Fulcrum Perspectives
An interactive blog sharing the Fulcrum team's policy updates and analysis.
Read Around the World in a Weekend: March 25, 2022
Please find our recommended weekend reads covering key issues and events around the world. We hope you find these informative, useful, and perhaps even fun. Please let us know if you want us to add anyone to our mailing list.
Russia/Ukraine/Belarus
OMFIF “Russia sanctions, the renminbi, and the dollars future – The red herring returns”
The author, a former senior US Treasury official, argues that with the imposition of severe financial sanctions on Russia, rumblings that China will provide Russia a lifeline, and rumors Saudi Arabia will denominate oil prices in renminbi, markets are once again abuzz about the dollar’s future global financing role. The red herring is back!
Rand Corporation “Russia’s Problems with Military Professionalization”
The internet is littered with reports of Russian soldiers seemingly stalled in convoys, deserting their units, and being unable to maintain their equipment. An effort to collect and confirm the instances of Russia's abandoned, destroyed, and captured military systems had to be terminated due to the inability of its contributors to keep up with the pace at which it is happening. While the internet is not reality, some may wonder if this is really the same Russian military that has been feared around the world for decades?
Rand Corporation “Russian Grand Strategy: Rhetoric and Reality”
First published in September 2021 (and included in an earlier Read Around the World), we thought it worthwhile to reconsider this large review and assessment of Russia’s – and Putin’s – Grand Strategy going forward.
Chatham House’s Belarus Initiative “Poll of Belarusians’ Views on the military conflict between Russia and Ukraine”
The poll, conducted between March 5-14, showed only three percent of the urban population support Belarusian troops being involved in the war on Ukraine. And a majority of them do not support Russian troops being based in Belarus as well expecting the war will have “serious socio-economic consequences” on their way of life.
United States
Defense One “State of Defense”
The daily defense publication takes an in-depth look at the state of the US Defense posture, branch by branch, in the face of growing security risks around the world.
Foreign Policy “US Grand Strategy After Ukraine”
Seven leading foreign policy strategists weigh in on how the war will shift US foreign policy in the short, medium, and long term.
AmCham EU “The Transatlantic Economy 2022”
The Transatlantic Economy 2022 presents the most up-to-date facts and figures about the economic relationship. The study includes dedicated profiles for 30+ European countries and all US states. This year’s study features new insights into how the war in Ukraine affects the transatlantic relationship, the impact of the COVID-19 pandemic, prospects for the recovery, global supply chain issues, relations with China and the transatlantic energy economy.
University of Virginia Center for Politics “Are Latinos Deserting the Democratic Party? Evidence from the Exit Polls”
One key question in American politics is the trajectory of Latino voters. Donald Trump performed better in 2020 with Latino voters than he did in 2016, particularly in places like South Texas and South Florida. However, an analysis of the longer-term trend in Latino presidential voting shows that this growing voting bloc is not necessarily trending one way or the other. Presidential incumbency appears to have a stronger influence on Latino voters than on other demographic groups.
Africa
Institute for Security Studies (South Africa) “Africa holds the answers to Europe’s wartime energy crisis”
Europe needs to swap its dependence on fossil energy from Russia with renewables from Africa. For example, Theoretically, the Sahara could supply four times the world’s current energy demand. Even a fraction of that could replace the energy from Russian gas imports. Solar can also ramp up rapidly, perhaps beating the plans to build more liquefied natural gas terminals.
Latin America
Wilson Center “China’s Investments and Land Use in Latin America”
The report argues that in order to understand the environmental impacts of China’s trade and investment in Latin America requires nuance. It focuses on multiple factors behind the environmental degradation associated with the soy, copper, beef, and pork industries: the nature of the resource, local legal frameworks, and global industry standards. The report highlights cases in which poor decision-making by both Chinese companies and Latin American countries is driving resource extraction to a tipping point.
Middle East
Carnegie Middle East Center “Only Going to Get Worse”
In this YouTube interview, the chief of water, sanitation and hygiene (WASH) at the United Nations Children’s Fund (UNICEF) discusses the growing challenge of the water scarcity situation in the Middle East and Africa.
Book Recommendation of the Week:
The Anarchy: The East India Company, Corporate Violence, And the Pillage of an Empire
(by William Dalrymple, Bloomsbury Press 2019, 552 pages)
Imagine a giant private equity firm that operates with complete impunity, no government regulation or oversight, no bounds on their greed. They take over a large swath of a foreign country and begin to mint money, figuratively and literally. And they also have their own army, which they deploy to subdue the locals whenever they complain too much.
Welcome to the East India Company, which we learn all about in the superb “The Anarchy: The East India Company, Corporate Violence, and the Pillage of An Empire,” written by William Dalrymple.
A corporate history that grabs you and gives you a vivid, and at many points, horrifying portrait of arguably the most powerful companies in history.
What makes Dalrymple’s book particularly interesting – and differentiates it from numerous other histories of the East India Company – is his deep and thorough research of Indian source material. He gives a fresh, holistic account of the Company not just from the Western perspective but also from the Indian perspective. And that is important because with it comes an illuminating portrait of the majesty and richness of the various Indian, Iranian, and Afghani dynasties that thrived – and died – during the Company’s operations.
What I found rather stunning in Dalrymple’s history of the Company is something I suspect most readers will not expect: The Company was, by and large, a rather poorly run operation. There are numerous instances of near-collapse – once almost cratering the entire British economy and forcing the collapse of multiple leading British and Continental European banks (which Dalrymple cleverly compares to the 2008 financial crisis).
But the money the Company made in the good years. Oh, the money! Staggering sums even by today’s standards. Many a poor or lower-middle-class English boy with a sense of adventure struck out to Bombay or Madras or some other balmy place in India where they Company operated, returning to London years later filthy rich (albeit, only if they survived the near constant warfare and deadly sicknesses). The most prominent of all of them being Lord Clive. Richard Clive was born in 1725, one of thirteen children to a modestly successful lawyer. He proved to be a violent, nasty boy – even running a protection racket as a teenager. With these rough skills and dangerous disposition, he journeyed to India in 1744 as a simple clerk.
I do not want to ruin Dalrymple’s extraordinary and devastating portrayal of Clive in India, but I’ll tease you with this: when all was said and done, Clive ended up being the wealthiest man in all of Europe. He became Lord Clive, 1st Baron Clive, a man so rich that his wife’s pet ferret even had its own diamond-studded necklace. But money doesn’t buy happiness, and clearly, Clive never found it. He ended up killing himself in 1774 at his massive Berkley Square mansion at the age of 49 by stabbing himself in the throat with a penknife.
This is an important book to understand how Britain gained much of its long-term wealth that survives even today and how India – once a great empire itself – was devastated by the Company and still struggles with the repercussions. It is beautifully written with countless colorful stories of battles and palace intrigue, transporting the reader to the place and a time long ago. It is indeed a great read.ke it stand out
Washington Look Forward:
March 21-25, 2022
Spring is finally in the air in Washington, and the famed Cherry Blossoms are starting to pop on the Tidal Basin in D.C. But it is going to be another busy week in Washington and internationally. Here is a quick run-down of what we are watching:
Ukraine and the Meeting of Western Leaders in Brussels and then Visit Poland: Ukraine continues to dominate Washington’s focus, particularly President Biden’s. We will see President Biden travel to Brussels for meetings Thursday and Friday with fellow NATO heads of state. He will begin Thursday with a NATO Extraordinary Summit to discuss the Russia-Ukraine conflict. In particular, the focus will be to reassess the Alliance’s long-term strategy and also take the opportunity to show strong support for the Baltic nations who are feeling increasingly at risk from Russia.
Biden will then join a meeting of the European Council Thursday and again on Friday to further discuss diplomatic efforts and the US-EU alliance. Watch for the NATO meeting and E.C. meetings to result in further sizeable commitments for increased defense and security spending by all member states.
Biden will then travel on Saturday to Poland to show solidarity with Poland, who, like the Baltic states, are feeling the risk of Russia on their border. There has been chatter of Biden then making a surprise visit to Kyiv, Ukraine, to meet with Ukraine President Zelensky – something British Prime Minister Boris Johnson apparently expected to do later this week. We note the Prime Ministers of Poland, the Czech Republic, and Slovakia made such a trip to Kyiv last week. However, the White House has said the President “has no plans” to make such a dangerous trip, but we will closely watch if this changes.
Is Congress Getting Closer to Passing the CHIPS Act?: We have written previously about this critical piece of investment legislation and how it has struggled for focus and passage in both the House and Senate. To briefly recap, the bill has seen four previous iterations but has languished in Congress for a variety of odd reasons.
However, Senate Majority Leader Chuck Schumer (D-NY) filed motions late Friday for the Senate to take up the House version of the bill (H.R. 4521) this week. The bill would shower tens of billions of dollars on the semiconductor industry to encourage re-shoring of semiconductor chip manufacturing to the U.S. as well as pouring tens of billions of more money on R&D efforts to grow and expand the U.S. technology base. The legislation is seen by both Democrats and Republicans as a means of competing more strongly versus China, and we expect the final product will garner considerable bi-partisan support.
But, with all things Congress, there is one potential sticking point: Several Democratic senators want to include a provision that would give the Federal Maritime Commission more power to regulate large container ships to help “fix” the supply chain challenges out there. There will likely be considerable push-back on this provision from those who do not see the container shipping industry as the culprit to supply chain issues and growing inflation.
The big question we have is around timing. Whatever the Senate ends up passing this week after amendments are added will be different than what the House passed last month, meaning the two chambers will have to iron the differences in a conference session in the coming weeks and maybe months. We believe they are much closer to an agreement than further apart, thus the conference negotiations will likely be short. We will keep you updated.
Russia is about to Lose Normal Trade Relations with the U.S.: Late last week, the House passed legislation revoking Russia’s Normal Trade Relations with the U.S. What does that mean with all the heavy sanctions already in place on Russia? Not much. President Biden would be empowered to bring hefty tariffs on Russian goods and services. But considering the fact Biden has already banned the import of Russian energy, seafood, alcohol, and luxury goods, this may be less impactful than meets the eye.
Supreme Court Confirmation Hearings: This week, Congress will be primarily focused on the confirmation hearing of Judge Ketanji Brown Jackson for the Supreme Court. The hearings kick off today (Monday). Unlike the last few Supreme Court nominations, we do not expect this one to be very controversial. By and large, Republicans seem much more at ease with Judge Jackson’s nomination for two reasons 1) she is clearly qualified, and; 2) she is replacing a liberal justice, not a conservative one. Therefore the balance of the Court is not being altered. Our guess is the full Senate confirms her in the next two to three weeks – and three or four Republican senators will vote for her confirmation.
We hope this helps you get a general perspective of what is going on in Washington this week. Please let us know if you have any questions.
Fulcrum Macro Advisors’ Read Around the World in a Weekend: March 18, 2022
Russia/Ukraine War
The New Yorker “The Weakness of the Despot”
New Yorker Editor David Remnick interviews Stephen Kotkin who is considered one of the greatest scholars on Stalin and Russian history. They discuss Putin, Stalin, and the West and why Putin decided to invade Ukraine.
Foreign Affairs “The End of Globalization”
Peterson Institute for International Economics President Adam Posen writes on what Russia’s War in Ukraine means for the world economy.
Center for Strategic and International Studies “Cryptocurrency’s Role in the Russia-Ukraine Crisis”
Since Russian forces invaded Ukraine on February 24, the United States and its partners have levied an unprecedented series of sanctions on Russia. These efforts have raised questions, including in Congress, about whether cryptocurrencies can be used by Russian actors to bypass sanctions. More broadly, the Russia-Ukraine crisis comes at a time when policymakers are trying to decide how to regulate digital assets.
Carnegie Endowment for International Peace “Moscow’s Southern Accent?”
The Ukraine war will reshape Russia’s influence in the Middle East, the Mediterranean, and Africa where they have long been active politically, economically, and militarily.
American Purpose “Preparing for Defeat”
Scholar Francis Fukuyama writes that he believes Russia is “heading for outright defeat in Ukraine” and “the collapse of their position could be sudden and catastrophic” and the West needs to be ready.
Center for European Policy Analysis “The Suwalki Corridor”
The Suwalki Corridor, a 65-kilometer-wide strip of territory linking Poland with Lithuania, is NATO’s most vulnerable chokepoint along its eastern flank. In the event of a conflict between Russia and NATO, Russia’s military—operating from the Kaliningrad exclave and from Belarus—could attempt to close the Suwalki Corridor and incapacitate NATO as a security provider for its three Baltic members.
China
Foreign Affairs “Xi Jinping’s Faltering Foreign Policy”
Chinese President Xi Jinping has a problem: His foreign policy plans are now at risk because of Russia’s invasion of Ukraine. An expert explains.
United States
Gallup Polls “Americans Still Pro-Israel, Though Palestinians Gain Support”
Americans continue to express greater sympathy for the Israelis than the Palestinians in the Middle East conflict, as they have throughout Gallup's trend -- 55% now sympathize more with the Israelis and 26% with the Palestinians
Latin America
Foreign Policy “Washington Must Respond to China’s Growing Military Presence in Latin America”
Colombia’s designation as a major non-NATO ally comes at a critical moment as China continues to press its sphere of influence across the Southern Hemisphere.
Center for Strategic and International Studies “Russian Invasion of Ukraine Force a Rethink about Russian Presence in the Americas”
Given the global revulsion toward Russia’s unprovoked invasion of Ukraine, governments in Latin America and the Caribbean should rethink their relationship with Russia The brutality of this invasion should make Argentina and Brazil, two countries flirting with Putin, think twice about a deeper partnership with the Kremlin. The rest of the region should see Russia’s invasion as a wake-up call and reduce their ties in the coming weeks and months.
Africa
“Mali Magic: The Digitized Manuscripts of Timbuktu Dating Back to the 16th Century”
An amazing interactive experience: Mali Magic, a collaboration among Google Arts & Culture and a number of local and international organizations, allows users to read thousands of documents. Once, long ago, the city of Timbuktu was once an economic hub for trade on the continent and a center of learning. During a 10-month occupation in 2012, Timbuktu was taken over by rebel groups, where thousands of priceless ancient manuscripts came under threat and more than 4,000 were either burned or stolen by jihadis. Malian librarians and their assistants secretly transported hundreds of thousands of volumes into family homes in a bid to save them from destruction. Through those efforts, some 350,000 manuscripts from 45 libraries across the city have been kept safe.
Terrorism
Carnegie Endowment for International Peace “The Insurgency of ISIS in Syria”
Since the “defeat” of ISIS in Syria in 2020, the Islamic State has morphed into a non-spatial insurgency capable of conquering territorial boundaries. For ISIS, their rural insurgency and desert combat is no less important than urban warfare as a means of achieving its objectives and ensuring its resurrection which now has an estimated 24,000-30,000 recruits.
Global Markets/Commodities
IMF Blog “War-Fueled Surge in Food Prices to Hit Poorer Nations Hardest”
Global food prices are poised to keep climbing even after jumping to a record in February, placing the heaviest burden on vulnerable populations while adding to headwinds for the global economic recovery. Food commodity prices rose 23.1 percent last year, the fastest pace in more than a decade, according to inflation-adjusted figures from the United Nations Food and Agriculture Organization. February’s reading was the highest since 1961 for the gauge tracking prices for meat, dairy, cereals, oils, and sugar.
Book Recommendation of the Week:
The Twilight Struggle: What the Cold War Teaches Us About Great-Power Rivalry Today
(By Hal Brands, Yale Univeristy Press, January 2022, 318 pages)
The Cold War is a distant memory for many of us of a certain age and nothing more than a textbook history lesson for the rest of us under the age of 40. But now, in the wake of Vladimir Putin’s brutal and bloody onslaught against Ukraine amid our collective prolonged worry and apprehension about an increasingly aggressive China, many seem to be struggling to understand what it will take to keep the peace. History can and will guide us, so we go back to the history books for guidance and enlightenment.
The first place we should start is with Hal Brand’s latest book. Brands, a noted Cold War historian and former Pentagon advisor, presents an illuminating and richly researched lesson of how the US dealt with the challenge of the Cold War – that “Twilight Struggle” the West fought from the end of World War II until 1991 when the Soviet Union dissolved itself. Brands gives us a crisp examination of the many successes, and more than a few missteps US leaders experienced during these anxious years. Ultimately, it was the power of ideas and free markets brought the West victory against a hollowed-out Communist empire – but it took extraordinary work, innumerable policies and programs, and a willingness to stand strong that won the peace.
Brands ventures deep into those many challenges, strategies, and tactics the Cold War American Presidents, beginning with Truman to ending with Reagan and Bush, took up to win that “Twilight Struggle.” To be fair to potential readers, this is not light reading. But it is an excellent read for those fascinated by Cold War history. For everyone else who picks up this book, it is something of an incredibly well-timed primer for what it will likely require from all of us to strenuously defend freedom and democracy as we know it once again.
The Twilight Struggle, Then and Now
The Cold War is a distant memory for many of us of a certain age and nothing more than a textbook history lesson for the rest of us under the age of 40. But now, in the wake of Vladimir Putin’s brutal and bloody onslaught against Ukraine amid our collective prolonged worry and
apprehension about an increasingly aggressive China, many seem to be struggling to understand what it will take to keep the peace. History can and will guide us, so we go back to the history books for guidance and enlightenment. The first place we should start is with Hal Brand’s latest book. Brands, a noted Cold War historian, and former Pentagon advisor, presents an illuminating and richly researched lesson of how the US dealt with the challenge of the Cold War – that “Twilight Struggle” the West fought from the end of World War II until 1991 when the Soviet Union dissolved itself. Brands gives us a crisp examination of the many successes, and more than a few missteps US leaders experienced during these anxious years. Ultimately, it was the power of ideas and free markets that brought the West victory against a hollowed-out Communist empire – but it took extraordinary
work, innumerable policies and programs, and a willingness to stand strong that won the peace.
Brands ventures deep into those many challenges, strategies, and tactics the Cold War American Presidents, beginning with Truman to ending with Reagan and Bush, took up to win that “Twilight Struggle.” To be fair to potential readers, this is not light reading. But it is an excellent read for those fascinated by Cold War history. For everyone else who picks up this book, it is something of an incredibly well-timed primer for what it will likely require from all of us to strenuously defend freedom and democracy as we know it once again.
Read Around the World in a Weekend: March 11, 2022
Russia/Ukraine
> Rice University’s Baker Institute for Public Policy “Reroute, Reduce, or Replace? How the Oil Market Might Cope with a Loss of Russian Exports After the Invasion of Ukraine”
This paper examines the potential for disruptions and possible direction of change in Russia’s participation in the global oil market, and in the market itself. For a companion discussion of the natural gas dimensions of this issue by the Center for Energy Studies, please see “Strategic Response Options If Russia Cuts Gas Supplies to Europe” (February 2022).
> Pew Research Center “Split between Ukrainian, Russian Churches Shows Political Importance of Orthodox Christianity”
The recent decision by the Ukrainian Orthodox Church to split from its Russian counterpart after more than 300 years of being linked reflects not only the continuing military conflict between the two countries in recent years but also the important political role Orthodox Christianity plays in the region
> Politico EU “Russian Military’s Corruption Quagmire”
Bogged down in Ukraine, Russian forces battle the consequences of systemic sleaze. This article references a Transparency International report detailing the corruption in Russia’s defense sector. You can access that report HERE.
> BBC “Ukraine: Why so many African and Indian students were in the country”
Ukraine was home to over 76,000 foreign students, according to government data from 2020. Nearly a quarter of the students were from Africa, with the largest numbers coming from Nigeria, Morocco, and Egypt. India easily accounts for the highest portion with over 20,000 students. Why were there so many foreign students in Ukraine?
United States
> Office of the Director of National Intelligence “2022 Annual Threat Assessment of the US Intelligence Community”
This assessment focuses on the most direct, serious threats to the United States during the next year. The order of the topics presented in this assessment does not necessarily indicate their relative importance or the magnitude of the threats in the view of the IC. All require a robust intelligence response, including those where a near-term focus may help head off greater threats in the future, such as climate change and environmental degradation.
> Federal Reserve Bank of New York “Cyber Risk and the US Financial System: A Pre-Mortem Analysis”
The New York Fed models how a cyber-attack may be amplified through the U.S. financial system, focusing on the wholesale payments network. We estimate that the impairment of any of the five most active U.S. banks will result in significant spillovers to other banks, with 38 percent of the network affected on average. The impact varies and can be larger on particular days and geographies. When banks respond to uncertainty by liquidity hoarding, the potential impact in forgone payment activity is dramatic, reaching more than 2.5 times daily GDP. In a reverse stress test, interruptions originating from banks with less than $10 billion in assets are sufficient to impair a significant amount of the system. Additional risk emerges from third-party providers, which connect otherwise unrelated banks, and from financial market utilities.
> Lloyd’s of London & Cambridge’s Centre for Risk Studies “Cyberattack on US Power Grid Could Cost Over $1 Trillion”
The report examines scenarios in which hackers crash sections of the US power grid in 15 states and Washington, DC – an attack that could leave 93 million people in the dark. The report claims that the blackout would result in a “rise in mortality rates as health and safety systems fail; a decline in trade as ports shut down; disruption to water supplies as electric pumps fail and chaos to transport networks as infrastructure collapses.” In the end, the damage to the US economy would be anywhere from $243 billion to $1 trillion depending on the scenario. It estimates that insurance claims related to the blackout could range between $21.4 billion to $71.1 billion depending on the severity of the attack.
> Pew Research Center “Majority of Workers Who Quit a Job in 2021 Cite Low Pay, No Opportunities for Advancement, Feeling Disrespected”
The COVID-19 pandemic set off nearly unprecedented churn in the U.S. labor market. Widespread job losses in the early months of the pandemic gave way to tight labor markets in 2021, driven in part by what’s come to be known as the Great Resignation. The nation’s “quit rate” reached a 20-year high last November.
Italy
> European Council on Foreign Relations “Italy’s Challenging Divorce from Russia”
Russia’s war on Ukraine has prompted urgent changes in Italian foreign policy. Rome’s efforts to distance itself from Moscow are creating major challenges at home.
Tunisia
> Carnegie Middle East Center “Becoming Toast”
The Ukraine conflict has led to a sharp increase in global energy and wheat prices, exacerbating Tunisia’s fragile economic situation. Tunisians had already been suffering from delays in the payment of public-sector salaries and shortages of wheat, medicines, sugar, and sunflower oil. Egypt is facing similar challenges, too.
China
> National Defense “Algorithmic Warfare: China Outpacing US in Key Science Metrics”
China is pulling ahead of the United States when it comes to key indicators of science and engineering prowess, the National Science Board is warning. The nation is falling behind China in important areas such as growth in research-and-development investment, the manufacturing of critical emerging technologies, and patents for innovative systems, according to the National Science Board’s “State of U.S. Science and Engineering 2022” report (which you can access HERE).
India
> European Council on Foreign Relations “Why India’s Silence on Ukraine is an Opportunity for Europe”
India’s dependency on Russia has left it reluctant to publicly criticize Putin’s war on Ukraine. Rather than pressure India to pick a side, the EU should show India that it is a serious geopolitical partner.
> Foreign Policy “In Sri Lanka, Organic Farming Went Catastrophically Wrong”
Faced with a deepening economic and humanitarian crisis, Sri Lanka called off an ill-conceived national experiment in organic agriculture this winter. Sri Lankan President Gotabaya Rajapaksa promised in his 2019 election campaign to transition the country’s farmers to organic agriculture over a period of 10 years. Last April, Rajapaksa’s government made good on that promise, imposing a nationwide ban on the importation and use of synthetic fertilizers and pesticides and ordering the country’s 2 million farmers to go organic. The result was brutal and swift.
Book Recommendation of the Week:
> The Last Emperor of Mexico by Edward Shawcross
In 1864, Hapsburg Archduke Maximilian, the brother of Austrian Emperor Franz Joseph, landed in Mexico to establish a monarchy where he would-be Emperor of Mexico. Done at the behest of France’s Napoleon III (who famed historian AJP Taylor said “learned from the mistakes of the past how to make new ones”), the effort was doomed from the start. In his engrossing book, Shawcross brilliantly details this last pathetic gasp of European colonial aspirations in the Americas. The United States, in the grip of a bloody Civil War, nevertheless was having none of Napoleon’s grand plans and helped the legitimate President, Benito Juárez, defeat Maximilian (who ended up in front of a firing squad). This sad episode in Mexican history has had ramifications on Mexico’s politics as well as impacting broader US Latin American policy ever since.
Geopolitical Calendar: March 13 - 21, 2022:
Sunday, March 13:
> Political Events/Social Events –
o Colombia holds elections for Senate, House of Representatives, and who will run in presidential primaries
o Israeli Foreign Minister Yair Lapid meets with Romanian Foreign Minister Bogdan Aurescu in Bucharest
> Economic Events -
o No significant reports/events
Monday, March 14:
> Political Events/Social Events –
o US National Security Advisor Jake Sullivan and members of the National Security Council (NSC) meet with China’s lead foreign policy official, Yang Jiechi, in Rome to discuss Russia’s invasion of Ukraine.
o NATO begins “Operation Cold Response” - NATO’s largest military training exercises since the end of the Cold War with more than 30,000 NATO troops participating – non-NATO members Sweden and Finland are also scheduled to participate
o EU Eurogroup meets in Brussels along with Economic and Financial Advisors (March 14-15) in Brussels to discuss Russia’s invasion of Ukraine
o German Chancellor Olaf Scholz meets with Turkish President Recep Erdogan in Ankara, Turkey to discuss Russia’s invasion of Ukraine.
o China to being releasing soybean stocks from state-owned Sinograin for auction to help alleviate domestic supply commodity fluctuations
o China to hold maritime military drills in South China Seas (but may actually for recovery of downed aircraft)
o Israeli Foreign Minister Lapid Slovakian Foreign Minister Ivan Korcok in Bratislava
o Commonwealth Day celebrated by 52 former British colonies in London
o White Day is celebrated in Japan (where men send presents to women who sent them gifts last month for Valentine’s Day)
o National Pi Day (because today is 3.14, the value of Pi)
> Economic Events –
o World Bank President David Malpass to speak on the global financial impact of Russia’s invasion of Ukraine
o France trade balance
o India GDP
o UK Office of National Statistics annual review of “shopping basket” items making up the consumer price inflation indices
o Sri Lanka GDP
o Botswana inflation data
Tuesday, March 15:
> Political Events/Social Events–
o UN Security Council holds briefing on the UN Mission in South Sudan as its mandate ends
o Possible no-confidence vote in Pakistan National Assembly of Prime Minister Imran Khan following break-down of ruling coalition
o Somalia holds lower House elections
o EU Economic and Financial Affairs Council meets in Brussels to discuss impact of sanctions on Russia among other issues
o Ukrainian President Zelensky to address Canadian Parliament by video
o Ides of March
> Economic Events –
o US PPIs
o Central Bank of Russia due to pay $117 million in coupons on dollar bonds
o China Industrial Production, Property Investment, Fixed Assets Retail Sales
o Germany ZEW Survey Expectations
o UK Jobless Claims
o Eurozone ZEW Survey Expectations, Industrial Production
o Japan Trade Balance
o Canada Housing Starts, Manufacturing Sales
o OPEC monthly oil market report
o Indonesia Exports, Imports, Trade Balance
o Nigeria inflation numbers
o Namibia inflation numbers
Wednesday, March 16:
> Political Events –
o United Nations holds a briefing and consultation with UN Support Mission in Libya on sanctions on Libya
o NATO Defense Ministers hold an emergency meeting in Brussels
o Saudi Foreign Minister Faisal bin Farham Al Saud to visit Bangladesh
o Colombia holds legislative elections to elect 102 members of the Senate and 166 members of the House of Representatives
o the Netherlands holds municipal elections
o ASEAN Chiefs of Defense Forces meeting in Phnom Penh, Cambodia
> Economic Events –
o US Federal Reserve Board rate decision
o US Retail Sales, Import Price Index, Export Price Index, Business Inventories, NAHB Housing Market Index
o China New Home Prices
o APEC Finance and Central Bank Deputies meeting
o Japan Capacity Utilization, Core Machine Orders
o Canada CPI, Wholesale Trade Sales
o South Korea Unemployment Numbers
o South Africa Retail Sales
o Ghana Producer Inflation
o International Energy Agency monthly market report
Thursday, March 17:
> Political Event/Social Events –
o EU’s Environmental Council meets in Brussels
o ASEAN Economic Ministers’ Retreat (March 16-17)
o Ukraine’s President Zelensky scheduled to address German Bundestag (parliament)
o St. Patrick’s Day celebrated; Irish Prime Minister (Taoiseach) Martin meets with President Biden and key members of Congress in Washington DC
o Purim – Annual festive Jewish holiday (March 17-18)
> Economic Events –
o Bank of England meeting
o Eurozone inflation data (Feb)
o US Housing Starts, Building Permits, Initial Jobless Claims, Industrial Production, Capacity Utilization
o Japan CPI
o Spain trade balance figures (Jan)
o Singapore Exports, Imports, Trade Balance, NODX
o Hong Kong Unemployment
o Indonesia Central Bank meeting
o Taiwan Central Bank meeting
o South Africa Q1 Consumer Confidence
Friday, March 18:
> Political Events/Social Events –
o ASEAN’s Regional Comprehensive Economic Partnership (RECEP) Ministerial scheduled to meet
o Russian Duma (parliament) to examine 3rd package of economic support measures
o Scotland’s Conservative Party Conference to be held in Aberdeen, Scotland
o Celebration of Holi – the Festival of Color - in India and among Hindus around the world
o Celebration of Hola Mahalla in India and among Sikhs around the world
> Economic Events –
o Bank of Japan meeting in Tokyo
o Central Bank of Russia meeting in Moscow
o US Existing Home Sales, Conference Board releases Leading Economic Index
o UK retail sales figures (Feb)
o Italy Trade Balance
o Eurozone Trade Balance, Labor Costs
o Canada Retail Sales
o Malaysia Exports, Imports, Trade Balance
o “Quadruple Witching Day” – stock index futures, stock index futures, stock options, and single-stock futures all expire
Saturday, March 19:
> Political Events/Social Events –
o Timor Leste holds presidential elections
o South Australia state elections
o Japan’s Prime Minister Kishida attends annual summit with India’s Prime Minister Modi in New Delhi, India
o The Feast of St. Joseph – the most important of saints’ feast days in the Roman Catholic Church is celebrated around the world
> Economic Events –
o China Foreign Direct Investment (Feb-YoY)
Sunday, March 20:
> Political Events –
o Wallis and Futuna Territorial Assembly election
o Spring (Vernal) Equinox
o Kurdish New Year
o UN-Sponsored “International Day of Happiness” (we sure need this one this year…)
> Economic Events –
o No significant events/data
Global Events This Week: March 6-13, 2022
This is Fulcrum Macro Advisors’ weekly calendar of key political and economic events we are watching in the coming week. We hope this is helpful. Please let us know if you have any questions.
► = Events of particular focus/note
Sunday, March 6:
> Political Events –
o US Secretary of State Blinken travels to Riga, Lithuania to meet with Lithuanian President Nauseda, Prime Minister Simonyte, and Foreign Minister Landsberger.
o Saudi Arabia hosts the World Defense Show for the global defense industry (March 6-9)
o 65th Independence Day in Ghana
> Economic Events -
o No significant reports/events
Monday, March 7:
> Political Events –
► o US Secretary of State Blinken travels to Riga, Latvia to meet with Latvian President Levits, Prime Minister Karins, and Foreign Minister Rinkevics
o International Atomic Energy Agency Board of Governors meeting in Vienna
o Thailand’s government and southern rebel groups to commence the latest round of peace talks in Malaysia
► o Possible Russia-Ukraine peace talks in Belarus
o European Climate Conference in Nantes, France
o South African Parliament expected to set date for a no-confidence vote for President Ramaphosa after a long corruption investigation
o Ash Wednesday in the Eastern Orthodox Church (also known as Pure Monday)
> Economic Events –
o China export data (YoY), import data (YoY), trade balance (Feb)
o Germany retail sales, factory orders, current account (Jan)
o European Community Sentix investor confidence
o Japan current account (Jan)
o Brazil PMIs (Feb)
o Russia GDP (Jan-YoY)
o South Africa reserves data, central bank bond holdings
o Cambridge Energy Research Associates holds CERA Week (March 7-11) – watch for significant analysis and forecasts on the oil/gas industry from key speakers including US Energy Secretary Granholm and Senate Energy Committee Chair Joe Manchin (D-WV) and leading global oil/gas CEOs
Tuesday, March 8:
> Political Events –
o US Secretary of State Blinken travels to Estonia to meet with President Karis, Prime Minister Kallas, and Foreign Minister Liimets
o Malaysia’s Johor state begins state elections
► o European Commission scheduled to unveil strategy to boost energy security
o UK Prime Minister hosts in London a meeting of the Visegrad 4 leaders: The Prime Ministers of Poland, Hungary, the Czech Republic, and Slovakia
o EU holds Telecommunications Ministers hold an informal meeting
o Lesotho’s former Prime Minister Thabane and his 3rd wife appear in court on charges of murdering his 2nd wife in 2017
o The Head of US Strategic Command and the Head of US Space Command testify before the Senate Armed Services Committee re: spending requests for Space Command
o West African States Economy Community parliament to hold a five-day session to discuss regional security, Monrovia, Liberia
> Economic Events –
o United States balance of trade (Jan), exports, imports (Jan), wholesale inventories (Jan), API crude oil stock change
o Germany industrial production, industrial output
o Spain industrial production, industrial output
o Italy retail sales
o Euro Area government expenditures, household construction, employment, GDO, gross fix cap
o Taiwan CPI, exports (YoY), imports (YoY), trade balance (Feb)
o India FX reserves
o Japan Leading Economic Index (Jan), Eco Watchers survey (Feb)
o South Africa 4Q GDP; sale of broadband spectrum
o Brazil PPIs
o Canada balance of trade, exports, imports
o Japan GDP Q4, capital expenditures, external demand, private consumption
o Nigerian government presents requests for proposals for potential investors to establish Nigeria Air
o Apple Inc hosts an annual spring product launch where a new low-cost 5G iPhone is expected to be unveiled.
Wednesday, March 9:
> Political/Social/Religious Events –
o South Korean presidential elections
o US Vice President Harris visits Poland and Romania (March 9-11)
o Israeli President Herzog to visit Turkey (March 9-10) – the first visit to Turkey of an Israeli leader since 2008
o US House of Representatives Democrats gather in Philadelphia for issues summit; President Biden to address them
o US Securities and Exchange Commission meets to discuss cybersecurity enforcement
> Economic Events –
o United States mortgage data, EIA’s March gasoline stocks, crude oil stocks, heating oil, refinery crude runs, distillate stocks, crude oil stocks
o China CPI (YoY), PPI (YoY), M2
o France private-sector payrolls, total payrolls
o Italy industrial production
o South Africa Bureau for Economic Research Business Confidence Q1
o Russia CPIs, state budget balance, FX reserves (Feb)
o India consumer confidence (Feb)
o Brazil industrial production (Jan)
o Mexico inflation rate (Feb-YoY)
► o Japan PPIs, auction of 1.64 million barrels of crude oil from its national reserves
Thursday, March 10:
> Political Events –
o Colombian President Duque meets with President Biden to discuss regional and global security concerns
► o European Council heads of state Informal Meeting in Versailles to discuss Russia-Ukraine (March 10-11) – On the agenda is number of applications of former Soviet states to be fast-tracked into EU membership
o NATO finishes crisis management exercise
> Economic Events –
o United States core inflation rates (Feb), initial jobless claims
o China new Yuan loans (Feb), outstanding loan growth (Feb-YoY)
o Brazil business confidence (Mar)
o Euro Area macroeconomic projections
o Italy PPIs
o ECB main refinancing rate, marginal lending facility, deposit facility rate
o ECB President Lagarde holds a press conference
o South Africa current account balance, auctions mobile spectrum.
Friday, March 11:
> Political Events/Social Events –
o European Council informal meeting (continued)
o Chilean President-elect Gabriel Boric inaugurated.
o Colombia’s deadline to register for upcoming presidential elections.
o Kenyan opposition leader Raila Odinga to unveil coalition party for election
o Turkey hosts Antalya Diplomacy Forum
o Djibouti holds municipal elections
o 2nd Anniversary of World Health Organization (WHO) official declaring COVID a worldwide pandemic
o SXSW Conference kicks off tech industry track in Austin, Texas
> Economic Events –
o United States Michigan Consumer Sentiment (Mar), Baker Hughes Oil Rig Count
o Germany CPIs, wholesale price index
o Spain CPIs
o Bank of France industrial sentiment
o Great Britain GDP, industrial production, manufacturing production, balance of trade
o South Korea current account balance (Jan)
o Philippines exports (Jan-YoY), imports (Jan-YoY), trade balance (Jan), industrial production
o Malaysia industrial production (Jan-YoY), manufacturing sales (Jan-YoY),
o India industrial production (Jan-YoY)
o Brazil inflation rate
o Mexico industrial production (Jan-YoY)
o Canada unemployment figures
o Turkey current account, retail sales, industrial production
Saturday, March 12:
> Political Events –
o Turkmenistan holds presidential election following the resignation of President Berdymukhamedov
> Economic Events –
o China Foreign Direct Investment (Feb-YoY)
Sunday, March 13:
> Political Events –
o Colombia holds legislation elections
o Mali holds the first round of parliamentary and presidential elections
o US daylight savings time starts (move your clock forward one hour, lose an hour of sleep…)
o 9th Anniversary of Pope Francis’ election as Pontiff
> Economic Events –
o No significant events/data
Read Around the World in a Weekend: March 4, 2022
Please find our recommended weekend reads covering key issues and events around the world. We hope you find these informative, useful, and perhaps even fun. Please let us know if you want us to add anyone to our mailing list.
Russia/Ukraine
> Wilson Center “Cryptocurrency as the New Frontline in the Russian Invasion of Ukraine”
Beyond the sphere of the traditional economy and finance, the Russian invasion of Ukraine may be a defining moment for the crypto economy—demonstrating the geopolitical implications of the crypto economy and cryptofinance in the context of global conflicts. In that regard, Ukrainian Vice Prime Minister Mykhailo Fedorov requested that centralized cryptocurrency exchanges freeze Russian digital wallets to prevent financial transactions and payments by Russia through alternative means.
> Congressional Research Service (CRS) “Russian Cyber Units”
Russia has deployed sophisticated cyber capabilities to conduct disinformation, propaganda, espionage, and destructive cyberattacks globally. To conduct these operations, Russia maintains numerous units that are overseen by various security and intelligence agencies. The CRS explains in detail who they are what the focus on.
> Defense Business Brief “Arms to Ukraine: A Comprehensive List”
There has been an unprecedented amount of weaponry contributed to Ukraine to defend itself from Russian aggression. Here is a complete list of who has given and what they have given to date.
> International Institute for Strategic Studies “Putin’s Strategic Failure and the Risk of Escalation”
Russia’s invasion of Ukraine is emerging as a grand strategic mistake, argues Nigel Gould-Davies. As the situation becomes more volatile and less predictable, is escalation the only way forward for a weakened Putin?
> Foreign Policy “NATO Must Prepare to Defend Its Weakest Point – The Suwalki Corridor”
On the Polish-Lithuanian border, the West must respond to Russia’s actual capabilities rather than making assumptions about its intent.
> The Atlantic “Cometh the Hour, Cometh the Man”
Foreign Policy scholar Eliot Cohen asks why did so many observers misjudge Putin and Zelensky?
> Carnegie Institute for International Peace “How does this end?”
Amid the ongoing crisis in Ukraine, experts can spin out an infinite number of branching scenarios on how this might end. But scores of war games conducted for the U.S. and allied governments suggest that if we boil it down, there are really only two paths toward ending the war: one, continued escalation, potentially across the nuclear threshold; the other, a bitter peace imposed on a defeated Ukraine that will be extremely hard for the United States and many European allies to swallow.
> Adam Tooze’s Chartbook “Chartbook #91: What if Putin’s War Regime Turns to MMT?”
Sanctions are the chosen weapon of the West against Putin’s aggression. Rather than starting small, we have gone immediately to an attack on the central bank. In response, the Russian central bank has effectively stopped capital flows out of Russia and nationalized foreign exchange earnings of major exporters. It now requires Russian firms to convert 80 percent of the dollar and euro earnings into ruble. This helps to bolster the ruble’s value and provides a flow of foreign exchange into the country.
China
> Center for Strategic and International Studies “China’s Economy and Ukraine: All Downside Risks”
The potential short-term risks for China’s economy emanating from the Ukraine crisis are all manageable, but the longer the time horizon, the greater are the dangers to China’s economy and its international influence. There are almost no scenarios in which China comes out net ahead. China’s trade ties with Russia and Ukraine are not insignificant, valued in 2021 at $147 billion and $19 billion, respectively.
Germany
> Foreign Policy “Putin Accidentally Started a Revolution in Germany”
American Institute for Contemporary German Studies President Jeff Rathke explains how the invasion of Ukraine is triggering a dramatic reversal of Berlin’s grand strategy.
Egypt
> Middle East Institute “The Russia-Ukraine War Has Turned Egypt’s Food Crisis Into an Existential Threat to the Economy”
Egypt’s food security crisis due to the Ukraine crisis now poses an existential threat to its economy. The fragile state of Egypt’s food security stems from the agricultural sector’s inability to produce enough cereal grains, especially wheat, and oilseeds to meet even half of the country’s domestic demand. Cairo relies on large volumes of heavily subsidized imports its 105 million citizens.
> Arab Reporters for Investigative Journalism “Shadows of Death Loom Over Occupants of Buildings at Risk of Collapse”
In the past seven years, 500 Egyptians perished under the rubble due to the collapse of their residential buildings. This happened amidst the Egyptian government’s inaction to repair derelict properties or demolish them once their residents have been given alternative places to live. Citizens are increasingly angry at the government for their lack of response or enforcing greater enforcement of building codes.
Latin America
> France 24 “Russia Receives Venezuela’s ‘Strong Support’”
In rare backing for Russia following its invasion of Ukraine, Venezuela's President Nicolas Maduro on Tuesday assured Vladimir Putin of his "strong support" in a telephone call, according to a Kremlin statement. This leaves many observers wondering “what’s in it for Maduro and his regime?”
> Americas Society/Council of Americas “Latin American Leaders React to Russia’s Invasion of Ukraine”
See what has been said by countries like UN Security Council members Brazil and Mexico and Moscow allies Cuba and Venezuela.
Finance and Development
> Carmen Reinhart and Ceyla Pazarbasioglu/IMF “Shining a Light on Debt”
As the COVID-19 crisis lingers and Russia invades Ukraine, emerging market and developing economies are entering perilous waters that evoke memories of past debt defaults. Although all countries amassed debt to fight the pandemic, the economic recovery in these economies substantially lags their advanced economy counterparts.
Climate Change/Sustainability
> IPCC 6th Assessment Report “Climate Change 2022: Impacts, Adaption and Vulnerability”
The Intergovernmental Panel on Climate Change (IPCC) which was created by the UN Environmental Program and World Meteorological Organization, published their 6th assessment report on the state of global climate.
The Absurd and Tragic Dreams of Monarchy in Mexico: “The Last Emperor of Mexico”
What do you get when you mix the mad dreams of a half-mad French King and a few eccentric Mexicans desiring monarchy with the bored lives of Hapsburg royalty in need of a purpose for being? You get the failed effort to establish an Emperor of Mexico - a fabulous, bizarre, and sad tale of France’s Napoleon III’s effort to grasp control of Mexico. To tell this story of weirdness, you need a master storyteller and Edward Shawcross is the man for the job. It is a taut, compelling story that is not well-known in the United States -indeed, it is not well known in most of Latin America or in Mexico itself.
But I get ahead of myself. First a quick synopsis which I hope you find intriguing enough to read this excellent history. In 1860, as the US Civil War was looming on the horizon, France’s Napoleon III thought he had an opportunity to curb what he saw as rising American imperialism. Appalled by the Monroe Doctrine which effectively kicked European powers out of the Western Hemisphere for good, Napoleon persuaded a young (and some would say gullible) Austrian Archduke Maximilian and his countess wife, Carlota, to follow his troops to Mexico to be crowned Emperor of Mexico.
France’s troops eventually crushed the existing Mexican government and soldiers - but not without suffering heavy losses to bullets and disease. Once in power, Maximilian and Carlota ruled with a cold ruthlessness which immediately turned what little support they might have had among the populace against them.
But beyond the Mexican people, there was another force to contend with: The United States. Although distracted badly by the Civil War, President Abraham Lincoln was clearly aware Maximillian’s presence and the creation of a French threat to the US and the rest of the Hemisphere. Throwing their support behind Mexican resistance leader Benito Juárez, Maximilian soon found his power ebbing away.
I do not want to give away the rest of the book and will stop here in detailing this haunting tale. But it is an important tale that the Us does not get enough credit for: Throwing European monarchies and their dreams of returning monarchial empires (and the gold and silver that went with it) out forever. It is a story as much of a sad period of Mexico’s history as it is of the US’s determination to allow each nation of the Western Hemisphere to choose democracy. Mexico, of course, has gone through many permutations of crisis, democracy, violence, and change. But it is their choice - not the choice of a monarch in Europe.
This is a fantastic read and a critical one to better understand what shaped the Western Hemisphere we know today.
Washington Week Ahead: Russia/Ukraine, State of the Union Address, and Fed Chair Testimony - Could it Get Any Busier?
This is the most electric Monday morning in Washington we can remember in a long, long time. Congress has returned from being in recess last week for the President’s Day holiday completely focused on Russia’s invasion of Ukraine and the massive implications to geopolitics and global economics.
Moreover, Congress is preparing for the President’s State of the Union speech Tuesday night and Federal Reserve Board Chair Pro Tempore Jay Powell’s testimony before the House Financial Services Committee Wednesday and the Senate Banking Committee Thursday.
We would note this is going to be an unusual State of the Union (SOTU) address (as if the last two were not unusual enough due to COVID). What will be unusual? Specifically, leading up to the SOTU, we normally see a flurry of “leaked” policy ideas and initiatives from the White House – “trial balloons” – to get a sense of the reaction of Congress as well as voters. Not this year. It has been virtually “radio silence” from the White House.
So what should we expect? We believe this will be more a “State of the World” than a “State of the Union” speech. The President is likely going to focus heavily on Russia’s violent aggression in Ukraine, the growing unified reaction globally to Russia, and what he intends to do next to convince Russia to cease and desist.
On the domestic front, look for President Biden to push for some form of Build Back Better (BBB) – no price tag will be mentioned but we would anticipate in the $500 billion to $1 trillion range. This will come with President Biden adding to the sense of urgency for the US to develop alternative energy sources (remember, the US still is a significant buyer of Russian oil).
Additionally, we expect the President to talk about inflation and possible new programs his Administration intends to pursue to get it in check – this will likely include new releases from the Strategic Petroleum Reserve (SPS) to help lower spiking gasoline prices.
The President will be giving his remarks in the face of new, historically low poll numbers. A new Washington Post/ABC News poll released Sunday showed only 37 percent of voters approve of his job performance while 55 percent disapprove. Moreover, only 33 percent of voters support Biden’s handling of the Russia/Ukraine situation while 47 disapprove.
The President’s address will face not just the normal rebuttal speech from a designated Republican (this year’s rebuttal will be given by Iowa Governor Reynolds (D-IA) but for the first time a fellow Democrat: Representative Talib (D-MI) will deliver a formal response on behalf of Progressive Democrats complaining about the lack of progress on BBB as well as effectively highlighting the increasingly stark divisions within the Democratic Party between moderates and progressives.
Federal Reserve Chair Powell’s testimony – both days – will be of maximum focus to not only the markets but Congress. Normally, what you see on the first day of congressional testimony is what you get the second day. But with global events moving as fast as they are, what Powell says on Wednesday may change by Thursday. Watching the Russian markets effectively collapse this morning and global corporations scramble to meet new sanction rules clearly has global markets on edge.
We will be sending updates this week as events change. Until then, please let us know if you have any questions.
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