Watching/Ignoring

​​​​​​WHAT WE'RE WATCHING

China’s Secret Weapons — US chipmaker Qualcomm abandoned a $44 billion deal to buy Dutch counterpart NXP on Wednesday after a deadline passed with no word from China’s antitrust regulators. Beijing’s approval was the only obstacle holding up the merger. The White House had lobbied hard for this deal, and President Trump spent plenty of political capital bailing out ZTE, a Chinese tech giant pushed to the brink of bankruptcy by US penalties. The saga is another reminder that the US-China trade war isn’t just about tariffs, and that both countries have many weapons at their disposal. The risk of escalation has just gone up.


Zimbabwe’s Election — Since independence in 1980, Zimbabwe has never had an election without Robert Mugabe. That streak will end on Monday. And this will be a vote worth watching. All political parties have been able to hold rallies without police interference, and US an European election observers have been welcomed for the first time in 16 years. In addition, Zimbabwe’s Electoral Commission says its new fingerprint ID system will help prevent the cheating that has marred past elections.

US politics adrift — A vandal attacked Donald Trump’s star on the Hollywood Walk of Fame with a pickaxe this week, and someone reportedly boarded and set adrift a $40 million 163-foot yacht owned by Trump administration official Betsy DeVos. Some will find these stories funny. Others, like your Friday author, believe there are 100,000 legitimate forms of protest, and vandalism is not one of them. It’s also the last thing the current US political climate needs.

WHAT WE’RE IGNORING

Steve Bannon — First came news the most overrated man in Washington was headed to Europe to launch a pan-European far-right political movement. Because Europeans who win votes with anti-American rhetoric badly need American help. Then came word that Bannon is in regular contact with former UK foreign minister and political bad boy Boris Johnson. Add Nigel Farage, and we’ll have that scene at the end of the film This Is Spinal Tap where the washed-up metal band reunites for a tour of Japan.

Zuckerberg’s Taste in Art — Facebook is having an awful week, but here’s yet another reason why it’s hard to sympathize. The Flemish tourist board accused Facebook this week of censoring a number of posts featuring paintings by Flemish masters—apparently because they included nudity. Let’s be crystal clear: Your Friday author is no fan of all those pudgy little cherubs Rubens has inflicted on us, but Zuckerberg better not be messing with Breughel the Elder.

Putin’s Inflatable Trojan Horse? — A soccer ball Vladimir Putin gave Donald Trump during their Helsinki summit reportedly contains a chip that can transmit information to nearby cell phones. (For the record, this is not satire). We’re ignoring this story because Trump’s well-known aversion to sports that provoke perspiration suggests Russian intelligence is much more likely to learn what 12 year-old Barron Trump wants for dinner than any presidential secrets.

Populist nationalists who have rocked the political establishment in European capitals from Rome to Berlin in recent years now have their sights trained on a new target: the European Union itself.

Starting tomorrow, voters across the bloc's 28 member states will cast ballots for the next European Parliament, the Union's legislature. Candidates from across the bloc compete for 751 seats that are divvied up roughly according to each member state's population.

The Parliament is the only democratically elected governing body of the EU, and it has final say over contentious issues like EU-wide migration policy, trade rules, and budget allocations. The EU Parliament also plays a role in selecting the EU Commissioner, the bloc's most powerful official.

That power is something that far-right populists, buoyed by success in their own countries, now want a bigger piece of. In particular, Italy's Matteo Salvini and France's Marine Le Pen, whose parties once advocated for leaving the EU, are now joining in a loose alliance with other populist nationalists, hoping to win enough seats to bend EU rules in the more anti-immigrant and nationalistic direction that their supporters want.

Polls suggest the nationalists will do very well: A pro-EU coalition of the center-left and center-right is expected to lose its majority for the first time in 40 years, as parties from the extremes, but particularly the right, surge.

But they are still badly fragmented. While the populist-nationalists agree that they want less oversight from Brussels and a more restrictive immigration policy, they haven't been able to coalesce into a single bloc, because of disagreements over who would lead the group and what its main objectives should be. That means that the next EU Parliament may end up deeply fragmented and ineffectual.

The campaigning for EU Parliament also has a lot to do with national politics, and here there are a few key implications to watch:

French President Emmanuel Macron's forceful and defining push for a more unified Europe would effectively be dead if populist parties score a big victory – that could pull the rug out from under him in national politics as well.

Italy's Salvini might call for snap elections at home if the polls confirm his Lega Party's growing popularity.

In Poland, the ruling Law and Justice Party, which faces national elections later this year, is looking to gauge whether its prolonged fight with the EU over rule of law and cultural issues has been a political winner or if it's a reason the party has lost some ground to the opposition.

The upshot: Far from a snooze-fest, this week's elections could significantly shift the direction of the world's largest economic bloc.

Does the European Union even hear the voices of average European citizens? As millions of people prepare to cast ballots in European Parliament elections, that's a good question. As this graphic shows, more Europeans feel "heard" by the EU today than ten years ago. But what, precisely, they are saying to the EU with those voices is something that we'll understand better when we see the election results this weekend.

Back in January, we warned that an intensifying "Tech Cold War" between the US and China over technology and trade could plunge global innovation into a deep freeze as both countries impose fresh restrictions on the free flows of money, people, and information that (throughout history) have powered new ideas.

We're not at the winter solstice of innovation just yet, but the US's move last week to restrict Chinese networking equipment giant Huawei's access to US markets and technology sent an awfully chilly wind through the tech sector.

Here are two ways that a decoupling of the Chinese and American tech sectors could damage innovation in the US:

  • Less good money: Huawei spends roughly $10 billion a year buying hardware and software from US firms. Total Chinese tech industry purchases are many times greater than that. A portion of that money is reinvested by Silicon Valley in R&D; to help develop the next generation of innovative tech products. If Chinese firms can't – or won't – buy from American companies, a lot of R&D; cash will vanish.
  • Fewer good brains: US semiconductor companies are already struggling to hire highly coveted Chinese engineers as the Trump administration slow-rolls their visa applications over national security fears. But top tech talent is hard to come by, and there aren't always qualified workers from the US or other countries available to pick up the slack.

The upshot: The United States has plenty of well-founded grievances with how China runs its economy and its increasingly powerful tech sector. But the costs of Washington's more confrontational approach are already becoming apparent. Those costs will rise further if the US and China's deeply linked tech sectors decouple more fully and formally, as some China hawks in the US hope. At what point do the costs start to outweigh the benefits?

Iran's proxies – The thing about "proxies" is that you don't always have perfect control over what they do. To varying degrees, Iran funds and backs Hizbullah in Lebanon, Hamas in Gaza, Houthi rebels in Yemen, and various militias in Iraq. But these groups also have agendas and interests of their own. Sometimes they'll do things Iran doesn't want them to do. At a time of high tensions between Iran, Saudi Arabia and the United States, these proxies can create trouble for Iran whether they've acted in coordination with its government or not.

Finns fighting fake news "Fake news," the dissemination of false information designed to create confusion and sow division, has become a truly global problem, but at least one country has a proven track record in helping its citizens to recognize and reject it. Finland has faced information warfare in various forms since declaring independence from Russia a century ago, but since Russia's invasion of Crimea in 2014, the country's government has worked hard to help its people – in particular high school students -- spot false information. This report suggests we can all learn something from the Finns' example.

What We're Ignoring: Fruitless British ploys and Venezuelans at the Pentagon

A second referendum on Brexit – A collective guffaw arose in the office here when we learned yesterday that British Prime Minister Theresa May had made yet another attempt to rally support for her thrice-rejected deal to leave the EU. This time she promised to let Parliament vote on whether to hold a second referendum on Brexit, but only if MPs pass her withdrawal agreement first. It's a notable concession by May, who had previously resisted calls for another referendum. But some prominent Brexit supporters have rejected the move, and we doubt that a whole lot of Remainers will be swayed by a promise to hold a vote on whether to ask the public to hold a vote.

Venezuelan talks – An emissary of Venezuelan opposition leader Juan Guaidó (recognized as president by more than 50 countries) went to the Pentagon on Monday for talks with the US military, evidently about humanitarian assistance. This follows last week's meetings in Norway between reps of both Guaidó and President Nicolas Maduro. Talks are good, but we don't see much scope for progress. Guaidó wants the one thing – free and fair elections – that would be certain political suicide for Maduro, whose approval rating is a deservedly pitiful 12 percent. But following Guaidó's failed April 30 uprising, the Maduro regime is feeling like it's got the momentum now. We see no compromises on the horizon.