Fulcrum Perspectives
An interactive blog sharing the Fulcrum team's policy updates and analysis.
Recommended Weekend Reads
What To Do When The START Treaty Expires, China’s Strategy for Countering the US’s New Focus on Latin America, the Economic and Geopolitical Implications of Apple’s Supply Chain, and Why Denmark Raised the Retirement Age to 70
June 6 - 8, 2025
Below is a collection of studies and articles we found particularly interesting and of likely impact on markets and public policy. We hope you find them helpful and that you have a great weekend.
The Future of Nuclear Weapons and Arms Control
No New START Franklin Miller/Eric Edelman, Foreign Affairs
The looming expiration of the New START Treaty, the only remaining bilateral nuclear arms control agreement between the United States and Russia, has focused national security experts on what comes next. At the time it was signed in 2010, New START had some advantages. But New START was written for a geopolitical landscape that no longer exists. Fifteen years later, the world has changed dramatically. Putin and Chinese leader Xi Jinping have emerged as aggressive and expansionist leaders, both dedicated to building a much more modernized and lethal nuclear weapons system.
Everything Changes but Nothing Changes: Can France Overcome Its Own Nuclear Doctrine? War on the Rocks
In a recent interview broadcast live on French television, President Emmanuel Macron said, “Ever since there has been a nuclear doctrine, Charles de Gaulle, there has been a European dimension of France’s vital interests. I have remained ambiguous on what those vital interests are…” Does France consider defending European allies part of their vital interests? Does France believe in extending a nuclear umbrella that covers Europe? These questions have been debated in France for decades, and with Russia’s aggression toward Ukraine, they have risen to a new level of focus and discussion.
Latin America
What Will China Do Next in Latin America? Ryan Berg/Foreign Policy
The second Trump administration has begun with a flurry of activity in Latin America. In the first 100 days, Secretary of State Marco Rubio visited both Central America and the Caribbean, Secretary of Defense Pete Hegseth made a visit to Panama, and Secretary of Homeland Security Kristi Noem visited both South America and Central America and Mexico. Another visit to the region by Rubio and a trip by Secretary of Agriculture Brooke Rollins are in the works. Some administration officials have characterized their approach as an “Americas First” foreign policy. The reprioritization of Latin America in the United States’ foreign policy, coupled with the high-level visits by cabinet officials, has placed China on the back foot in the region—at least temporarily. In many ways, Beijing was unprepared for the Trump administration’s considerable focus on the Western Hemisphere and its scrutinizing of countries’ relationships with China. Curiously, though, despite a revamped U.S. posture in Latin America, China appears to be sticking to a familiar bag of tricks—even as domestic challenges pare back the robustness of its offer.
Momentum for Red Tape Reform in Chile Picks Up Americas Quarterly
The decision by Chile’s government to scrap the massive Dominga copper and iron mining project in January, and the resulting court battles, have roiled debates over red tape and regulation in the country, where natural resources make up 77.6% of exports. These debates—which go far beyond the mining sector—have become a campaign issue ahead of the November general election as the business community demands lighter regulation and President Gabriel Boric defends his record and tries to forge compromises with his critics.
The War on Trees – How Illegal Logging Funds Cartels, Terrorists, and Rogue Regimes Foreign Affairs
Around the world, nefarious state and nonstate actors are extracting enormous value from forests to fund their operations. The unlawful clearing of land and the harvest, transport, purchase, and sale of timber and related commodities have long been dismissed as a niche concern of environmental activists. But this is a mistake. Although unsustainable deforestation imperils the environment, illegal logging also poses an outsize—and underacknowledged—geopolitical threat. Environmental crime constitutes a growing economic and national security threat to the United States and countries around the world. Yet Washington has largely ignored illegal logging’s role in its fight against transnational criminal organizations, drug cartels, terrorists, and rogue regimes, as well as China’s part in this illicit trade.
Geoeconomics
Why Emerging Markets Weathered Federal Reserve Tightening So Well Steven Kamin/AEI Economic Policy Working Paper Series
The steep rise in US interest rates that started in 2022 led many observers to anticipate severe difficulties for emerging market economies (EMEs). Unlike after the Volcker disinflation of the early 1980s or the bond market turmoil of 1994, however, most EMEs weathered the Fed’s monetary tightening in 2022-23 relatively well. In particular, EME dollar credit spreads, an indicator of potential financial distress, rose only moderately in those years before dropping to historically low levels in 2024. One reason that the EMEs weathered Fed tightening so well is that, simply put, Fed tightening is no longer as injurious to them as commonly believed; this likely reflects improvements in EME policies since the 1980s and 1990s that have bolstered their resilience. A second reason why EME spreads remained relatively contained in the face of rising interest rates is that US corporate credit markets remained buoyant, and their confidence spilled over to EMEs. We show that US high-yield spreads accounted for the lion’s share of the fluctuations in EME spreads over the past couple of decades, dominating not only the effects of monetary shocks but also changes in the VIX and the dollar.
Connectivity Policy – A Strategic Tool for the EU in its Eastern Neighborhood German Council on Foreign Relations
Given the shifts in the geopolitical landscape, connectivity is no longer just an economic tool – it has become a strategic instrument used for influence, resilience, and security, as China has demonstrated with its Belt and Road Initiative. The EU must understand that connectivity is central to its engagement with the Eastern Partnership (EaP) countries, where the EU faces growing competition not only from China’s BRI but also from Russia’s infrastructure dominance and Turkey’s regional ambitions. This memo explores the new momentum that connectivity has gained as a part of the EU foreign policy in the EaP and examines its significance in the emerging new regional order. It assesses whether and how connectivity can be reframed as a strategic instrument for the EU’s engagement.
Apple’s Supply Chain: Economic and Geopolitical Implications Chris Miller/Vishnu Venugopalan – American Enterprise Institute
Over the past decade, many electronics firms have talked about diversifying their supply chains. An analysis of Apple—America’s biggest consumer electronics firm—illustrates that most of its manufacturing supply chain remains in China, though there have been limited increases in Southeast Asia and India. China’s role for Apple has grown substantially. Ten years ago, Apple relied on China primarily for final assembly, while today Apple not only assembles devices in China, it also sources many components from the country. However, Chinese-owned firms generally only play a role in lower-value segments of the supply chain. Many of the higher-value components—even those made in China—are produced in factories owned by Japanese, Taiwanese, or US firms.
Immigration and Demographics
America’s Immigration Mess: An Illustrated Guide Nicholas Eberstadt/American Enterprise Institute
Immigration was a flashpoint in American politics long before President Biden’s election, but it became a major political fiasco with the Biden Administration’s mismanagement of illegal immigration. Immigration ended up being one of the top issues in the 2024 election and is widely recognized as one of the key factors contributing to the re-election of President Trump. America is poised for a very different set of immigration policies today. But wherever America aims to head with immigration policy, it is essential to guide that policy with accurate information. This illustrated guide is intended to offer a summary snapshot of America’s immigration situation today, and some of the dilemmas attending it. In this illustrated guide we collect what we take to be the most accurate data and information on a number of hotly debated questions: trends in total and illegal immigration; the Biden era migration surge and its components; immigrants’ contributions to the national economy, dependence of US social welfare benefits, and impact on the budget deficit and national debt.
Why Denmark is raising its retirement age to 70, Europe’s highest Rangvid’s Blog
The Danish parliament recently decided to raise the retirement age in Denmark to 70, effective from 2040. This decision attracted significant international attention. In this post, I will explain why the decision was made, the benefits it offers, and why, overall, the Danish pension system is strong, arguably among the best in the world. That said, it is not without its challenges.
Recommended Weekend Reads
What Is President Trump’s Golden Dome and Will It Work? China’s Investments in EU and UK Rebounded in 2024, Latin America’s Baby Bust is Coming Early, and Understanding the Two Chinas
Summer is just about here and we are hoping you are having a relaxing Memorial Day Weekend. Below are our latest recommended reads. We hope you have a wonderful Easter and a relaxing weekend. And please let us know if you or someone you know wants to be added to our distribution list.
President Trump’s Golden Dome
The Golden Dome and the New Missile Age Center for Strategic and International Studies Podcast
President Donald Trump has proposed to create a multilayered defense system capable of intercepting missiles even if they are launched from the other side of the world and even if they are launched from space. The concept includes both ground and space-based capabilities that would defend the US from attack by detecting and destroying them ahead of launch, intercepting them early in flight, halting them midcourse and stopping them in the last few moments of approaching a target. CSIS’s podcast takes a closer look at the President’s proposal and how it would be implemented, how much it will cost, and how it cannot work unless Canada is a part of it.
Golden Dome for America: Revolutionizing U.S. Homeland Missile Defense Lockheed Martin
Defense contractor Lockheed Martin hopes to be the primary builder of President Trump’s Golden Dome missile defense system. IN a recent post on their website, they offer an in-depth presentation of the multiple ways the Golden Dome, as they envision it, would be deployed in space, land, sea, and air.
Bad News for Trump’s Golden Dome: He Can’t Build it without Canada Politico
President Donald Trump left out a key detail this week when he outlined his plans for a massive missile and air defense shield over the continent: He can’t build it without Canada. And it’s not clear America’s northern neighbor wants in.
Can China’s New Stealth Tech Challenge Trump’s Golden Dome? South Morning Chian Post
Chinese scientists have unveiled a new material that could undermine the effectiveness of the new US missile defense system – known as the Golden Dome – proposed by President Donald Trump. The material may be used as a stealth material that is effective against both infrared and microwave detection and could prove suitable for high-speed aircraft and missiles.
Asian-Pacific Economics
There are Two Chinas, and America Must Understand Both New York Times
Two Chinas inhabit the American imagination: One is a technology and manufacturing superpower poised to lead the world. The other is an economy that’s on the verge of collapse. Each reflects a real aspect of China. resident Trump, as he tries to negotiate a resolution of a trade war, must reckon with both versions of America’s arch geopolitical rival. The stakes have never been higher to understand China. It’s not enough to fear its successes or take solace in its economic hardships. To know America’s biggest rival requires seeing how the two Chinas are able to coexist.
A Geo-Economic Conundrum for the Member States of ASEAN International Institute of Strategic Studies
When leaders from Southeast Asia meet at a regional summit on 26–27 May in Kuala Lumpur, the sense of imminent crisis will have lifted, given the agreement announced by Beijing and Washington on 12 May to pause for 90 days their ongoing trade dispute. Yet anxiety will still be high. Another 90-day pause – on the ‘reciprocal tariff’ schedule announced by United States President Donald Trump in April – will expire on 8 July. All ten member states of the Association of Southeast Asian Nations (ASEAN) would face significant new tariffs under the schedule, with Cambodia, Laos, Thailand, and Vietnam being the hardest hit. Vietnam, facing a 46% tariff unless it reaches a bilateral deal with the US, might have the most to lose given its increasingly prominent position in supply chains serving the US market.
Chinese Investment Rebounds Despite Growing Frictions Mecator Institute for China Studies/Rhodium Group
Chinese foreign direct investment (FDI) in the EU and UK rebounded last year for the first time since 2016: it reached EUR 10 billion, rising 47 percent from 2023. Europe remained the leading destination for Chinese investment in high-income economies, drawing 53.2 percent of all Chinese FDI in such markets. In 2024, the EU and UK’s share of total Chinese FDI also rose to 19.1 percent, the first significant increase since 2018. The growth of Chinese FDI in the EU and UK was driven by a slight recovery in mergers and acquisitions (M&A) activity and continued appetite for greenfield investment. Greenfield investment increased for the third consecutive year, rising by 21 percent year-on-year and hitting a record high of EUR 5.9 billion. 2024, five investors—CATL, Tencent, Geely, Envision, and Gotion—accounted for almost half of the Chinese FDI in Europe.
Latin America
When Recession is Not Mexico’s Biggest Problem Americas Quarterly
The “R” word is becoming increasingly popular in Mexico. On the same day that the U.S. reported a surprising quarterly GDP contraction in the first trimester of the year, data released by Mexico’s statistics institute, INEGI, showed an unexpected 0.2% quarterly economic expansion for the same period. Since this initial and seasonally adjusted reading followed a 0.6% decline in economic output in the last quarter of 2024, it appears Mexico barely escaped the curse of a so-called “technical recession” (i.e., two consecutive quarters posting negative changes). This result, however, is unlikely to settle the issue, particularly in Mexico’s polarized political climate. It can be easily argued, for instance, that the positive reading is explained by an unusually strong 8.1% growth rate posted by the volatile primary sector. This serves as a good reminder that business cycles are a more complex affair than a simple rule of thumb would suggest. More importantly, a discussion about this issue should not be Mexico’s main priority.
Latin America’s Baby Bust is Arriving Early Bloomberg
Data published in the past few weeks confirm the quick decline in the region’s fertility levels, with the number of births in Brazil falling to the lowest in close to 50 years. In Argentina, the number of newborns has almost halved in just a decade, with kindergartens struggling to find pupils. In 2024, Uruguay had more deaths than births for the fourth consecutive year. Even Bolivia, a country of traditionally large families, is about to fall below the 2.1 children-per-woman threshold necessary to keep its population constant.
The Spy Factory – Russian Intelligence’s Use of Brazil for Deep Cover Operations New York Times
For years, a New York Times investigation found, Russia used Brazil as a launchpad for its most elite intelligence officers, known as illegals. In an audacious and far-reaching operation, the spies shed their Russian pasts. They started businesses, made friends and had love affairs — events that, over many years, became the building blocks of entirely new identities. Major Russian spy operations have been uncovered in the past, including in the United States in 2010. This was different. The goal was not to spy on Brazil, but to become Brazilian. Once cloaked in credible back stories, they would set off for the United States, Europe or the Middle East and begin working in earnest. The Russians essentially turned Brazil into an assembly line for deep-cover operatives.
Geoeconomics
Unconventional Monetary Policies in Small Open Economies Jesper Lindé/Marcin Kolasa/Stefan Laseen IMF Working Papers
This paper provides a comprehensive assessment of the macroeconomic and fiscal impact of unconventional monetary tools in small open economies. Using a DSGE model, we show that the exchange rate plays a critical role to amplify the favorable impact of unconventional monetary policy while it attenuates the effectiveness of conventional fiscal policy to jointly boost output and inflation. We then use the model as a laboratory to do a case study of the Swedish Riksbank asset purchases and negative policy rates 2015-2019. We find that the Riksbank unconventional policy measures provided meaningful macroeconomic stimulus to economic activity and inflation, with the dual benefit of reducing overall government debt by about 5 percent of GDP. If conventional fiscal policy had been used to provide a commensurate output boost, inflation would have risen notably less, and the fiscal cost would have amounted to a deterioration of the government debt position with nearly 8 percent of GDP.
What Have We Learned from the U.S. Tariff Increases of 2018-19? Reserve Bank of St. Louis “On the Economy” Blog
In the summer of 2018, the normal pace of global trade encountered an important disruption: The United States increased tariffs to a wide set of imported goods from China, which included such diverse products as electronics, furniture, manufacturing equipment and aerospace components. In this way, the imposed tariffs impacted final consumption goods, intermediate inputs and capital goods used by U.S. households and firms. All told, these measures affected approximately $376 billion of Chinese exports to the U.S., or around 50% of all the country’s imports from China. The scale becomes even more remarkable when one considers that prior to this campaign, most of these goods faced tariffs of just 3% to 4% and that China was the largest trading partner of the U.S. in terms of imports.
Recommended Weekend Reads
BRICS Expansion and What Its Members Want, The Growth of Institutionalized Fraud, Hezbollah’s Latin American Networks, and Does Putin Trust Anyone in Russia Anymore?
April 4 - 6, 2025
Here are our recommended reads from reports and articles we read in the last week. With all that has happened and been written this week on Trump’s new tariff regime, we refrained from including anything on tariffs but we are assembling a special collection of research for next week. In the meantime, we hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Geoconomics
BRICS Expansion and the Future of World Order: Perspectives from Member States, Partners, and Aspirants Carnegie Endowment for International Peace
Among analysts, the significance of the BRICS expansion remains a matter of debate. On paper, “BRICS+” has the potential to become a major geopolitical and geoeconomic force. The bloc already boasts about 45 percent of the world’s population, generates more than 35 percent of its GDP (as measured in purchasing power parity, or PPP), and produces 30 percent of its oil. BRICS countries have also established an extensive and thickening latticework of intergovernmental cooperation. Many analysts, therefore, depict BRICS expansion as a watershed moment in the shift to a more egalitarian international system.
Demand for College Labor in the 21st Century Federal Reserve Bank of Cleveland
Tracing the evolution of labor demand in the United States, this Economic Commentary reveals that the disproportionate rise in relative productivity of college-educated labor that shaped the latter half of the 20th century has plateaued since 2000. Our analysis suggests that technical change in the 21st century may no longer favor college graduates, in which case further growth in the employment share of college-educated workers would likely lower the premium that college-educated workers receive compared with non-college-educated workers.
Why extracting data from PDFs is still a nightmare for data experts Ars Technia
AI has one enormous challenge. For years, businesses, governments, and researchers have struggled with a persistent problem: How to extract usable data from Portable Document Format (PDF) files. These digital documents serve as containers for everything from scientific research to government records, but their rigid formats often trap the data inside, making it difficult for machines to read and analyze.
“Industrialized Fraud” Excerpt from Stripe’s Annual Letter
Stripe published their annual letter covering a host of trends the finance company is seeing transform. But there was one shocking observation – the explosive growth of institutionalized fraud: “Fraud is a bigger drag on the global economy than you might think: one report found that fraud cost 3% of a typical online business’s revenue. Fraudulent actors today operate on an industrial scale, with teams of engineers, managers, and data analysts. (We are yet to verify whether they have HR departments. If you know, please tell us so we can give them some peer feedback.) Fraudulent actors generally target times when fraud teams are offline—we see more fraud on Saturdays, Sundays, and Mondays—but we see subtler patterns, too, like the fraudsters’ own work schedules. Fraudsters are particular about their lunch breaks.”
The Psychology of Free: How a Price of Zero Influences Decision-making Federal Reserve Bank of St. Louis
Why do we get so excited when we see the word “free”? In competitive markets, businesses use strategies to attract customers and increase sales. One effective and appealing tactic is offering something for free. Examples include “Buy one, get one free!” and “Free samples inside!” The power of “free” goes beyond just saving money; it involves psychological factors that influence our decisions without us realizing it. Free items, free shipping, and the psychological impact of “free” reveal much about social norms and human decision-making.
Americas
Hezbollah's Networks in Latin America: Potential Implications for U.S. Policy and Research Rand
Most people have no idea Hezbollah operates in Latin America. Academic literature and government reports almost universally indicate that Hezbollah's activities in the region pose potential threats to U.S. national security. However, there is a significant knowledge gap in existing assessments. In this paper, the author offers an initial exploration of Hezbollah's operational footprint in Latin America, focusing on illicit funding mechanisms, violent operations, and key operational hubs — particularly in the Tri-Border Area and Venezuela. The analysis situates these activities within the broader context of Iran's regional diplomatic, economic, and cultural activities, which partially facilitate conditions amenable to Hezbollah's operations.
Assessing Guatemala as a Nearshoring Destination Center for Strategic and International Studies
Guatemala’s geographic proximity to the United States and Mexico gives it an advantage when trying to lure North American businesses seeking to shorten and strengthen their supply chain routes. The country, which has the United States as its largest trading partner, has the potential to leverage the nearshoring movement and attract businesses seeking alternative hubs to Mexico, especially as the Guatemalan government continues to make efforts to enhance its competitiveness, promote investment opportunities, and work on reforms to support economic growth.
Inside the President’s Daily Brief War Room Podcast
Ever wonder what goes into the President’s Daily Brief (PDB)? It’s not your average morning news. Stephanie Sellers, a former PDB briefer, is currently the Central Intelligence Agency (CIA) Representative to the U.S. Army War College and the General Walter Bedell Smith Chair of National Intelligence Studies. She joins host Ron Granieri to share her experiences and describes the job as trying to keep up with “17 different soap operas at once.” This crucial intelligence update is delivered to the president and other senior government leaders, shaping their understanding of critical issues. Sellers, who previously worked on missile systems for the Navy, joined the CIA after 9/11 out of a desire to continue to serve her country and to use and grow her technical and leadership skills in new and exciting assignments. Her journey to becoming a PDB briefer was fueled by a desire for challenge and the opportunity to work at “the nexus of intelligence and policy.”
Russia, China, North Korea, the US, and the Ukraine War
On a spring morning, two months after Vladimir Putin’s invading armies marched into Ukraine, a convoy of unmarked cars slid up to a Kyiv street corner and collected two middle-aged men in civilian clothes. Leaving the city, the convoy — manned by British commandos, out of uniform but heavily armed — traveled 400 miles west to the Polish border. The crossing was seamless, on diplomatic passports. Farther on, they came to the Rzeszów-Jasionka Airport, where an idling C-130 cargo plane waited. The passengers were top Ukrainian generals. Their destination was Clay Kaserne, the headquarters of U.S. Army Europe and Africa in Wiesbaden, Germany. Their mission was to help forge what would become one of the most closely guarded secrets of the war in Ukraine.
Auditing the Auditors: Does Putin Trust Anyone Now? Carnegie Politika
A new type of Russian bureaucrat has emerged in recent years: those appointed by President Vladimir Putin to oversee certain agencies or sectors and keep an eye on the officials formally in charge—even those who ostensibly enjoy the Kremlin’s trust. These “auditors” can now be found everywhere: from the Russian delegation conducting negotiations with the United States to the Defense Ministry, the Emergencies Ministry, and the presidential administration. While these appointments help to reassure Putin that he remains in control, they also threaten to undermine the viability of Russia’s power vertical. It’s recently become clear, however, that the president does not trust even long-serving officials and has decided to create a new tier of bureaucracy to oversee them.
Can Trump Channel Nixon to Turn Russia Against China? Carnegie Politika
The Trump administration has been quite open about why exactly it wants to get into bed with Moscow: it believes closer ties will prize Russia away from China, which it sees as the real existential threat to the United States. A previous U.S. president—Richard Nixon—came up with a similar plan at the beginning of the 1970s. The only difference is that Nixon’s plan was supposed to work the other way around: improving relations with China to isolate the Soviet Union. Back then, the U.S. strategy worked—more or less. Donald Trump’s modern-day imitation of Nixon, however, is unlikely to succeed.
China and Russia’s strategic relationship amid a shifting geopolitical landscape Brookings Institution Commentary
The geopolitical landscape is shifting at a breakneck pace, raising urgent questions about how the China-Russia strategic relationship—both with each other and with the United States—might evolve, and what this means for the war in Ukraine and the broader global order. In the conversation that follows, four experts—Aslı Aydıntaşbaş, Angela Stent, Tara Varma, and Ali Wyne—join Patricia Kim to unpack these critical developments. They explore topics ranging from the consequences of a potential U.S.-Russia reset or a “reverse Nixon” strategy, to China’s evolving strategic calculus, the future of the China-Russia-North Korea-Iran “axis,” and Europe’s uncertain path forward. Join us as we delve into what’s at stake for Washington, Beijing, and the world.
Russia-China-North Korea Relations: Obstacles to a Trilateral Axis Foreign Policy Research Institute
This paper begins by examining the history of Russia-China-North Korea interactions, highlighting Sino-Russian differences in emphasis regarding North Korea prior to the full-scale war in Ukraine. To assess whether a trilateral axis formed after 2022, the paper examines evidence of institutionalized cooperation, coordination of Chinese and North Korean military aid to Russia for Ukraine, and Russian and Chinese expert perspectives. The paper then addresses the obstacles to the formation of a trilateral axis. Although authoritarian states share an overriding interest in regime security and political survival, this does not necessarily mean that we should expect solidarity among similarly disposed regimes or believe that they would inevitably form an anti-Western axis. Considerable research has been done on the reasons why authoritarian states choose to support one another, but it is important to understand what factors might limit their cooperation. This paper examines how the historical experience of trilateralism, reputational concerns, foreign policy considerations, and domestic factors make a new China-Russia-North Korea axis unlikely.
Recommended Weekend Reads
Guides to Understanding Trump’s Trade and Foreign Policy, What the EU Must Do to Build Up Their Defense Capabilities, the US Workforce Challenge, and Why China Isn’t the Obvious Winner in Latin America
March 28 - 30, 2025
Understanding Trump's Trade and Foreign Policy
A User’s Guide to Restructuring the Global Trading System Stephen Miran/Hudson Bay Capital
Stephen Miran is one of President Donald Trump’s top economic advisors. He chairs the White house Council of Economic Advisors. He is also the author of a 41-page memo – more a blueprint - that lays out what can be achieved by what is being billed as a “Mar-A-Lago Accord” which would revise the framework for the global financial system.
Trump, Strategy, and Mercantilism School of War Podcast
Walter Russell Mead, Alexander Hamilton Professor of Strategy and Statecraft at the University of Florida's Hamilton Center and columnist for The Wall Street Journal, joins the show to talk about the role of economic issues in Trump’s strategic views. They discuss Mercantilism and physiocracy, the role of Silicon Valley, the dollar, coalitions, tariffs, China, and what President Trump thinks about all of it.
Annual Threat Assessment of the U.S. Intelligence Community Office of the Director of National Intelligence
In this year’s public annual report – the first of the new Trump Administration and under the oversight of new DNI Tulsi Gabbard- the DNI points out the following: Both state and nonstate actors pose multiple immediate threats to the Homeland and U.S. national interests. Terrorist and transnational criminal organizations are directly threatening our citizens. Cartels are largely responsible for the more than 52,000 U.S. deaths from synthetic opioids in the 12 months ending in October 2024 and helped facilitate the nearly three million illegal migrant arrivals in 2024, straining resources and putting U.S. communities at risk. A range of cyber and intelligence actors are targeting our wealth, critical infrastructure, telecom, and media. Nonstate groups are often enabled, both directly and indirectly, by state actors, such as China and India as sources of precursors and equipment for drug traffickers. State adversaries have weapons that can strike U.S. territory, or disable vital U.S. systems in space, for coercive aims or actual war. These threats reinforce each other, creating a vastly more complex and dangerous security environment. Russia, China, Iran and North Korea—individually and collectively—are challenging U.S. interests in the world by attacking or threatening others in their regions, with both asymmetric and conventional hard power tactics, and promoting alternative systems to compete with the United States, primarily in trade, finance, and security.
The EU’s Move to Build Up Its Defense Capabilities
Joint White Paper for European Defense Readiness 2030 European Commission
From the paper’s introduction: The international order is undergoing changes of a magnitude not seen since 1945. These changes are particularly profound in Europe because of its central role in the major geopolitical challenges of the last century. The political equilibrium that emerged from the end of the Second World War and then the conclusion of the Cold War has been severely disrupted. However much we may be wistful about this old era, we need to accept the reality that it is not coming back. Upholding the international rules-based order will remain of utmost importance, both in our interest and as an expression of our values. However, a new international order will be formed in the second half of this decade and beyond. Unless we shape this order – in both our region and beyond – we will be passive recipients of the outcome of this period of interstate competition with all the negative consequences that could flow from this, including the real prospect of full-scale war. History will not forgive us for inaction.
Defending Europe without the US: first estimates of what is needed A Joint Publication of Bruegel and the Kiel Institute for the World Economy
Europe could need 300,000 more troops and an annual defense spending hike of at least €250 billion in the short term to deter Russian aggression. From a macroeconomic perspective, a debt-funded increase in defense spending should boost European economic activity at a time when external demand may be undermined by the upcoming trade war (Ilzetzki, 2025; Ramey, 2011), though yields and inflation may rise. Ilzetzki (2025) argued that defense spending can also positively contribute to long-term growth via innovation, but a precise quantification of such effects is still needed.
The Case for Europe Strategic Europe
By choosing to vote against a United Nations resolution marking the third anniversary of Russia’s invasion of Ukraine, the United States seems intent on abandoning its leadership of the West after eighty years of hegemony. Europe is going through its gravest hour since the Second World War—and most Transatlanticist political leaders are starting to realize it. At best, Europe will have to defend its territory alone and take responsibility for deterrence. At worst, it will have to fend off great powers actively seeking to subvert it as they assert their respective spheres of influence. This could involve political interference, economic coercion, and open aggression, tearing Europe apart. Europe’s choice lies in between these two scenarios. Rather than predict success or failure, it is worth outlining the building blocks that make the case for a stronger Europe possible and the pitfalls this vision could run into.
Germany’s big spending splurge gives EU the jitters Politico Europe
European Union governments have expressed fears that the radical spending plans announced by Germany’s chancellor-in-waiting will end up skewing the bloc’s single market and could give the country an unfair competitive edge. A month on from an election that made Friedrich Merz almost certainly the next leader in Berlin, the upper house of parliament on Friday approved a historic change to the country's basic law to exclude defense investment above 1 percent of economic output from the nation’s strict spending rules, along with a €500 billion fund for infrastructure and green energy, clearing the final parliamentary hurdle. While Germany’s allies in Europe have broadly welcomed Berlin’s long-awaited loosening of the purse strings, there is a sense of unease about the impact it could have at a time when economies are still struggling to recover after the twin shocks of Covid and the Ukraine conflict, and with the looming threat of a trade war with the U.S.
Why Europe can’t defend itself: Political fragmentation is blocking autonomy Wolfgang Munchau/UnHerd
Imagine a world in which Western Europe was actually able to stick it to Vladimir Putin and Donald Trump simultaneously. As if. Back in the real world, there’s a remote possibility the Europeans might get their act together sufficiently to stand up to one, or the other. But not both. They will, in classic fashion, be split. Some of the eastern European countries, the Baltic States, for example, will prioritize a push-back against Russia. Others, like France, are more concerned with driving their independence from the US. Then there is a third group that wants neither. So, where does that leave Europe? What they are agreed on is the plan is to increase military spending. The EU will follow Germany’s example and partially exempt the defense budget from the fiscal rules. But the truth is, no amount of investment will wean the EU off its American dependency any time soon. It will take decades to close the immense defense technology gap. To build entire industries from scratch takes time. You need defense companies, supply chains, and know-how. Europe is far from the cutting edge of 21st century defense technology and its expertise in that sector has been diminished since the end of the Cold War.
Behind NATO’s 2 Percent: Measuring the True Scope of Alliance Defense Investments and the NATO Defense Deficit Mackenzie Eaglen & Cole Spiller/American Enterprise Institute
This working paper examines NATO’s military spending through two key lenses: how NATO allies measure defense expenditures and the strategic implications of the long-term defense deficit created by chronic underfunding. While 21 member states now meet the 2 percent of GDP benchmark, the alliance must look beyond numerical targets to assess whether these investments translate into real military capability.2 Closing NATO’s $2 trillion defense deficit requires greater transparency in accounting to allow for more complete analysis, as well as sustained increases in spending to build credible deterrence against rising threats.
The Changing US Workforce
Shifting Immigration Toward High-Skilled Workers Penn Wharton Budget Model
We evaluate two immigration policies that shift 10 percent of future low-skilled immigration toward either: (i) high-skilled immigrants (“HSI”) that otherwise maintains the current share of STEM workers within the high-skilled group, or (ii) only high-skilled STEM workers (“HSI STEM”) that increases the share of STEM relative to other high-skill workers. The number of total immigrants remains the same under both policies. Both policies grow the economy, reduce federal debt, and increase wages across all income groups: lower-skilled, higher-skilled non-STEM workers, and higher-skilled STEM workers. In fact, this policy change affords the rare opportunity of a “Pareto improvement” benefitting all groups.
Technology Adoption and the Changing Role and Background of Clerical Workers Federal Reserve Bank of Cleveland
From 1980 through 2015, the share of clerical jobs in the employed labor force declined more significantly in large and expensive cities than in smaller cities. Moreover, the remaining workers performing these occupations in large and expensive cities had, on average, higher education levels and were more likely to perform tasks usually done by managerial and professional personnel when compared to their small-city counterparts. In this Economic Commentary, we show how these patterns are related to the uneven adoption of information communication technologies (ICT) across geographies and discuss adoption’s impact on clerical jobs’ tasks and worker requirements.
Defensive Hiring and Creative Destruction Jesus Fernandez-Villaverde/Yang Yu/Francesco Zanetti/National Bureau of Economic Research
America has long struggled with a lack of productivity growth despite huge investment in research and development. Jesús Fernández-Villaverde, Yang Yu, and Francesco Zanetti find that the defensive hiring of researchers by incumbent firms with monopsony power reduces creative destruction, which in turn maintains the status quo and leads to stagnant productivity growth.
The Americas
China Won’t Be the Obvious Winner in Latin America Ryan Berg/Foreign Policy
After a mere two months in office, a narrative on the Trump administration’s policy toward LAC and great-power competition has emerged: Regional influence will accrue to China at the expense of the United States because Washington appears a “bully,” has talked of reviving the controversial Monroe Doctrine, and has occasionally adopted the rhetoric of territorial expansion. A deputy assistant secretary of state in the Biden administration accused the Trump administration of shortsightedness, leading to “an opening for China, made in America.” Even a former staffer in the first Trump administration worried that the current approach to LAC “could unwittingly facilitate the extension of Beijing’s influence.” Will the Trump administration’s more assertive approach toward LAC benefit China?
What Elections Mean for Canada and the Future of North America Center for Strategic and International Studies
On March 23, newly minted Canadian Prime Minister Mark Carney announced snap elections for April 28, kicking off a contest to determine Canada’s future at a critical juncture. The election pits the incumbent Liberal Party, which has received a second wind since January in part due to tariffs and political threats from the United States, against the Conservative Party under the leadership of “Canada First” politician Pierre Poilievre. No matter the outcome, however, the next leader of Canada will inherit a tense relationship with the United States, public pressure to deliver economic gains, and an increasingly fraught global security environment that impinges upon Canada’s sovereignty.
Recommended Weekend Reads
Business Strategy in a New Geopolitical Age, Chile’s Libertarian Presidential Candidate, One Moment and Two Speeches, Data Center Energy Demands, and What is the Mar-a-Lago Accord?
March 14 - 16, 2025
Below are our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Business Strategy in an Age of Heightened Geopolitical Risk
How to Strategize in an Out-of-Control World MIT Sloan Management Review
During the past few years, company strategies have been disrupted repeatedly by major shocks like the COVID-19 pandemic, the outbreak of war in Ukraine and the Middle East, and breakthroughs in generative AI. In the first months of 2025, a stream of political surprises has been impacting company agendas — and further upheavals seem likely. This turbulence is having a real impact on business: Our analysis of nearly 7,000 organizations over a 20-year time frame shows that variance in company profitability can increasingly be attributed to factors that lie beyond the company and its industry. (See “What Shapes Profitability?”) Contextual factors — like geopolitics, technology, and climate — now account for 43% of the variation in the net profit margins of public corporations.
The Indo-Pacific
Conversations: China’s Naval Flotilla and Australia’s Response Lowry Institute Podcast
Defence analyst Marcus Hellyer talks with the Lowy Institute’s Sam Roggeveen about the unprecedented appearance of Chinese warships off Australia’s east coast. What message was Beijing sending? How well did Australia’s defense force perform in response? And what are Australia‘s future options with the United States in retrenchment?
One Moment, Two Speeches Center for Strategic and International Studies
Two weeks ago, the world’s two most powerful countries witnessed a rare moment of symmetry. On March 4th at 9:00 pm US EST, President Donald Trump strode into the Capitol to give his second administration’s first address to a joint session of Congress. Meanwhile, on the other side of the planet, at 9:00 am Beijing time, Chinese Premier Li Qiang was just finishing up his speech summarizing the annual Government Work Report(GWR) to the National People’s Congress. Both are two countries’ key national annual addresses in which the executive reports on the state of the country to the legislative branch. This side-by-side moment highlights not only major differences in the political systems and political theater, but also some surprising similarities in substance as well.
Trump-ism and East Asia Global Policy/Durham University
Alastair Newton argues that Donald Trump’s abandonment of the US-led international order and efforts to reshape global trade and finance do not bode well for economies in East Asia which may find themselves forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.
Latin America
The Radical Libertarian Reshaping Chile’s Presidential Race Americas Quarterly
He’s been called the “Gabriel Boric of the right”—maybe because, like Chile’s young president, he wears a beard and made a name for himself criticizing the country’s political establishment. But Johannes Maximilian Kaiser Barents-von Hohenhagen, 49, objects to the comparison.“ Kaiser, who proudly describes himself as a “reactionary,” is now taking a turn in the spotlight after a recent poll showed him tied for the lead in October’s presidential election. He is the latest right-wing populist in Latin America to channel widespread frustration with crime, immigration and politics as usual, although his story has some distinctly Chilean twists.
Inside a Mexican Cartel ‘Extermination’ Camp: Ovens, Shoes, and Teeth Washington Post
For months, the tips had been appearing on a Facebook page. There was a mass grave hidden in a rural village outside Guadalajara, in western Mexico, the messages said. Mexico has grappled for years with a crisis of disappearances, with more than 110,000 people reported missing. Relatives of the disappeared have unearthed hundreds of graves filled with corpses. This seemed like another. But the people who ran the Facebook page — a group in Jalisco state who search for the missing — were puzzled. After getting more anonymous tips, Indira Navarro, head of the group, and dozens of other victims’ relatives arrived on March 5 at an abandoned ranch outside La Estanzuela and started poking around. They dug up three underground ovens. They found hundreds and hundreds of singed bone shards — from skulls, fingers, teeth. It was what Mexicans call an “extermination camp.” But the image that’s really stunned Mexicans was of the shoes. There were piles of them — well over 200. The camp is a sign of how much criminal groups have penetrated the Mexican economy. They don’t just traffic drugs to the United States; they extort businesses, “tax” migrant smugglers, and run vast networks of contraband goods, from gasoline to wood. Navarro’s group believes the ranch in La Estanzuela was a recruiting and training center for one such crime group. The area is dominated by one of the country’s largest cartels, Jalisco New Generation (CJNG).
American’s View of Currencies
Cryptocurrency Ownership among U.S. Households Federal Reserve Bank of St. Louis
Cryptocurrency has become more prevalent since it first entered the global economy. However, no consistent measurement of cryptocurrency ownership among American households has emerged. This blog post uses what data are available through the Survey of Consumer Finances (SCF) to estimate the distribution of cryptocurrency ownership in the U.S., finding that roughly 4.3% of Americans held such assets.
Thoughts for Your Penny? Hoover Institution
One of the concepts you come across in a well-taught monetary economics course is the idea of seigniorage. An online dictionary does a pretty decent job of defining it: “The profit made by a government by issuing currency, especially the difference between the face value of coins and their production cost.” Although the definition highlights coins, the concept applies to paper money also. The US government makes a pretty penny (pun intended) on seigniorage. It’s not as much as it used to be because more and more people use credit cards and even cryptocurrency to buy goods and services. Still, it’s a good amount. The biggest gain from seigniorage is on the $100 bill. Printing one costs the federal government just 9.4 cents.
So, when the feds spend this $100, they make a nice profit of $99.90. Not bad. Printing a $1 bill costs the feds 3.2 cents. So even on a $1 bill, the feds make 97 cents. But minting small coins loses money for the feds. In its 2024 Annual Report, the US Mint reports the cost of producing each coin denomination. The cost of producing a penny was $0.03. In other words, the cost of producing a penny was three times the value of the penny. Interestingly, the feds went underwater even on the nickel, whose cost, at $0.11, was over twice the value of the nickel. That’s why I stated earlier that the federal government should stop producing nickels also. It isn’t until you get to the dime that you find a coin that the feds make money on. Interestingly, the cost of producing a dime, at $0.045, is less than the cost of producing a nickel.
the Race for Critical Minerals and the Growing Electrical Demand for Data Centers
Who is Paying for all that data center power? Volts Podcast/Substack
In this episode, Harvard Law's Eliza Martin and Ari Peskoe unpack how data centers' skyrocketing electricity demand could leave ordinary customers subsidizing Big Tech's power bills. Most chilling is the potential alliance between utilities and tech giants that threatens to derail much-needed utility reforms while entrenching fossil-fueled infrastructure.
The Potential for Geothermal Energy to Meet Growing Data Center Electricity Demand Rhodium Group
Next-generation geothermal energy has a number of advantages in meeting growing electricity demand from data centers. This report estimates how much of this demand could potentially be served by geothermal over the next decade.
Why the U.S. Keeps Losing to China in the Battle Over Critical Minerals Wall Street Journal
The U.S.’s desperate need for critical minerals—which include resources such as nickel, lithium and cobalt in addition to graphite—has been underscored by the Trump administration’s aggressive push for greater access in Ukraine and Greenland, rattling allies. In December, Beijing said it would ban certain mineral exports to the U.S. and conduct stricter reviews of graphite sales, in response to U.S. restrictions on semiconductor exports to China. Yet with its thumb on many of the best resources, China can dictate prices. Washington’s policy flip-flops keep blowing up miners’ plans. And many Western mining companies struggle to navigate higher-risk countries where critical minerals—all needed for green technologies and national defense—are prevalent, leaving them flat-footed when unrest erupts.
The Mar-a-Lago Accord: What Is It? Will It Happen?
What is the Mar-A-Lago Accord? Apollo Academy/Apollo Capital Management
The always brilliant Torsten Slok explains is brilliantly: The US dollar is the global reserve currency because America is the most dynamic economy in the world, and the US provides stability and security. As a result, there is upward pressure on the US dollar because everyone wants to own the world’s safest asset. This safe-haven upward pressure on the dollar overwhelms the negative impact on the dollar coming from the US current account deficit. With safe asset flows putting constant upward pressure on the dollar, there is a need for a deal—a Mar-a-Lago Accord—to put downward pressure on the US dollar to increase US exports and bring manufacturing jobs back to the US. The Mar-a-Largo Accord is the idea that the US will give the G7, the Middle East, and Latin America security and access to US markets, and in return, these countries agree to intervene to depreciate the US dollar, grow the size of the US manufacturing sector, and solve the US fiscal debt problems by swapping existing US government debt with new US Treasury century bonds. In short, the idea is that the US provides the world with security, and in return, the rest of the world helps push the dollar down in order to grow the US manufacturing sector
Meeting in Mar-a-Lago: is a New Currency Deal Plausable? Atlantic Council
In 1985, finance ministers from France, Germany, Japan, the United Kingdom, and the United States came to an agreement in the Plaza Hotel in New York City to intentionally devalue the US dollar. In the five years leading up to the Plaza Accord, the US dollar had doubled in value, threatening to upend global trade and destabilize the international financial system. Today, Washington is once again chattering about the possibility of a currency deal. This time, the venue may move south for what Trump’s incoming chairman of the Council of Economic Advisers, Stephen Miran, described as a “Mar-a-Lago Accord.” In a September report, Miran declared the overvaluation of the US dollar responsible for the “roots of economic discontent.”
Mar-a-Lago Accord, Schmar-a-Lago Accord Steven Kamin/Mark Sobel/Financial Times
In recent weeks, the buzz has been mounting about a new American plan — a “Mar a Lago Accord” — to upend the global monetary system. We can only hope it remains idle chatter. In brief, based on a detailed discussion paper by CEA Chair nominee Stephen Miran, the accord would have America’s trading partners help weaken the dollar and commit to providing low-cost, long-term financing to the US government, enforced by the threat of higher tariffs or removal of security guarantees. Intriguingly, there has been no announcement by the Trump administration or even a tweet by Trump, but Miran’s paper — along with various utterances by Treasury Secretary Scott Bessent — have led Wall Street observers to believe such an initiative is indeed in the offing. And that’s too bad, because a Mar-a-Lago Accord would be pointless, ineffectual, destabilizing, and only lead to the erosion of the dollar’s pre-eminent role in the global financial system.
Recommended Weekend Reads
Why Trump Is Focused on the Panama Canal, America’s Data Center Hotspots, How Iran Lost Before It Lost, The Four Main Groups Opposing Xi Jinping, and Should We Believe the Economic Data?
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Americas
Panama: From Zoned Out to Strategic Opportunity Ryan Berg/Center for Strategic and International Studies
Since his election in November 2024, President Donald Trump has staked out strong positions on the importance of the Western Hemisphere to the United States’ national security interests. A secure, prosperous, and free Western Hemisphere underpins U.S. geopolitical and economic success. Panama is the most strategically significant geography in the Western Hemisphere. With 40 percent of U.S. container traffic passing through the Panama Canal, it rightfully drew President Trump’s attention. Trump has highlighted concerns about the status quo regarding the disposition of the canal, its operation, and People’s Republic of China (PRC)–owned ports dominating the approaches. This commentary will not relitigate the merits of the 1977 Carter-Torrijos treaty, sovereignty, or transit rates but rather highlight the strategic importance of Panama, legitimate concerns over Beijing-owned ports, and the need for sustained diplomatic engagement and U.S. private sector investment.
Trump’s Panama Canal threat revives memories of 1989 US invasion Financial Times
With US President Donald Trump this week threatening to “take back” the Panama Canal, residents who survived the battles 35 years ago are angry that they are once again at the whim of their country’s main ally. “The invasion overthrew the military dictatorship of General Manuel Noriega, who was captured, flown to the US and jailed on drug trafficking charges. Panama has been a democracy and staunch US ally ever since.
Will Trump Focus on the Western Hemisphere? The Net Assessment Podcast
The hosts get together to talk about the second Trump administration’s agenda in the Western Hemisphere. What interests does the United States have in Latin America? Should the United States be pushing back on China’s activities in the region? If so, what carrots and sticks can the United States offer countries there? And will the administration officials eager to focus on the region be able to sustain that focus, when so many other parts of the world are competing for U.S. attention?
It’s Time for a U.S.-Greenland Free Association Agreement Kaush Arha/Alexander Gray/Tom Dans National Interest
American security interests and Greenland’s economic aspirations necessitate an institutional partnership between the two. Greenland, an autonomous territory of Denmark, is part of North America in terms of aspiration and geography. It is high time Greenland’s position in North American orbit was cemented. As the world’s largest island atop the North Atlantic, it is an indispensable U.S. ally in the most proximate theatre between the United States and its NATO allies and the Russia-China authoritarian advance. American investments and markets are essential catalysts to turbocharge Greenland’s economic growth and prosperity and ensure its continued alignment with NATO as its place within the Kingdom of Denmark evolves in the years ahead. It is time for a US-Greenland Free Association.
America’s data center job hot spots Axios
President Trump has announced his support for Stargate, a massive $500 billion AI infrastructure project which, when you break it down, it all about building more data centers. But where are the data center job hotspots in America? Axios breaks it all down.
Middle East
How Iran Lost Before It Lost: The Roll Back of Its Gray Zone Strategy War on the Rocks
“Today, you can get in a car in Tehran and get out in the Dahia, Beirut.” Five years and two months after Gen. Qasem Soleimani made this statement, the Islamic Republic of Iran is in retreat. Iran’s air and ground lines of supply to Lebanon now go through Sunni-dominated Syria, where the Assad regime recently crumbled. Even if Iran could more easily get to Lebanon, Hizballah is the weakest it has been in over a generation, having been relentlessly battered by Israel. In the words of one high-ranking commander in Iran’s Revolutionary Guard Corps: “We lost, we badly lost.” Iran’s ability to deter and wage war in recent decades was largely through gray zone methods. And the structures, resources, and allies that allowed it to do this are now in tatters. But the erosion of Iran’s gray zone strategy was already happening when Assad was still in power and Hizballah loomed over Israel as a fearsome threat. Iran’s economic dysfunction and political disarray prevented it from building and sustaining resilience. This analysis highlights how Iran’s economic malfeasance, fueled by internal divisions among government stakeholders, has undermined its geopolitical ambitions and prevented it from converting regional influence into sustainable economic leverage, marking a potential turning point in its regional strategies.
Indo-Pacific
2025 could be the tipping point for India’s economic aspirations OMFIF
Amid the multiple global shifts taking place today, India stands at a critical juncture. The world’s most populous democracy faces a turbulent landscape of geopolitical rivalries, technological shifts and the urgency of climate action. The question remains: will global economic forces propel India toward leadership, or will they impede its ascent?
The Four Main Groups Challenging Xi Jinping The Jamestown Foundation
Chinese President Xi Jinping faces challenges to his authority from four main groups: 1) retired party elders such as Li Ruihuan and Wen Jiabao; 2) princelings, especially those based overseas; 3) military leaders, such as Zhang Youxia; and 4) parts of the middle and entrepreneurial classes who are voicing their discontent. Xi is unlikely to be overthrown or face a coup, but his ability to force through his agenda may be reduced. Indicators that Xi is embattled include his absence from chairing two recent high-level meetings, references to “collective leadership” the PLA Daily newspaper, and an adjustment to PRC diplomacy to a more conciliatory approach, especially toward the United States. This apparent reduction in power could be a result of the country’s bleak economic situation, which Xi’s policies from last year have not resolved.
China's Economic, Scientific, and Information Activities in the Arctic Rand Corporation
How might China's scientific, information, and commercial activities in the Arctic contribute to the country's broader security goals by enabling the collection of intelligence, allowing access to critical infrastructure, or providing other types of military advantages? China's activities in the Arctic have increased, and China's overall approach to strategic competition, which fuses the public with the private and the civilian sphere with the military, has heightened U.S. concerns that China might be on its way to becoming a security and military actor in the Arctic and that Russia is enabling this pathway. In this report, the authors present an analysis of China's economic, scientific, and information activities in the Arctic and call special attention to the intelligence collection and military risks that they might present, including the threat signals for these risks. The authors explore five categories of activities: natural resource exploitation, knowledge development, access to infrastructure, data transmission, and public diplomacy.
From Fast Lane to Gridlock: Have Chinese Car Exports Peaked? Rhodium Group
China’s auto industry has been a success story in recent years, with car exports emerging as a bright spot in an otherwise slowing economy. Between 2021 and 2024, the number of cars shipped from China surged by 300%, propelling China past Japan to become the world’s largest car exporter by units. However, this rapid growth now faces significant challenges. Trade barriers and outright bans in major markets like the US threaten to stall export momentum. Slumping export growth will put pressure on Chinese automakers, potentially leading to industry consolidation. But incumbent carmakers shouldn’t celebrate too much—even with slower export growth, Chinese carmakers are transforming into formidable global competitors in the auto market.
Geoeconomics
How German Industry Can Survive the Second China Shock Sander Tordoir/Brad Setser Centre for European Reform
Industrial production in the EU’s largest economy has been declining for over five years, a source of profound angst in a country where manufacturing contributes around 5.5 million jobs and 20 percent of gross domestic product (GDP). Germany is starting to realize that China’s new automotive, clean technology and civil aviation industrial base directly competes with Germany’s manufacturing foundation. China’s macroeconomic imbalances now directly infringe on German industrial interests. Germany, with its low debt levels and endangered industrial base, has both the policy space to act and the most to lose if it does not. But it cannot act alone against the new Exportweltmeister. As Henry Kissinger once quipped, Germany is “too big for Europe and too small for the world.”
Use of Artificial Intelligence and Productivity: Evidence from Firm and Worker Surveys RIETI Discussion Paper Series
Abstract: With the rapid diffusion of artificial intelligence (AI), its effects on economic growth and the labor market have attracted the attention of researchers. However, the lack of statistical data on the use of AI has restricted empirical research. Based on original surveys, this study provides an overview of the use of AI and other automation technologies in Japan, the characteristics of firms and workers who use AI, and their views on the impact of AI. According to the results, first, the number of firms using AI is increasing rapidly and firms with a larger share of highly educated workers have a greater tendency to use AI. Robot-using firms are also increasing, but the relationship between their use and workers’ education is weakly negative, suggesting that the impact on the labor market is different for each technology. Second, AI-using firms have higher productivity, wages, and medium-term growth expectations. Third, AI-using firms expect that while it will increase productivity and wages, it may decrease their employment. Fourth, at the worker level, more-educated workers are more likely to use AI, suggesting that AI and education are complementary. Currently, AI may favor high-skill workers in the labor market. Fifth, workers who use AI evaluate their work productivity to have increased by approximately 20% on average, suggesting that AI could potentially have a fairly large productivity enhancing effect.
Should We Believe the Economic Data or Americans “Lyin” Eyes? The Answer is Yes Scott Winship/American Enterprise Institute Center on Opportunity and Social Mobility
Many Americans are convinced the economy is ailing and that life is financially tougher today than a decade—or a generation—ago. Social media posts wax nostalgic for a long-lost era when all single breadwinners allegedly could afford a home and two cars for a family of four. Everyone seemingly knows someone who did everything they were supposed to do but is now stuck with six figures of student loan debt and a string of gig economy jobs. So, are Americans “right to believe their lyin’ eyes,” as Cass claimed in a recent op-ed titled, “Three Cheers for Economic Pessimism”? This formulation begs the question of whether American beliefs about the economy conflict with objective measures. Cass and the declensionists are no more reliable guides to those beliefs than accurate interpreters of economic data. What Americans tell surveyors is consistent with the objective data, for the most part. There has been no long-term decline in economic conditions.
The Upcoming Trump Tariffs: What Americans Expect and How They Are Responding Olivier Coibion/Yuriy Gorodnichieknko, Michael Weber
Abstract: In a recent survey, we asked Americans to tell us about what they thought would happen under Trump’s tariff policies and how this might affect their decisions. The results point toward widespread anticipation of tariffs being imposed on our trading partners, especially China, with significant expected passthrough into the prices of both imported and domestically produced goods and a general acknowledgment that American consumers will bear an important share of the cost of tariffs. In response to higher future tariffs, many Americans, and particularly Democrats, report that they would increase their purchases of foreign goods in anticipation of the upcoming tariffs and higher prices, while simultaneously trying to save more in the face of higher uncertainty about future policies. Managers’ report that their firms would become more likely to raise prices, change their mix of products and seek out alternative suppliers as the rise in tariffs approaches.
Recommended Weekend Reads
20 Trends to Watch in 2025 and 9 U.S. Political Issues that Bit the Dust in 2024, What Do Chinese Citizens Think of the Communist Party? And The U.S. Assessment of China’s Military
December 27 - 29, 2024
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
We hope you have a wonderful New Year and our warmest best wishes for a joyful and prosperous 2025!
Global Trends& Events to Watch in 2025
20 Gallup Trends to Watch in 2025 Gallup
Next month’s transfer of power in the U.S. could reshape American views on politics, the economy and societal issues. Generational shifts and technology are also driving change. Gallup lays out 20 trends they are tracking 2025 to see how Americans react to the new political landscape and how society continues to evolve.
The Real Stakes of the AI Race: What America, China, and Middle East Powers Stand to Gain and Lose Reva Goujon/Foreign Affairs
A sense that global technology competition is becoming a zero-sum game, and that the remainder of the twenty-first century will be made in the winner’s image, pervades in Washington, Beijing, and boardrooms worldwide. This angst feeds ambitious industrial policies, precautionary regulations, and multibillion-dollar investments. Yet even as governments and private industry race for supremacy in artificial intelligence, none of them possess a clear vision of what “winning” looks like or what geopolitical returns their investments will yield.
Global Summits to Watch in 2025: Priorities for a Splintering World Council of Councils
Global summits give leaders an opportunity to come together to advance solutions and prepare responses, but can they keep up with the pace at which the world’s most urgent problems are intensifying? Here is a list of the most anticipated summits set for 2025, where newly elected leaders, increased participation from the Global South and emerging powers, and reframed conversations could help answer that question.
9 Political Issues That Bit the Dust This Year Politico Magazine
The end-of-year obituary packages are publishing — remembering the people who shaped our world in ways large and small. Politico decided to do something a little bit different. This year, we asked POLITICO reporters to tell us: What are the trends in politics that died in 2024 — or that are at least heading into obsolescence?
China
Do Chinese Citizens Conceal Opposition to the CCP in Surveys? Evidence from Two Experiments The China Quarterly/Cambridge University Press
There has been a number of questions about the support among average Chinese citizens for the ruling Chinese Communist Party. In this research paper, it is noted that most public opinion research in China uses direct questions to measure support for the Chinese Communist Party (CCP) and government policies. These direct-question surveys routinely find that over 90 percent of Chinese citizens support the government. From this, scholars conclude that the CCP enjoys genuine legitimacy. However, the researchers who conducted this study found from two survey experiments in contemporary China that make clear that citizens conceal their opposition to the CCP for fear of repression. When respondents are asked in the form of list experiments, which confer a greater sense of anonymity, CCP support hovers between 50 percent and 70 percent. This represents an upper bound, however, since list experiments may not fully mitigate incentives for preference falsification. The list experiments also suggest that fear of government repression discourages some 40 percent of Chinese citizens from participating in anti-regime protests. Most broadly, this paper suggests that scholars should stop using direct question surveys to measure political opinions in China.
Military and Security Developments Involving the People’s Republic of China 2024 U.S. Department of Defense Annual Report to Congress
The Defense Department’s annual report charts the course of the PRC’s national, economic, and military strategy and offers insight into the People’s Liberation Army’s (PLA) strategy, current capabilities, and activities, as well as its future modernization goals. In 2023, the PRC continued its efforts to form the PLA into an increasingly capable instrument of national power. Throughout the year, the PLA adopted more coercive actions in the Indo-Pacific region while accelerating its development of capabilities and concepts to strengthen the PRC’s ability to “fight and win wars” against a “strong enemy,” counter an intervention by a third party in a conflict along the PRC’s periphery, and project power globally. Working-level and senior-level military-to-military channels of communication resumed following President Biden and PRC leader Xi Jinping meeting in November 2023. This report illustrates the importance of meeting the pacing challenge presented by the PRC’s increasingly capable military.
China Ousts Two Military Lawmakers as Xi’s Defense Purge Widens Bloomberg
China abruptly ousted two military lawmakers from its national parliament without explanation, as a purge of key personnel in the upper echelons of the nation’s defense establishment shows no sign of easing. Xi, China’s most powerful leader since Mao Zedong, has been intensifying his grip on the military. He ordered a reorganization of the armed forces this year, replacing the Strategic Support Force created in 2015 with three new branches. He also held the first military-political work conference since 2014, a conclave he previously used to assert his authority over the PLA.
The China-Russia relationship and threats to vital US interests Brookings Institution
This piece is part of a series titled “The future of U.S.-China policy: Recommendations for the incoming administration” from Brookings’ John L. Thornton China Center. Four leading scholars of Chinese and Russian foreign policy look at the growing alignment between the People’s Republic of China and the Russian Federation – an alliance that has significant implications for vital U.S. interests and the interests of U.S. allies and partners. Animated by shared grievances against the configuration of the international order and mutual concerns about perceived external threats, principally from the United States, the Sino-Russian partnership has deepened over the last decade across the military, economic, and diplomatic domains. Beijing and Moscow’s strategic alignment will pose a significant test for the incoming Trump administration.
Americas
Over the past ten years, cocaine has transformed Ecuador from one of South America’s most stable nations – with safer streets and higher living standards than many of its neighbors – into the most dangerous country on the continent. More than 8,000 murders were recorded last year. Victims are wide-ranging: ten volleyball players, nine shrimp fishermen, six mayors, five tourists, two state prosecutors, a presidential candidate and the leader of a political party are among those shot or assassinated since 2023. The industrial city of Durán – where much of the governing apparatus has been hijacked by mobsters – has a good claim to being the murder capital of the world; on average, someone is killed there every 19 hours.
Europe
Offensive Strategy: the EU’s Economic Security Carl Bildt/European Council on Foreign Relations
‘Economic security’ has become a Brussels buzzword in recent years, shaped by a blend of pressure from Washington and Brussels’ own protectionist instincts. In sports, playing defense rarely wins championships. The economic security agenda is defensive; it might slow the decline, but it will not reverse it. What Europe needs is a bold, offensive strategy.
Podcast Recommendation of the Week
China Considered Hosted by Elizabeth Economy, the Hoover Institution
Elizabeth Economy is arguably one of the finest China scholars out there. She now hosts a podcast sponsored by the Hoover Institution at Stanford University. that features in-depth conversations with leading political figures, scholars, and activists from around the world. The series explores the ideas, events, and forces shaping China’s future and its global relationships, offering high-level expertise, clear-eyed analysis, and valuable insights to demystify China’s evolving dynamics and what they may mean for ordinary citizens and key decision-makers across societies, governments, and the private sector.
Recommended Weekend Reads
Big Changes Are Coming to Latin America, How Russia and China Evade Sanctions Together, and How Monetary Policy Impacts U.S. National Security
October 4 - 6, 2024
Please find below our recommended reading from reports and articles we read last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Americas
It isn’t only Sheinbaum. Meet the Women Who Run Mexico Washington Post
Mexico inaugurated its first female president on Tuesday, reaching the milestone before its northern neighbor. Even if the United States elects Kamala Harris as president in November, it will lag well behind this traditionally macho country on broader gender parity. The new president, Claudia Sheinbaum, will govern with a cabinet that is half female and a Congress evenly divided between men and women. Women head the Supreme Court and central bank and run top federal ministries. Mexico has become a global leader in gender parity thanks to aggressive laws establishing quotas for women in politics and government. They have had a dramatic impact. Mexico’s legislature ranks fourth in the world for female representation, while the United States is No. 70 — just behind Iraq — according to the Inter-Parliamentary Union.
Gabriel Boric’s Unlikely Legacy Americas Quarterly
Fresh off his 2021 primary victory, President Gabriel Boric famously predicted that “if Chile was the cradle of neoliberalism, it would also be its tomb.” Three years later, his ambition to remake Chile got buried instead. Now approaching his final year in office, the former student activist often sounds less like Marxist icon Salvador Allende and more like the traditional center-left politicians he once derided. He espouses growing the economic pie, vows “mano dura” against crime, and blasts Venezuela as a dictatorship. Has Boric genuinely moderated his convictions? Or, as his less scripted remarks suggest, is this the tactic of an agile young politician biding his time?
How are the United States and China Intersecting in Latin America? Brookings Institution
Strategic competition between the United States and China is impacting how the two countries relate to each other across the world, including in Latin America. How are the United States and China approaching Latin America and where do their interests intersect? What is the character of their interactions in the Western Hemisphere—rivalry, cooperation, or something in between? And finally, should competition with China be used to motivate American policymakers to devote more attention and resources to Latin America? In this written debate, the authors address the title question with essay-length opening statements. The statements are followed by an interactive series of exchanges between authors on each other’s arguments. The goal of this product is not to reach any conclusion on the question but to offer a rigorous examination of the choices and trade-offs that confront the United States in its competition with China.
Brazil’s Largest Mafia is Entering Politics. The Government Must Act New York Times
The city of São Paulo, Brazil, is about to elect its next mayor, but the talk of the town is about a party that’s not on the ballot on Sunday: The “party of crime,” or as it’s formally known, the First Capital Command (P.C.C.). Police officials recently claimed that the criminal group moved almost $1.5 billion through fintech companies, using some funds to finance candidates around São Paulo State. And one of the front-runners for São Paulo mayor, the far-right fitness coach and influencer Pablo Marçal, is running under a small political party whose president was caught on tape bragging about his P.C.C. ties earlier this year. (The party president has denied the audio is of him, but reporters from the newspaper Folha de S. Paulo say they confirmed its authenticity with six independent sources.)
How Organized Crime Threatens Latin America Journal of Democracy
Abstract: Organized crime has emerged as the most important security threat to democratic governance in Latin America. This essay explains why Latin American democracies have been able to curb other security threats (from the military, insurgents, and oligopolists) but are struggling to contain organized crime. Organized crime possesses power assets associated with traditional security threats (military capacity, territorial control, and access to markets). But it also operates innovatively: It infiltrates and coopts the state, which makes it difficult for presidents to rely on state institutions (such as the police, the army, the courts, and prisons) to act in a unified way to fight organized crime. To date, there are no successful cases of Latin American states truly defeating organized crime. But states have means of rendering organized crime less predatory and violent.
Geoeconomics
National Security Policy as Monetary Policy: Military Means to Counter Inflation The War Room (An Online journal of the U.S. Army War College)
Although the U.S. Federal Reserve System is the only federal entity with a legal mandate to set monetary policy and manage inflation, inflation impacts every department and agency. To endure and win conflicts of the future, U.S. national security requires monetary stability and economic resilience. The U.S. military must prepare to support civil authorities and deter foreign threats from stoking harmful inflation in the U.S. economy by disrupting supply chains. Temporary trade disruptions during the COVID-19 pandemic and the 2021 Colonial Pipeline ransomware attack contributed to the surge of inflation in the post-pandemic years. In January 2022, Chairman of the Federal Reserve Jerome Powell testified before Congress that the conventional monetary policy tools of the central bank were ineffective at countering inflation driven by supply-side shocks. Since 2023, however, U.S. and allied maritime security operations in the Red Sea and the Black Sea have contributed to lowered costs associated with threatened shipping lanes, despite not defeating the threats outright. Looking ahead, the U.S. military should prepare to manage and counter even worse supply-side inflationary shocks that might arise from competition or conflict with a great power adversary.
Trade Intervention for Freer Trade Carnegie Endowment for International Peace
By targeting specific trade violations rather than balanced flows, global trade policy has been focusing on the wrong outcome. New trade rules are needed to create an international trading system in which comparative advantage allocates production.
Growth and Productivity in the Americas AEI Economic Perspective
Across the Americas, low output and productivity growth are key policy challenges. Growth expectations for many countries have fallen in recent years, with Latin America and the Caribbean especially lagging behind emerging market peers. In many cases, total factor productivity growth has been negative for decades. This is due to several structural factors, including low overall investment, low educational attainment, high informality, and inadequate infrastructure. Going forward, “nearshoring,” digitalization, and the energy transition offer opportunities to renew growth. It will be incumbent on authorities to grasp these opportunities.
When Does Federal Debt Reach Unsustainable Levels? Penn Wharton Budget Model
The Penn Wharton Budget Model (PWBM) estimates that---even under myopic expectations---financial markets cannot sustain more than the next 20 years of accumulated deficits projected under current U.S. fiscal policy. Forward- looking financial markets are, therefore, effectively betting that future fiscal policy will provide substantial corrective measures ahead of time. If financial markets started to believe otherwise, debt dynamics would “unravel” and become unsustainable much sooner.
The Political Economy of Zero-Sum Thinking S. Nageeb Ali, Maximilian Mihm, and Lucas Siga
Abstract: This paper offers a strategic rationale for zero-sum thinking in elections. We show that asymmetric information and distributional considerations together make voters wary of policies supported by others. This force impels a majority of voters to support policies contrary to their preferences and information. Our analysis identifies and interprets a form of “adverse correlation” that is necessary and sufficient for zero-sum thinking to prevail in equilibrium.
Russia, China, and Sanctions
How Western Curbs on Russian Oil Revenue Benefit China Harvard Kennedy School/Belfer Center for Science and International Affairs
Since Russia’s Invasion of Ukraine in February 2022, the United States has worked closely with the European Union (EU) and other allied nations to impose wide-ranging economic sanctions on Russian government agencies and companies as well as on individual officials and business leaders. The results are mixed. Some policies have demonstrably constrained Russia’s resources, obstructed trade, slowed investment, and blunted not only innovation but also maintenance of Western equipment. Freezing over $300 billion in Russian assets has considerably reduced Moscow’s financial maneuvering room. Denying several major Russian banks access to the SWIFT network has complicated Russia’s effort to settle transactions, as have sanctions that limit Russia’s ability to use U.S. dollars and Euros.
Is a “Shadow Fleet” of Oil Tankers Really Circumventing the Russia Price Cap? Carnegie Politika
Russia has chosen to defy the price cap by sourcing tankers and auxiliary services outside of the Western coalition. These tankers, which supposedly knowingly operate in defiance of Western sanctions, have been nicknamed the “shadow fleet.” The prevailing assumption today is that most if not all of Russian oil transported by sea is being sold outside of the price cap regime. Some of it is still carried by vessels owned by shipowners and/or insured by insurers that are subject to the price cap coalition legislation. The article covers 2,849 oil tankers, of which 735 picked up at least one cargo in a Russian port this year and is based on data collected via the ships’ automatic identification systems, which can be accessed via many ship tracking services. The vessels carried an average of 48 million barrels of oil per day (the rest most likely traveled via pipelines to the refineries).
China is Ready for War – And Thanks to a Crumbling Defense Industrial Base America is Not Seth Jones/Foreign Affairs
Amid a growing bipartisan consensus that the United States needs to do more to contain China, much of the policy debate in Washington has focused on China’s economic and technological clout. Now, given China’s economic problems—high youth unemployment, a troubled real estate market, increased government debt, an aging society, and lower-than-expected growth—some scholars and policymakers hope that Beijing will be forced to constrain its defense spending. Others go so far as to say the Chinese military is overrated, contending that it will not challenge U.S. dominance any time soon. But these assessments fail to recognize how much China’s defense industrial base is growing. Despite the country’s current economic challenges, its defense spending is soaring, and its defense industry is on a wartime footing.
Recommended Weekend Reads
How Will the U.S. Election Impact the Rest of the World? The BRICS’ Growing Power and Influence and the Geopolitics of Port Security in the Americas
September 27 - 29, 2024
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Geopolitics & the U.S. Elections
The Global Impact of the 2024 U.S. Presidential Elections Center for Strategic and International Studies
The audience for the U.S. presidential election is global and has a global impact. The election takes place at a moment when the demands of two wars in Europe and the Middle East, China’s assertiveness, and coalitions of autocratic leaders are putting unprecedented stress on the rules-based international order. These developments, as much as the election, are compelling changes in how global leaders look at their future with the United States regardless of signals of policy continuity or discontinuity from a Harris or Trump presidency. This report provides concise analysis and predictions covering the globe.
Why US-China ties will worsen regardless of the US vote Matt Gertken/Hinrich Foundation
BCA Research’s Chief Strategist Matt Gertken argues the upcoming US elections will not determine the course of US-China relations. Regardless of which party wins the elections, the superpower rivalry is set to deepen as national and economic security competition intensifies. Both Washington and Beijing are doubling down on antagonism, and trade ties will worsen in the foreseeable future.
The Growing Influence of the BRICS
BRICS Considering Petro-Yuan in next de-dollarization attempt OMFIF
Unlike the BRICS Summit in Johannesburg in 2023, which was waved off by Western observers as no real threat to the dollar, October’s summit in Kazan, Russia, is set to be ground-breaking for two reasons. First, there have been major changes since the last summit. BRICS – comprising Brazil, Russia, India, China, and South Africa – has been expanded by five important new members: Saudi Arabia, United Arab Emirates, Iran, Egypt and Ethiopia. Saudi Arabia, the world’s main supplier of petrol, has also joined Project mBridge, the Bank for International Settlements’ digital currency arrangement. The country has made comments about considering alternatives to the present dollar-based oil payments system and being open to using the Petro-Yuan for oil settlements. Second, there is Russia, a country at war with Ukraine and engaging in economic conflict against the whole Western alliance. It will use the Kazan summit as a means to push BRICS members to join this endeavor. Russia is planning a new denomination for oil, – the Petro-Yuan – its own mBridge system to pay for oil and even a common BRICS currency to reduce dependence on the dollar.
The Battle for the BRICS: Why the Future of the Bloc Will Shape Global Order Foreign Affairs
In late October, the group of countries known as the BRICS will convene in the Russian city of Kazan for its annual summit. The meeting is set to be a moment of triumph for its host, Russian President Vladimir Putin, who will preside over this gathering of an increasingly hefty bloc even as he prosecutes his brutal war in Ukraine. The group’s acronym comes from its first five members—Brazil, Russia, India, China, and South Africa—but it has now grown to include Egypt, Ethiopia, Iran, and the United Arab Emirates. Saudi Arabia also participates in the group’s activities, but it has not formally joined. Together, these ten countries represent 35.6 percent of global GDP in purchasing power parity terms (more than the G-7’s 30.3 percent) and 45 percent of the world’s population (the G-7 represents less than ten percent). In the coming years, BRICS is likely to expand further, with more than 40 countries expressing interest in joining, including emerging powers such as Indonesia.
As the United States and its allies are less able to unilaterally shape the global order, many countries are seeking to boost their own autonomy by courting alternative centers of power. Unable or unwilling to join the exclusive clubs of the United States and its junior partners, such as the G-7 or U.S.-led military blocs, and increasingly frustrated by the global financial institutions underpinned by the United States, such as the International Monetary Fund and the World Bank, these countries are keen to expand their options and establish ties with non-American initiatives and organizations. BRICS stands out among such initiatives as the most significant, relevant, and potentially influential.
Expansion of BRICS: A quest for greater global influence? European Parliament Think Tank
The official Think Tank of the European Parliament explains who the new members of the BRICS are and what this means. The BRICS decision to open the door to new members was taken at its Johannesburg summit in August 2023, sparking a debate about its growing international influence. According to estimates, BRICS+, as the organization has been informally called since its expansion, now accounts for 37.3 % of world GDP, or more than half as much as the EU (14.5 %). However, besides an increase in economic power the new members could bring potential conflicts (Saudi Arabia/Iran or Egypt/Ethiopia) into the group, making the reaching of consensus on common political positions more difficult. Since the new members would only contribute roughly 4 % to the group's cumulative GDP, the significance of the expansion should be seen beyond the purely economic effect, in the form of greater influence for the group and for developing countries as a whole within international organizations such as the United Nations, the World Trade Organization and the Bretton Woods institutions.
The Battle for the BRICS: Why the Future of the Bloc Will Shape Global Order Foreign Affairs
In late October, the group of countries known as the BRICS will convene in the Russian city of Kazan for its annual summit. The meeting is set to be a moment of triumph for its host, Russian President Vladimir Putin, who will preside over this gathering of an increasingly hefty bloc even as he prosecutes his brutal war in Ukraine. The group’s acronym comes from its first five members—Brazil, Russia, India, China, and South Africa—but it has now grown to include Egypt, Ethiopia, Iran, and the United Arab Emirates. Saudi Arabia also participates in the group’s activities, but it has not formally joined. Together, these ten countries represent 35.6 percent of global GDP in purchasing power parity terms (more than the G-7’s 30.3 percent) and 45 percent of the world’s population (the G-7 represents less than ten percent). In the coming years, BRICS is likely to expand further, with more than 40 countries expressing interest in joining, including emerging powers such as Indonesia.
Latin America
Claudia Sheinbaum and the Shadow of AMLO Americas Quarterly Podcast
Claudia Sheinbaum will take office as Mexico’s new president next week, on October 1, 2024. Often described as a technocrat, she also supports some of current President AMLO’s more controversial policies, such as the judicial reform that was just approved. In this episode, Vanessa Rubio, a professor at the London School of Economics and a former senator and deputy minister, shares what she expects from Sheinbaum’s government. Rubio argues her administration will take shape as a new blend—one that could be deemed “techno-populist.”
The Geopolitics of Port Security in the Americas Center for Strategic and International Studies Americas Program
“[T]he truth of the matter is that the People’s Republic of China is rapidly filling the vacuum created by the departure of American military forces from the isthmus [of Panama]. . . .Their presence adds to the danger of using the Colon Free Zone to purchase restricted technology with dual civilian-military use.” This sentiment would not seem out of place in a contemporary discussion of Chinese strategic advances in the Western Hemisphere. It is, in fact, more than two decades old, coming from the testimony of Dr. Tomas Cabal, then professor of business at the University of Panama, who appeared before the U.S. House Subcommittee on Domestic and International Monetary Policy on December 7, 1999.
Alternative Energy
New Battery Designs Could Lead to Gains in Power and Capacity The Economist
In their quest to build a better battery, researchers have blazed a trail through the elements of the periodic table. The earliest prototype cells ran on nickel and cadmium; successors have used everything from zinc and iron to sodium and lead. Instead of the other long-overshadowed components of cells. Those efforts are starting to pay off and several companies are looking to further radically improve the battery as we know it.
Recommended Weekend Reads
September 13 - 15, 2024
Geoeconomics
The Innovation Paradox MF Finance and Development Magazine
We've long assumed that investing more in research and development is a surefire way to spur innovation, increase productivity, and fuel job creation and economic growth. And yet, as the US dramatically expanded R&D spending over the past four decades, the opposite happened. Innovation, productivity gains, and economic expansion slowed. What went wrong?
High and Rising Institutional Concentration of Award-Winning Economists National Bureau of Economic Research/Richard Freeman, Danxia Xie, Hanzhe Zhang, Hanzhang Zhou
Abstract: We analyze the institutional clustering of award-winning researchers. We collect nearly 300,000 annual education and career affiliations of nearly 6,000 award-winning researchers across 18 major academic fields in the natural sciences, engineering, and social sciences. All fields, except for economics, exhibit a low and decreasing concentration, which suggests a trend toward decentralized knowledge production. Conversely, economics shows a high and rising concentration. We investigate potential reasons for this anomaly, including researcher mobility, reliance on physical assets, the age of fields, the role of prestige, and the influence of the United States in shaping disciplinary norms (Fulcrum Note: So, this proves economists do roam in packs? Hmmm…)
India
Can India Change Course? A Conversation with Pratap Bhanu Mehta Foreign Affairs Podcast
Pratap Bhanu Mehta, President of the Centre for Policy Research, is one of India’s wisest political observers—a great political theorist and writer as well as a fierce critic, and occasional target, of Modi and his policies. Foreign Affairs Senior Editor Kanishk Tharoor spoke with him on September 3 about what the election means for Indian democracy and where the country goes from here.
European Union
The Future of European Competitiveness: A Comprehensive Strategy for Europe Mario Draghi
Former European Central Bank President and former Italian Prime Minister was asked by EU President Ursula von der Leyen to conduct a comprehensive study on how the European Union could become more competitive with the US and China. This past week, Draghi published a 400-page comprehensive and wide-ranging report offering recommendations for ten main economic sectors. Overall, Draghi says the EU needs to invest between €750 - €850 billion per year – close to 5% of the bloc’s GDP – to stay competitive in the face of shrinking populations, the need to rapidly and massively ramp up combined defense capabilities, and offset the supply of previously cheap energy (mostly coming from Russia).
A World of Chips Acts: The Future of U.S.-EU Semiconductor Collaboration Center for Strategic and International Studies
The U.S. and the EU have each recently enacted legislation providing for an unprecedented volume of public investments in semiconductors, with the largest portion allocated to the establishment of new onshore chip production facilities. Substantial funds are also allocated to semiconductor research and development, supply chain security, and workforce expansion and training. These parallel initiatives have been prompted by an awareness in both regions of threats to economic and strategic security arising out of their dependency on foreign-made chips. The question posed by the enactment of the two Chips Acts is how such joint activities can be deepened, broadened, and leveraged by direct engagement between the United States, the European Union, and national authorities to address the vulnerabilities faced by both ecosystems.
The EU has a playbook to de-risk from China. Is it working? Brookings Institution
The European Union’s (EU) decision to raise its tariffs on Chinese electric vehicles (EVs) has prompted speculation about whether the EU and the United States could cooperatively “de-risk” from China. Much like the United States, the EU has developed a “de-risking” playbook with three goals: to protect its economy from outside encroachments, to promote its own competitiveness and resilience, and to partner with others to amplify its economy’s strengths and mitigate its vulnerabilities. In fact, the term “de-risking” was pioneered by European Commission President Ursula von der Leyen and later embraced by the Biden administration and all G7 leaders. But is it working?
China
China Decoupling Handbook: Where We Are, What To Do American Enterprise Institute/Derek Scissors
Scissors writes the case for a smaller US-China relationship keeps getting stronger, arguing that China under President Xi Jinping will not become a better partner. To achieve this decoupling, which is already underway, additional policies are needed around imports, exports (especially technology), inbound investment, outbound investment, and supply chains. In his “handbook,” Scissors details how best to carry out such policies in each area.
Why Catching Up to Starlink is a Priority for Beijing Carnegie Endowment for International Peace
China’s push to enter the satellite internet market shouldn’t come as a surprise. The Chinese Communist Party (CCP) has poured significant resources into closing the gap with America’s space-based technologies, and its efforts are starting to pay off. on August 9, a Long March 6A rocket blasted off from the Taiyuan Satellite Launch Center in the northern Chinese province of Shanxi. The rocket carried eighteen low-Earth orbit (LEO) satellites from the government-backed company Qianfan. State media hailed the launch as China’s answer to Starlink, the U.S.-based satellite internet pioneer, and the first step toward breaking America’s dominance in this market. Qianfan intends to grow its constellation to more than 600 satellites by the end of 2025 and to eventually place 14,000 satellites into orbit
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