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Shawn Fain, president of the United Auto Workers (UAW) speaks as President Joe Biden joins striking UAW members on the picket line in Belleville, Mich., in September.
Could union wage hikes worsen inflation?
It may be cold out, but bankers up north are sweating thanks to a flurry of union settlements that could, according to a new report from Toronto-Dominion Bank, have “staying power.”
For years, unionized workers’ pay failed to keep pace with inflation, but now labor negotiators are pressing to close the gap. The successful UAW strike in the United States led to 11% wage increases, and Canadian union settlements, though not as high, are rising as workers try to make up for ground lost to inflation.
This is not expected to slow the struggle against inflation in the United States because only 10% of the US workforce belongs to unions. But in Canada, where about 30% of the workforce is unionized, juicy settlements have a bigger economic impact.
While the deals should not be enough to cause inflation, they may make it harder to tame, and this could mean more trouble for Justin Trudeau’s embattled government if Canadian voters see inflation falling in the United States more quickly than in Canada.
Plus, Canadian homeowners are angry about the looming mortgage shock that will see many of them renew at higher rates. Finance Minister Chrystia Freeland just introduced the Canada Mortgage Charter, a set of voluntary guidelines to protect homeowners under financial pressure, that she expects banks to follow. But more than three million Canadians are facing mortgage renewals in the next 18 months, which means higher payments for most – as well as foreclosures for some.Protestors gather outside the U.S. Supreme Court ahead of the oral arguments in two cases that challenge President Joe Biden's $400 billion student loan forgiveness plan.
What We’re Watching: SCOTUS mulling student debt relief, Blinken visiting Central Asia, Biden's partial TikTok ban, Petro’s post-honeymoon phase
US Supreme Court weighs student loan forgiveness
The US Supreme Court began hearing arguments on Tuesday in a pair of cases that will test the limitations of presidential power and could derail Joe Biden’s plan to forgive $400 billion in student debt. Biden campaigned on debt relief, promising to help families burdened by the pandemic-fueled economic crisis. But now the court will decide whether Biden has the authority to forgive student loans. The White House cites a 2003 law aimed at alleviating hardship suffered by federal student loan recipients following a national emergency, but opponents say debt relief should require congressional approval. Biden hopes to fulfill his campaign promise ahead of next year’s presidential race, and millions of millennials and Gen-Z scholars – many of whom could see up to $20,000 of their federal student loan debt wiped away – will be waiting with bated breath. A decision will drop before the court adjourns in June, but so far, justices in the conservative majority seem critical of Biden’s move.
Blinken’s trip to Central Asia
US Secretary of State Antony Blinken on Tuesday met with foreign ministers from five former Soviet Republics: Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan. Blinken wants to signal solidarity with Russia’s neighbors and try to ensure that trade routes in these countries are not used by Russia to evade Western sanctions. The 'Stans are happy for the support because they have all felt pressure from Moscow to form closer ties with Russia. In particular, Putin has pressed Kazakhstan’s President Kassym-Jomart Tokayev, without success, to support Russia’s war in Ukraine. Tokayev has a reason for concern: Putin has cited the defense of persecuted ethnic Russians in Ukraine as a motive for his war, and Kazakhstan is home to the second-largest population of ethnic Russians among former Soviet Republics. These states, faced with varying degrees of economic trouble exacerbated by the food and fuel inflation that followed the invasion of Ukraine, could also use some direct US help. During the visit, Blinken announced $25 million of new funding to support economic growth in the region in addition to $25 million the Biden administration had already pledged.
Will China respond to Biden’s government TikTok ban?
China hit back at the US on Tuesday for joining the European Union in banning TikTok from government devices. China’s foreign ministry said that Washington’s move – which gives government employees 30 days to remove the social app from their phones – is an abuse of “state power.” Canada, for its part, followed up with a similar ban. These developments come amid fears that the app, owned by Chinese company ByteDance but based in Singapore, is being used by China’s Communist Party to gather government data. Will Beijing retaliate? Anna Ashton, a China expert at Eurasia Group, thinks any significant reprisal by Beijing for a partial or even a full TikTok ban in the US is unlikely. “It isn’t clear that Beijing will bear any significant loss if TikTok stops operating in the United States, nor is it clear that there would be any real gain in lashing out over such a ban,” she says, noting that there was no clear retaliation from Beijing when India banned TikTok a few years back. What’s more, Ashton says, “TikTok is a private company, and social media companies (much like online sales platforms) are not strategic priorities in China’s technological development plans.” Meanwhile, Congress will proceed on Wednesday to further a bill that would allow the Biden administration to ban TikTok for America’s 100 million users. Being tough on China is a rare bipartisan policy issue. Still, it’s unclear whether the Democratic-controlled Senate will back the GOP-sponsored legislation.
First cabinet reshuffle in Petro’s Colombia
A clash over healthcare and education reforms has provoked the first reshuffle of Colombian President Gustavo Petro’s government since he took power last August. The left-wing leader’s plans to expand the government’s role in both sectors drew a public backlash from several of his more centrist cabinet officials. Among them was Education Minister Alejandro Gaviria, whom Petro promptly sacked along with the ministers of sport and culture. Petro – a notoriously headstrong former guerilla – was elected on a change platform, but at the outset of his term, he brought in centrist allies to quell fears that he’d govern as a wild-eyed revolutionary. Now, as his honeymoon period melts away, is this reshuffle simply a necessary move to preserve policy unity, or is he starting to show his true colors?A new 1000 Naira note as the Central Bank of Nigeria releases the notes to the public, December 15, 2022.
What We’re Watching: Nigeria’s dwindling cash/patience, Bolsonaro’s next move, China's diplomatic European tour, Armenia’s olive branch
Nigeria’s currency crisis
It’s a little over a week before voters head to the polls in Nigeria, Africa’s most populous country, and temperatures on the streets are rising amid protests over a cash shortage. In November, outgoing President Muhammadu Buhari began a program of phasing out currencies of high denominations, saying it would help transition the country to a cashless economy and clamp down on the currency black market and inflation. The timing appears odd so close to an election, but Buhari’s explanation has been that the measure will curb vote buying. But fast forward three months, and banks are running low on cash, with people having to line up for hours to withdraw their own savings. After being told by the government to hand in large denomination notes in exchange for new wads of cash, many are being sent home empty-handed. This is particularly problematic because the West African country of more than 213 million is highly reliant on cash, with just 45% having access to a bank account in 2021. Violence is on the rise as frustrated Nigerians take to the streets, which presents increasing governance challenges ahead of the crucial Feb. 25 vote. In a bid to calm things down, Buhari announced Thursday that one of the three banknotes being phased out would remain legal for another two months. For more on what’s at stake, see this Q+A with Eurasia Group’s Africa expert Amaka Anku.
Bolsonaro plans to return home
The famous Brazilian singer Tom Jobim once said, in so many words, living abroad is great, but it’s crap – living in Brazil is crap, but it’s great. Brazil’s right-wing former President Jair Bolsonaro seems to agree: After months of self-imposed exile in South Florida, he reportedly plans to return to Brazil in March to lead the opposition against his nemesis, left-wing President Luiz Inácio “Lula” da Silva. Bolsonaro has been a “Florida Man” since December, after losing to Lula in a presidential election he and his supporters believe was stacked against them. Although Bolsonaro is still hugely popular in Brazil — he lost by less than 2 points — returning is risky. Brazil’s Supreme Court is already investigating his role in the January 8 riots, when thousands of Bolsonaristas ransacked government buildings in the capital, Brasilia. When Bolsonaro arrives, Lula will have a big decision to make. With things as polarized as they are, jailing Bolsonaro or banning him from politics could backfire. Who would know that better than Lula himself? He was imprisoned for corruption in 2018, only to walk free a year later and storm his way back to the presidency.
Beijing’s balancing act
Former Foreign Minister Wang Yi, a chief foreign policy advisor to President Xi Jinping, is on a whirlwind trip to Europe, where he aims to bolster economic ties. On Wednesday, he met with Emmanuel Macron, reportedly asking the French president for help in getting the US to rein in efforts to clamp down on China’s tech sector (the US recently recruited Japan and the Netherlands to join tech export controls on China). Wang is also making stops in Italy, Hungary, and finally Germany, where he’ll attend the Munich Security Conference. Relations between China and the US, as well as much of the EU, have been strained in recent months – to put it mildly. But with Beijing’s economy in decline after years of self-imposed zero-COVID chaos, Beijing is looking for friends with deep pockets wherever it can find them. This might also explain why Wang is reportedly hoping to meet with US Sec. of State Antony Blinken on the sidelines of Munich. If it happens, it’ll come just a few weeks after Blinken’s planned visit to Beijing was canceled after a Chinese spy balloon was identified – and subsequently shot down – over US airspace. EU leaders, meanwhile, are unlikely to acquiesce to China unless Beijing starts distancing itself from Russia’s aggression in Ukraine.
Armenia offers Azerbaijan a peace plan project
The search for peace in Nagorno-Karabakh continues. Armenia has presented Azerbaijan with a project it hopes will achieve lasting peace in the Caucasus region, which the two former Soviet Republics have fought two wars over since the dissolution of the USSR, killing thousands. The most recent one in 2020 ended with a Russia-brokered peace deal, but clashes late last year threatened to unravel both the ceasefire and repeated efforts at a permanent resolution to the conflict. The Armenian plan outlines monitoring mechanisms by both countries to prevent breaches of a peace deal. The region is claimed by Azerbaijan but has a majority Armenian population that has been semiautonomous since the early 1990s and enjoys close relations with nearby Armenia. Complicating matters further, Turkey supports Azerbaijan while Russia is committed to defending Armenia in case of military escalation in a region rich in oil and gas. We’ll be watching to see how Azerbaijan responds and whether the two sides can come to an agreement on ending the long-simmering conflict.Welcome to the GZERO
Welcome to the GZERO
Hi, I’m Ian Bremmer, and I want to help us all become a little less crazy. Starting now.
I think, talk, and write about global politics for a living. That's too important a subject to be left to “schools of thought,” which is why I left academia to go into business—the business of geopolitics. And because so many people know they don’t really understand this subject—and know they need to—I and 200 of the smartest people I know have built the world’s largest political science company, Eurasia Group.
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How Covid-19 killed the KL-Singapore project
Malaysia's decision yesterday to cancel the high-speed rail (HSR) project with Singapore was a painful one, say analysts, but a necessary move to shore up its domestic economy against the more immediate onslaught of the coronavirus pandemic.
Malaysia faces revenue crunch as spending mounts on coronavirus woes
The government expects revenue to rise 4.2 per cent next year.
Chinese leaders pledge to keep up economic recovery
Senior Chinese leaders have pledged to maintain "necessary support" to keep up China's economic recovery, as the world's second-largest economy continues to face uncertainties and headwinds.
Wuhan: A city of resilience, a city of scars
WUHAN - On a rainy Sunday evening, a line of about 100 cars is at a standstill waiting to enter an upscale mall in the Guanggu district east of Wuhan.