed to believe that nationalism, at least in the tolerant variation he associated with the philosopher Johann Gottfried Herder, was not only inevitable but also valuable.
  • Ultimately, Berlin believed the cure to nationalism was more nationalism. Not, though, the closed and aggressive forms of political nationalism now simmering in the West, but the open and defensive nationalism embodied by Herder. This form of liberal or civic or constitutional nationalism, since taken up by thinkers such as Jürgen Habermas, insists on the existential importance of an individual identifying with a group defined by a common language and values. But it also insists on the existential danger of transforming this sense of belonging into the reflex of abominating other groups.

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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ESADEgeo Daily Digest, 07/11/2018

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The New York Times – The Editorial Board / The Democrats won the House. Now what?

  • With the House of Representatives in Democrats’ control, they now have to pick policy battles wisely. Many Trump-hating Democrats might be in the mood for payback, but most Americans could easily be turned off by overt political games.
  • For the midterms, Democrats adopted a trio of policy goals: lowering health care costs, creating jobs by investing in infrastructure, and cleaning up politics via a comprehensive reform package that would tighten ethics laws and shore up the integrity of the US electoral system.
  • President Trump has explicitly expressed his own support for these three causes, which gives Democrats a chance to press him about whether he is genuinely interested in making progress on these fronts.
  • First up on the Democrats’ agenda is expected to be the reform package. But they also plan to move quickly to address the plight of the Dreamers. Huge majorities of Americans support letting the Dreamers stay, and finding a compromise path with Trump would be good policy and good politics.
  • Democrats would do well to wait and see if the investigation by the special counsel, Robert Mueller, turns up high crimes and misdemeanors before deciding whether to pursue the painful and divisive path of impeachment.

The Washington Post – Aaron Blake / Winners and losers from election night 2018

  • Republicans will pitch the midterm elections as a split decision, because they gained seats in the Senate. It’s not; the Senate map was highly favorable to them, meaning that maintaining control of it was expected.
  • It may not have been a huge surprise that Republicans held the Senate, but they did it with ease, meaning Republicans can keep confirming President Trump’s judges. And it will be even easier now, given the GOP’s majority has expanded by at least a couple seats.
  • Nancy Pelosi is another winner of the night. It’s rare that a former speaker sticks around for as long as Pelosi did after losing the gavel in 2010. Now she just needs to make sure there are enough Democrats willing to vote for her to allow her to become speaker again. It will be tough to stop her.
  • Sen. Sherrod Brown (D-Ohio) easily dispatched Rep. James B. Renacci (R-Ohio). In his victory speech, Brown left little doubt he’s eyeing the next prize: a presidential run. And, given the very long list of Democrats expected to run for president, why not Rep. Beto O’Rourke (D-Tex.), who at least managed to make Texas competitive?
  • The common assumption that the economy is the most important thing at all times doesn’t make much sense when the unemployment rate is 3.7 percent and 8 in 10 voters rate the economy positively, but the party in power loses a chamber. In the end, it seems that Trump’s tough anti-immigration rhetoric did not do much to help the Republican cause.

Project Syndicate – Joseph E. Stiglitz / Can American democracy come back?

  • Democracies rightly constrain majority domination, which is why they enshrine certain basic rights that cannot be denied. But in the US, this has been turned on its head. The minority is dominating the majority, with little regard for their political and economic rights.
  • In a democratic society, the only way a minority – whether it’s large corporations trying to exploit workers and consumers, banks trying to exploit borrowers, or those mired in the past trying to recreate a bygone world – can retain their economic and political dominance is by undermining democracy itself.
  • It’s striking how difficult America makes it to vote, to exercise the basic right of citizenship. The US is one of the few democracies to hold elections on a workday, rather than a Sunday. Moreover, the system of mass incarceration that continues to target African-Americans was designed to deny those convicted of a crime the right to vote.
  • America’s ideals of freedom, democracy, and justice for all may never have been fully realized, but now they are under open attack. Democracy has become rule of, by, and for the few; and justice for all is available to all who are white and can afford it.

Financial Times – Henry Paulson / We are living in an age of unprecedented risks

  • Over the course of my 50-year career, with the exception of the 2008 financial crisis, I have never seen the public and private sectors buffeted by so much risk. In the past, successful companies could navigate through them. Now, politics threatens to disturb the foundations of the global system.
  • The most apparent risk is the power of populism and nationalism in advanced democracies. A second risk of regulatory chaos has already begun to constrict opportunities for cross-border transactions. And a third risk is the increasingly elastic definition of “national security”.
  • Governments, meanwhile, confront unprecedented business risk because the private sector generates so much disruptive innovation. Communication and data flowing through privately controlled platforms have enabled social and political mobilization that challenges the state’s role.
  • Moreover, competition for capital investment has sharpened: businesses play countries off against each other, enticing them to offer incentives. This risks a race to the bottom in which corporate profits determine policies.

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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ESADEgeo Daily Digest, 06/11/2018

Pipeline, Pipe, Gas, Industry, Oil, Fuel, Technology

Politico – Anca Gurzu / The Franco-Spanish ghost gas pipeline

  • Despite enthusiasm in Brussels to try for a second time to build the pipeline, opposition to the €3.1 billion project known as MidCat is mounting. The main problem? According to French regulator CRE, most of the costs will be borne by France but the bulk of the benefits will go to Spain.
  • Project promoters say the pipeline is needed to boost regional energy security and help the EU better integrate its gas market. Opponents argue it’s a waste of money in an area already well-supplied with gas and ill-suited to the EU’s efforts to cut greenhouse gas emissions.
  • MidCat was initially pitched as part of the broader EU effort to reduce the bloc’s dependence on Russian energy imports by shipping more gas from the Iberian peninsula to the rest of Europe, but Russian gas would also flow from France down to Spain. The full project would approximately double the amount of gas that can flow between the two countries.
  • Teresa Ribera, Spain’s minister for ecological transition, said she tends to be “extraordinarily cautious” about new gas investments until Spain figures out how much it can rely on gas in the long run, since it is a transition fuel to a greener energy future.

Financial Times / What the midterms will mean for US policy: three scenarios

  • If Democrats take the House and Republicans keep the Senate: the path to congressional approval of the USMCA trade deal with Mexico and Canada would become more complicated, there might be an opportunity to pass a bill to protect Dreamers, further tax reform may be difficult, and Democrats would push for more probes into President Trump’s relations with Russia.
  • If Republicans keep the House and Senate: USMCA would pass Congress with little trouble in 2019, there might be further rounds of US tariffs against China, Trump would cajole his party to take up some of his hardline immigration proposals, the GOP would seek to extend the lifespan of its tax reductions and potentially add fresh cuts to its existing reforms, and Trump would feel emboldened in his hawkish and militaristic approach to foreign policy.
  • If Democrats take the House and Senate: Trump could have a major stand-off with Congress over USMCA, the border wall will not be built, there would be talks on a comprehensive immigration bill, Trump’s foreign alliances would be questioned, and climate change and overseas aid could rise back up the agenda.

Brookings – Suzanne Maloney / “Sanctions are coming”— but Trump has no achievable end game for Iran

  • Even as Iranians crow that the Trump administration has failed in its bid to drive its oil exports to zero, Iran’s economy has taken a huge hit since the US withdrawal from the Iran nuclear deal. The inference for the rest of the world is clear: American financial unilateralism works, at least for now.
  • However, today the Islamic Republic benefits from more meaningful international support than at any other point in the past 40 years: a burgeoning if mutually suspicious strategic partnership with Russia, the economic and strategic opportunism of Beijing, and full-throated (if still operationally impeded) assistance from Europe.
  • If Trump wants to bring Tehran back to the table, his officials will have to outline a more realistic platform for negotiations than the wish list of wholesale surrender that the administration has been advertising to date. While the president himself has consistently touted the prospect of a new negotiating process, National Security Advisor John Bolton and Secretary of State Mike Pompeo have a long history of infatuation with the concept of regime change, which is not a reasonable near-term bet in Iran.
  • A high-stakes game of chicken between two unpredictable leaderships leaves a profoundly risky environment for oil markets and for American interests in the broader Middle East.
  • Al-Monitor / Iran to fight US sanctions but will leave door open for talks

Foreign Policy – Aaron Stein / US-Turkish ties may be cut for good in Syria

  • Last week, the US and Turkey started joint military patrols in the Syrian town of Manbij. The patrols are part of the so-called “Manbij Roadmap”, agreed by both countries last June. But the roadmap hasn’t really worked, and what happens in the city could further undermine an already strained US-Turkish relationship.
  • President Erdogan has made clear that he views Manbij as a stepping stone for clearing all YPG (People’s Protection Units) presence from eastern Syria. To underscore the point, Turkey has recently bombarded YPG positions near Manbij and elsewhere along the Syrian-Turkish border with artillery fire.
  • The US, despite having had ample public warning from the Turkish government, appears to have been caught off guard by the recent uptick in shelling, and it is struggling to respond. The Turkish attacks challenge a central assumption about the direction of the Syrian civil war: that the various front lines have hardened and that the combatants’ existing positions can be used as the basis for negotiations to end the conflict.
  • If only to prevent the Islamic State from regaining a foothold in disputed territory, it is in the US’s interest to get the Turks and Kurds to cooperate, which will require clarity about US intentions and a commitment to tackling the vexing issue of Turkish-Kurdish relations.

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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ESADEgeo Daily Digest, 05/11/2018

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Financial Times / Europe prepares for US Iran sanctions hit

  • Hours before today’s launch of a US squeeze on Iran’s energy industry and central bank, European diplomats said a planned special channel to safeguard non-US trade with Iran (the so-called Special Purpose Vehicle, SPV) would not be ready in time.
  • “We are now actively working on where the SPV will be located, deciding who will participate, and starting the process of registering it,” a French finance ministry official said.
  • The Trump administration will add more Iranian banks to its sanctions list on Monday, forcing international financial messaging system Swift to choose whether to fall in line with the US and cut the institutions from its global cross-border payment network.
  • The Belgium-based company could face possible punishment under new EU rules if it complies with US orders. Iranian analysts say that — regardless of Swift’s decision — the world’s top banks would be unlikely to handle Iranian transactions for fear of facing massive penalties.
  • European Council on Foreign Relations – Mark Leonard / The new tyranny of the dollar

Al-Monitor – Jack Detsch / Middle East upheaval casts a shadow over ‘Arab NATO’

  • The two-week-long “Shield of the Arabs I” exercise that started in Egypt on Saturday brings together troops and advisers from eight Arab nations (Egypt, Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Jordan, Lebanon and Morocco) in a glimpse of the joint strength of the region’s most powerful militaries.
  • The Middle East Strategic Alliance (MESA), Washington’s name for a repeatedly delayed military consortium first floated by Saudi Crown Prince Mohammed bin Salman and aimed at countering Iran, remains slated for a delayed January rollout but could face another postponement.
  • A US official told Al-Monitor that the Trump administration hopes to see a resolution to the diplomatic row between Qatar and its Gulf neighbors before the alliance is formalized.
  • The long-delayed MESA pact may face more trouble getting off the ground in the coming months, as the US administration pushes for a UN-backed cease-fire in Yemen and a full probe into the killing of Saudi journalist Jamal Khashoggi.

South China Morning Post – Minnie Chan / Chinese warship crew says ‘good morning’ to Japanese helicopter carrier sailors in South China Sea

  • The crew of a Chinese warship sent a friendly greeting to Japanese sailors aboard a helicopter carrier they encountered in the South China Sea recently in what analysts said was a further sign, albeit superficial, of the warming ties between the two Asian giants.
  • The sentiment was in stark contrast to that of a message sent in August by the People’s Liberation Army – China’s military – to the crew of a US Navy P-8A Poseidon reconnaissance plane flying over the Spratly Islands in the disputed waterway, which said simply, “leave immediately”.
  • Despite the improvement in relations between Beijing and Tokyo, and the “historic turning point” achieved by the visit to China of Japanese Prime Minister Shinzo Abe last month, naval expert Li Jie said the PLA Navy would continue to keep a close eye on Japanese military vessels in the region.
  • “The Chinese navy only sent the friendly message because the Japanese warship wasn’t in a sensitive area and was not being in any way provocative,” said Song Zhongping, a military commentator for Hong Kong’s Phoenix Television.
  • South China Morning Post – John Power & Catherine Wong / Exclusive details and footage emerge of near collision between warships in South China Sea

Project Syndicate – Interview with Angus Deaton, Barry Eichengreen, Rana Foroohar, Glenn Hubbard & Edmund S. Phelps / Trumponomics and the US midterm elections

  • Following Donald Trump’s surprise victory in the 2016 US presidential election, many economists predicted that he would usher in another global recession, despite having inherited an economy with sound fundamentals. Were those predictions wrong, or simply premature?

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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