WHAT WE’RE READING: GLOBAL POLITICS SURF AND TURF

This Tuesday, it’s a meat and seafood lovers’ delight – we’ve found two stories that tell us about the state of global politics from the perspective of what’s on your plate.


First, to the northeastern American state of Maine, where Bloomberg’s Shawn Donnan delivers an extraordinary portrait of how the high politics of US-China trade tensions have hit the rough and tumble lobstermen of New England. In recent years, a burgeoning Chinese middle class has developed a taste for imported lobster, fueling a boom in Maine, the largest exporter of lobster in the US.

But amid this summer’s tit-for-tat tariff escalation between Washington and Beijing, China threw a 25 percent levy on live lobsters, imperiling a hundred-million-dollar annual export market. Now Maine lobstermen are scrambling to find new customers in Asia while also clashing with their Canadian rivals, who have better access not only to China, but also to Europe because of a recent EU-Canada trade pact. The story is a lesson in how pulling even the smallest strings in the tapestry of global trade can have far-reaching, and very local, effects. Consider the lobster!

The next course comes from Brazil, where right-wing president-elect Jair Bolsonaro has hit a snag in his plan to assert a more nationalistic foreign policy patterned after Trump’s America First model. Last week, the fiercely pro-Israel Bolsonaro pledged to relocate Brazil’s embassy in Israel from Tel Aviv to Jerusalem, as the US did earlier this year. Egypt, which has firm ties with Israel but still responds to popular support for the Palestinians, abruptly cancelled a scheduled visit from Brazilian diplomats and businesspeople. What’s more, the move provoked an outcry from Brazil’s powerful meat export industry.

What’s the beef? Brazil, as it happens, is the world’s leading exporter of halal meat  that complies with Muslim dietary restrictions, and the Arab world is a critical market for the Brazil’s cattle industry. Egypt alone accounts for some $2 billion in the Brazilian trade, nearly half of Brazil’s total meat exports to the region, and competition from other exporters is stiff.  Bolsonaro has now said that the decision is under review.

The lesson: It’s one thing to call for “[my country] first” when you are a global superpower like the US.  It’s trickier when you are a second-tier power with fewer levers of influence. Nationalists take note: if the world becomes dog eat dog, there could well be a dog bigger than you.

Facebook unveiled plans for a new cryptocurrency and payment system on Tuesday. It's called the Libra, and it's not-so-modest goal is to "reinvent money," and "transform the global economy" so that "people everywhere can live better lives." Ambitious much, Zuck?

This is a huge political gamble, but the rewards could be enormous. Here's a quick look at the tradeoffs:

The risks: Facebook is asking its 2.5 billion users — and government regulators — to entrust it with something that's vitally important to people everywhere and a power that governments jealously protect: access to money. And it's doing so at a time when trust in Facebook and other big Silicon Valley companies is at a low ebb.

Whether it's a concern that Big Tech has become too powerful or that it's not doing enough to protect privacy or put a stop to fake news, it's a heck of a time to launch a new techno-utopian project that could give Silicon Valley much more power — including the ability to track not just what people say they like but how they spend their money.

Mark Zuckerberg understands this — the Facebook founder is setting up Libra as a Swiss-based non-profit that will be governed by an "association" of 28 tech and financial companies and non-profits of which Facebook is just one member. He's also promising that Facebook will not mix personal data with payment information, and to cooperate with regulators.

But this will always be Zuckerberg's baby, and by launching Libra, he's painting a big new political bullseye on his own back.

The payoff: If Libra can survive the inevitable political and regulatory storm (and convince its billions of users that they can trust the underlying technology and financial stability of the new cryptocurrency) the upside could be enormous.

How enormous? The Libra website claims that more than 30 percent of the world's population — about 1.7 billion people — currently lack access to traditional bank accounts. Many more pay steep fees to transfer money using traditional payment services. Libra, by contrast, promises access to anyone in the world with a simple smartphone — and to make payments as inexpensive as sending a text message.

Plug those capabilities into a social network whose user base is roughly double the population of the biggest country in the world, and the results could be revolutionary — not just for billions of people who would gain new access to financial resources, but for Facebook's business model, and for central banks and governments that have traditionally sought to control the flow of money through their economies.

That would be a techno-utopian dream come true, but it's a power that governments won't willingly surrender.

Does the leader of Hong Kong appear weaker withdrawing the extradition bill?

Well as we'd say in Australia, "Is the Pope a Catholic?" Of course. This means that Carrie Lam's authority within the Hong Kong SAR is reduced and her standing in Beijing is reduced as well. But I think the bottom line is that China will resist any efforts to remove her from office, despite local pressure.

Is the US – China trade war coming to an end anytime soon?

Depends Dr. Bremmer on what your definition of "any time soon" happens to be. My prediction is simply this: once they get to the G20 meeting in Osaka Xi Jinping and President Trump will agree to reboot the negotiations process but then it's a question of the substance of the deal. My prediction is A) there will be a deal sometime between now and the end of the year. And secondly, the nature of the deal will be America yielding on the questions of tariffs to the Chinese and China yielding to the Americans on the amount that President Trump expects in the purchasing order of future American goods by the Chinese. That's my bottom line. Both countries need the economic outcome. Both countries therefore have a deep interest in securing a deal. Doesn't mean the end of the economic war however, technology reigns supreme.

If Willis's story on Tuesday about Argentina being plunged into darkness after a nationwide power failure didn't get you packing a flashlight and checking that your car has a full tank of gas, this one should. Over the weekend, the New York Times said anonymous US officials had revealed a US campaign to plant "potentially crippling malware" inside Russia's power grid "at a depth and with an aggressiveness that had never been tried before."

Quick thoughts:

This is a big provocation. It's the cyber equivalent of mining a harbor — an aggressive move that falls short of actual conflict but sends an unmistakable message: mess with us, and we'll mess you up.

The leak was probably intentional. The campaign fits with the new US strategy, launched under the Trump administration, of trying to deter cyber adversaries like Russia, China, and Iran from hacking its critical infrastructure. By disclosing the US campaign, US officials are effectively telling Russia (and by extension China and Iran), that they've got a loaded gun cocked and pointed at their economies.

That's dangerous. People — and governments — may not always behave rationally when a gun is pointed at their heads. Russia might be even more inclined to lash out. And unlike more conventional forms of conflict, cyber isn't a domain where the US can be sure it has an overwhelming advantage if push comes to shove.

It gets worse. The Times said US cyber officials described a "broad hesitation" to go into details of cyber operations against Russia with President Donald Trump because they feared he might cancel it or tell other governments about it. Among other things that are disturbing about this story, a lack of communication between the President and US cyber warriors could send mixed signals that further embolden US adversaries.

It's no secret that cyberattacks are becoming more commonplace. But where do most of them originate and what countries do they target most? The graphic above shows the most significant offenders and victims since 2006. Hackers in China, Russia, Iran, and North Korea account for three-quarters of all major attacks. Nearly a fifth of attacks, meanwhile, have targeted institutions or companies in the United States.

(At least that we know of: this chart highlights known attacks on government agencies, tech companies, and other operations that caused more than $1 million in economic damage. But many cyberattacks are never disclosed, and some countries are more transparent than others, so consider this a cross-section of a much bigger — and more disturbing — picture.)