WILL THAT RED/BLUE WAVE RIPPLE GLOBALLY?

Today, a deeply divided America votes in midterm elections for Congress, governors, and state and local legislatures. Amid a level of furious polarization not seen in decades, the vote is in many ways a referendum on President Trump’s unconventional presidential style, his “America First” agenda, and his bid to take the Republican Party in a radically more nationalistic direction.


Democrats, fired up with animus against Trump, are hoping that strong turnout among millennial voters and women (particularly in politically-purple suburban districts) can help them gain the two dozen seats they’ll need in order to take control of the House of Representatives, as polls suggest they can. Republicans, meanwhile, are focusing more on defending their control of the Senate. President Trump, in recent days, has rallied the party’s base by stoking fears about immigration and focusing on America’s roaring economy. The latest surveys suggest GOP will hold the upper chamber.

Since our beat here is global affairs, let’s take a look at the election through that lens.

How much do mid-term voters care about foreign policy?

 

Quite a bit. Polls show that foreign policy is a top issue for about two-thirds of voters right now. That’s about the same as in 2014, and while it ranks lower than traditional domestic issues such as healthcare (top concern for 80% of voters), economic policy, or immigration, it’s one of the few issues that is equally important for both Democrats and Republicans (see graphic below.)

What’s more, while it’s true that immigration outshines “foreign policy” as a concern for Republicans and “climate policy” does the same for Democrats – both of those issues are in fact closely bound up with the broader debate about what role America should play globally today. For Trump and his supporters, for example, proposals to regulate immigration more tightly and exit global pacts to combat climate change are part and parcel of the more assertively nationalistic America First foreign policy that he has outlined.

Do other countries and their leaders care?

 

You bet. Other world leaders are watching the election closely because of what the result tells them about Trump’s political future – a strong showing for the GOP will put Trump in a more competitive position as he seeks his own re-election in just two years.

That calculation is particularly important for leaders at odds with the US: after all, Chinese president Xi Jinping has to calculate how far to take a trade war with the US; North Korean leader Kim Jong-un has to craft an endgame for his current strategy of wooing Trump personally without conceding much on denuclearization; and Iran has to decide whether to abandon the nuclear deal now that the US has bolted on it, or to hold out hope for repairing it under a future US administration less implacably hostile to Tehran. All of those decisions look very different if Trump seems likely to be in power for another six years rather than just another two.

But that question matters also for traditional American allies such as Japan, Canada, and the EU, which are watching closely to assess the depth and permanence of the uncertainty the Trump has introduced into their ties to Washington. The prospect of another half dozen years of Trump would accelerate their efforts to develop financial and security policies that are more independent of the United States.

Would a divided Congress affect Trump’s foreign policy?

 

Not directly, no. In foreign policy, the US President has extremely broad scope for action – on military interventions, trade policy, and adherence to international rules and norms – that does not require Congressional approval.

One of the few areas where the House will have a say is on ratifying the revised NAFTA treaty, now called the USMCA. But here House Democrats would be in a bind: opposing Trump’s relatively mild but still worker-friendly revisions to the pact would be political suicide if the party hopes to win back white blue-collar voters who voted for Trump in 2016. Hard to see House Democrats making that a hill to die on just to stymie Trump.

What the House can do is open Congressional investigations or audits of areas that are related to foreign policy – such as the budgets of the Pentagon and State Department, Trump’s alleged financial ties to foreign powers, or the ongoing allegations of collusion in the 2016 election.  Prominent democrats have already signaled that if they gain control of the House this is precisely what they plan to do.

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.)