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What We’re Watching: China vs Australia, Kashmir talks, EU’s Putin FOMO
China-Australia trade row continues: In the newest installment of the deepening row between China and Australia, Beijing has launched a complaint against Canberra at the World Trade Organization over tariffs placed on three Chinese exports: wind towers, railway wheels and stainless-steel sinks. Australia says it was caught off-guard by China's suit — the tariffs have been in place since 2014, 2015, and 2019 — and that Beijing didn't go through the regular WTO channels nor pursue bilateral talks before filing the complaint. It's the latest move in a game of tit-for-tat: last year, Beijing slapped tariffs on Australian products like wine and barley, a massive blow to Australia's export-reliant economy. Since the Chinese crackdown on Australian wine, sales have fallen from AU$1.1 billion ($840 million) to just AU$20 million, prompting Australia to recently challenge Beijing's move at the WTO. China-Australia relations have become increasingly fraught over a range of issues including trade, Chinese spying, 5G, and Australia's call for a global probe into the origins of the pandemic.
Is India going to change tack on Kashmir? Leaders of pro-India political parties in Kashmir are meeting with Prime Minister Narendra Modi for the first time since India revoked Kashmir's autonomy almost two years ago. The talks are a sign that Modi may be open to partially restoring the special self-governing status of India's only Muslim-majority territory, which since August 2019 has been ruled directly from Delhi. But, why now? Foreign considerations play a big role. First, restoring Kashmir's autonomy would help to continue a wider India-Pakistan thaw. The two sides recently signed a ceasefire agreement in Kashmir, a territory that they've fought three wars over. Second, the looming US withdrawal from Afghanistan is making India nervous: if, as expected, the Taliban take power again, they could provide haven for Kashmiri separatists eager to attack India.
The EU has Putin FOMO: Joe Biden's summit with Vladimir Putin last week went well enough that now European leaders want to have a go of their own. French President Emmanuel Macron and German Chancellor Angela Merkel on Wednesday proposed a direct EU meeting with the Russian president for the first time in more than seven years, while also threatening more sanctions if Russia continues to challenge European interests and values. The EU is much closer, both geographically and economically, to Russia than the US is, so there's lots to talk about. But the proposal, which evidently blindsided other EU leaders, has exposed divisions within the bloc. Some EU member states — in particular perennial Russia-hawks Poland and the Baltic states — oppose giving Putin the pleasure of a meeting while Russia still occupies Crimea, harbors cybercriminals, spreads disinformation, and stifles dissent. Others, echoing Biden's reasoning, say it's better to speak directly and frankly than not. Can Merkel and Macron get enough of their fellow EU leaders to agree? Putin is watching, and so are we.
What We’re Watching: US vaccine patent U-turn, right wins big in Madrid, Biden weighs in on Russia-Ukraine
US reverses course on vaccine patents: In a surprise move, the Biden administration will now support waiving international property rights for COVID vaccines at the World Trade Organization. Until now the US had firmly opposed waiving those patents, despite demands from developing countries led by India and South Africa to do so. Biden's about face comes just a week after he moved to free up 60 million of American-bought AstraZeneca jabs — still not approved by US regulators — for nations in need. It's not clear how fast an IP waiver would really help other countries, as the major impediments to ramping up vaccine manufacturing have more to do with logistics and supply chains than with patent protections alone. But if patent waivers do accelerate production over time, then that could accelerate a globalreturn to normal — potentially winning the US a ton of goodwill.
The left gets pummeled in Madrid: The two leftwing parties in Spain's national government got massacred in regional elections in Madrid this week. Both the center-left PSOE and the far-left Podemos were steamrolled by the conservative Popular Party, which more than doubled its current seats to win 64, just four shy of a majority on its own in the Madrid legislature. The PP may now even turn to the upstart far-rightists of Vox in order to form a coalition government in Madrid. The defeat was a crushing blow for Prime Minister Pedro Sánchez of the PSOE, who has often clashed with Madrid's pugnacious regional leader over the latter's disdain for economy-crippling lockdowns. Moreover, the surge in support for PP and Vox in Madrid — always an influential bellwether for national politics — will make him very reluctant to call early elections, which he was considering doing because the PP until recently was in big trouble following its dismal showing in the Catalan election just three months ago. Interesting times ahead for Spanish politics.
Biden, Ukraine, and Russia: I'd like to speak face-to-face with Russian President Vladimir Putin sometime this summer, says US President Joe Biden. Not a bad idea, says the Kremlin. If it happens, the two leaders are sure to talk about Ukraine, and there have been suggestions this week that the US might join Germany and France in efforts to mediate the conflict and find a path to peace. US Secretary of State Tony Blinken is actually in Kyiv this week to assert "unwavering US support for Ukraine's sovereignty and territorial integrity in the face of Russia's ongoing aggression." Russia has lately been dialing up the pressure on Ukraine – with a brief military buildup along the border between the two countries, military exercises in the disputed Crimea peninsula, and Russian threats to blockade key Ukrainian ports. These are reminders that the central challenge for any mediator is ending a conflict that Russia's government still finds useful for both domestic and international purposes.Women in power — the World Trade Organization's Ngozi Okonjo-Iweala
Starting a new job is always daunting. For Ngozi Okonjo-Iweala, who just weeks ago started a new stint as director general at the World Trade Organization, the timing could not be more trying: she is taking over the world's largest global trade body amid once-in-a-generation public health and economic crises that have emboldened protectionist inclinations around the world.
Who is Ngozi Okonjo-Iweala, and how has her worldview shaped her politics and policymaking?
Nigerian trailblazer. "Investing in women is smart economics, and investing in girls, catching them upstream, is even smarter economics."
As Nigeria's first female finance minister (2003-2006 and 2011-2015) under presidents Olusegun Obasanjo and Goodluck Jonathan, Okonjo-Iweala oversaw sweeping financial reforms that helped stabilize the country's volatile economy. Indeed, her leadership was crucial in ensuring $18 billion in debt forgiveness, helping Nigeria secure its first-ever sovereign debt rating. She also pioneered a program that culled "ghost workers" from the civil service's payroll, saving around 163 billion naira ($398 million) over two years.
Okonjo-Iweala also started the privatization of state sectors like power, though that process has since proven to exacerbate problems, resulting in spotty power supply and price increases for the country of 200 million people. Additionally, though Okonjo-Iweala tackled corruption by making states report their accounts, failed attempts to diversify the country's economy, a stated aim of Okonjo-Iweala and the Jonathan government, has left Nigeria, Africa's largest oil producer, vulnerable to the shocks of global oil markets.
Central to her economic outlook is the belief that the political and economic fruition of Nigeria — and that of other African countries — is contingent on better integration of women into all areas of political and economic life. Though many Nigerian women have become influential entrepreneurs, she notes, lack of education opportunities for women and girls in the country's north have impeded development and growth (a crisis exacerbated by the deteriorating security situation in northern Nigeria over the past decade.)
It's worth noting that Okonjo-Iweala paid a personal price for her reforms and crackdown on corruption in the oil industry: In 2012, her 82-year old mother was kidnapped by bandits demanding the finance minister's resignation — and cash. Okonjo-Iweala refused to resign and her mother was eventually released safely (though details remain unclear).
African representation. "The low-income countries in Africa and elsewhere are some of the most rapidly growing economies in the world. These countries ought to be given more of a voice."
In Nigerian politics, as well as during her 25 years at the World Bank (she rose to managing director), and now at the WTO, Okonjo-Iweala has always emphasized that African nations, as well as other emerging markets, are some of the fastest-growing economies in the world. (Before oil prices fell sharply in 2016, Nigeria's economy was growing steadily at 6.3 percent.) Pointing to the fact that many frontier economies in Africa and Asia were the engines of the world's economic revival in the aftermath of the global financial crisis in 2009, Okonjo-Iweala says that African nations should be given more voice in global forums where important international decisions are made.
It's precisely this outlook that Okonjo-Iweala — who until recently was also chair of the GAVI board which aims to boost vaccine access in the developing world — plans to bring to her tenure at the WTO. In recent months, Okonjo-Iweala has lobbied against "vaccine nationalism," and she's advocated for using WTO intellectual property rules to expand vaccine development and manufacturing in developing countries. She has pointed to licensing deals like the one struck with India's Serum Institute that allows it to produce AstraZeneca's vaccine as a model — a view shared by many leaders, including South Africa's President Cyril Ramphosa who recently said that rich countries were practicing "vaccine apartheid" by blocking emerging markets from manufacturing vaccines on their home turf.
The importance of symbolism. Many media reports have focused on Okonjo-Iweala's bonafides as the first African and first woman to head the WTO after almost seven decades (the WTO emerged from the former General Agreement on Tariffs and Trade). That's a reductive way of looking at Okonjo-Iweala's accomplishments, but her appointment as WTO chief at this tumultuous moment in its history is indeed an historic breakthrough for African women, who see their own social and professional prospects boosted by her accomplishments. As one Nigerian academic recently said, "[Her] achievement is not just a day's work. It's a kind of investment that she has nurtured for a long time."
Texas grid shows need to fix infrastructure in US; RIP Rush Limbaugh
Ian Bremmer discusses the World In (more than) 60 Seconds:
What's happening in Texas?
Speaking of weird weather, my goodness yeah, I didn't know this was coming up here. Yeah, it's cold, right? There's snow. It looks horrible and millions of people without energy and of course that is because the level of infrastructure investment into the Texas grid is well below what it needs to be. There's a lack of integration. Texas' grid largely stands by itself. It is not under the authority of or coordinated multilaterally with broader energy infrastructure. And there has been a lot of investment into renewables in Texas. It is certainly true. They've been very interested in that. Sped up under former Governor Perry but still the vast majority of electricity is coming from fossil fuels. It's coming from coal and mostly oil and gas.
And so, all of these people that recently have said it's because of renewables, and you can't rely on renewables and that's why you've got all of these shutdowns in Texas. No, it's because you haven't invested properly in infrastructure resilience. First of all, there's a lot more gas shut down then there is wind shutdown, and you've got temperatures like this in Northern Europe all the time and worse and they don't have this kind of wind shut down because they invest properly in their infrastructure. So, you know, you go to LaGuardia, and we're finally fixing it in New York, but for quite a while a lot of people including Joe Biden said it was like going to a developing country, they said third world country when you look at LaGuardia. Well, when you look at a lot of infrastructure in the US it feels that way and one of the reasons why I strongly support a trillion dollar plus spend after the $1.9 trillion for relief on infrastructure because that's a good investment that will actually return more than the dollars you put in over the long-term. And that's the way you should think about the deficit of whether or not you're getting a better return on your investment. Just like you do for corporations, you do for sovereigns.
The World Trade Organization, WTO, has a new leader. Who is she and what challenges lie ahead?
She is Ngozi Okonjo-Iweala. And I mean, she's a fixture. I've known her, I've seen her at events for well over a decade. She was the minister of finance for Nigeria. She was the number two at the World Bank. And I mean whether you're talking about Davos or IMF annual meetings, any big multilaterals, her presence there as a technocrat, as a plain smoking, really smart pro-globalization force, is kind of legion. It would be really surprising if she hadn't gotten a major, additional position at some point in her career. WTO was an obvious place for her. Not going to be easy, first of all because big decisions have to be taken unanimously and you've got 160, 170 members of WTO so it's hard to do. Secondly, the WTO needs reform, it needs to be focused much more on digital exchange and trade. It needs to be modernized the way trade agreements, multilateral and bilateral do and that's going to be very hard to do. And of course, the Chinese government, the second most powerful economy in the world routinely abrogates the outcomes that are forced upon it by World Trade Organization judges. So do the Americans not least of which in terms of the US-China trade conflict itself. So, it's not an easy role but I do think that she's going to be seen as very active in it, kind of like Christine Lagarde at the ECB when she got that appointment. I mean, this was completely uncontroversial that she would get this position.
Okay, what's happening between Iran and the US over sanctions?
Not very much. The United States certainly wants to rejoin the old Iranian nuclear deal, but they understand there's a lot of domestic pushback unless it is made tougher or at least broader in terms of how long it lasts as well as involving things like ballistic missile development where the Iranians are in abrogation of the UN security council resolutions. The Iranians are saying, "We'll come back to the JCPO as it was but nothing more." These are hard people to negotiate with. It's a hard government to negotiate with, the bureaucrats there. It took years on the final points under Obama and Kerry and that was when the secretary of state was personally involved. There is no cabinet member in the Biden administration that is personally anywhere close to as invested in getting this Iranian deal done if it's hard as Kerry was five years ago. And so, as a consequence, I think there'll be forward momentum, but I think it's going to be much slower than people expect. Now, there is a point that once you start engaging in negotiations a whole bunch of third countries that were concerned about doing anything that might be seen as gray area in terms of busting sanctions like buying Iranian crude and other sorts of goods will suddenly, you'll see more leakage. And so, the Iranians just by virtue of moving back towards the United States and people getting confident about JCPOA, they won't have another million barrels a day on the market, but you'll start to see slippage, leakage in that and that means that energy prices will start going down a bit.
And Rush Limbaugh at 70 no longer, passed away today. What do I think?
I think that Rush Limbaugh is like a precursor to Mark Zuckerberg. He's someone that became an iconic figure by giving people what they wanted, not what they admitted they wanted but what they actually wanted, figuring out what that was and maximizing his reach and his influence as a consequence of that. Talk radio really became the force that it was in the United States because of Rush and his connection with his audience, his understanding of how the medium worked, his ability to raise extraordinary amounts of advertising revenue that had never been done in radio in a news format before that. All things that he became a unique figure and of course an entire field developed around him. And after talk radio we get cable news; we get Lou Dobbs on CNN even talking about a presidential run at some point. And then of course you get social media and now you have Mark Zuckerberg. And I think that you can draw a line directly between those two men. And I think they both caused a lot of damage internationally and certainly in terms of civil society in the United States but also on this day of Rush's passing to recognize just how well he understood the opportunity that was in front of him and how much he was able to maximize it, kind of a force for capitalism in a country that is most interested in unleashing animal spirits. And there you have it, RIP Rush Limbaugh.
"Fixing" US foreign policy isn't the real challenge Biden would face
Josh Rogin's Washington Post op-ed argues that Donald Trump's assault on US foreign policy could take decades to repair. But Rogin gives Trump too much credit and misses the real challenge to American global leadership. Ian Bremmer and Eurasia Group analyst Jeffrey Wright use The Red Pen to keep the op-ed honest.
Today, we're taking our red pen to an op-ed from the Washington Post written by Josh Rogin, a columnist for the Global Opinions section.
The piece is called "U.S. foreign policy might be too broken for Biden to fix" it. I mean, we could start with the title--which encapsulates just how much we feel Josh overstates the damage done in the past four years and fails to recognize the resilience of US institutions in general.
But let's get specific.
Number one, Rogin writes that President Trump has attacked "the previous bipartisan consensus that the United States has a unique duty to lead a global world order based on the advancement of freedom, human rights and the rule of law."
Hey, Josh—the Iraq War, GITMO, and drone strikes are calling. They want you to know America acted unilaterally long before Trump became President. It's true. President Trump was the first to say "America First" out loud—(I mean, since we tried to stay out of WWII, that is)--but it's far from a new philosophy.
Number two, on the point of Trump potentially having broken the systems critical to diplomacy, he writes, "It could take decades to repair the institutions Trump intentionally damaged…"
Now sure, Trump gutted the State Department and he's clogged up the World Trade Organization, and this is…a bad thing. Though we'd argue the institutions are resilient and it won't take decades for them to bounce back, if we want to actually rebuild them. While others, so far, he's talked a big game, but hasn't done very much—take NATO, the IMF, the United Nations, even the World Health Organization.
On Iran, Rogin writes "Biden can't return to the Iran deal but won't be able to strike a new one.
Who says? I mean, I'm not saying a new deal with Iran will be easy (the last one wasn't, and it wasn't exactly comprehensive), but Biden is going to resume negotiations (if he becomes president) and will have broad international support for doing so. Plus, Iran is in far more desperate economic shape now than they were four years ago. They're incented.
I also think there's a big point about the United States that Rogin's article ignores. The barriers to becoming the world's policeman again aren't just partisanship—or because of Trump's presidency or GOP leadership in Congress. Polls consistently show that Americans are tired of so-called "endless wars" and extensive international engagement. There's also real discontent about US trade policy--which many feel hasn't done much to help everyday Americans.
Joe Biden, should he win on November 3 or later,will face major challenges in restoring global leadership—but they aren't just coming from Republicans or Trump supporters. He would have to overcome domestic political opposition—including from a lot of Democrats—if he wants to set the nation on a different path.
No, don’t abolish the WTO. Reform it.
Have you ever read a major op-Ed and thought to yourself, "no! no! no! That's just not right!" Us too. That's why we're launching a new series called The Red Pen, where Ian Bremmer and the crew at Eurasia Group will pick apart the argument in a major opinion piece. Right, left, Republican, Democrat, American, Global — we aren't particular. We just want to keep writers honest. This week, we take the red pen to Senator Josh Hawley's Times op-ed calling for the end of the WTO. No, Josh, killing the WTO isn't a good idea — but reforming it is. Watch the video here, and stay in the red with us!
All-powerful WTO operating against US interests? Hardly. The WTO remains a forum of nation states, with most decisions made by consensus. It's an arbiter, not a manager.
Don't blame the WTO for all the US economy's ills—globalization, tech advancements, and innovation have done as much to disrupt American industries as free trade.
The WTO and GATT did fuel free trade. Average tariff levels fell by 50% from 1947 to 1996 and 20% from 1996 to 2018, while the US created millions of new jobs.
Frustration with China is valid, and change is necessary. But reform, not abandonment, is the solution. Withdrawing from the world is costly, and we will invariably get pulled back in.
The US certainly defends itself … it has brought more cases before the WTO than any other country and won the vast majority of them.
—With research by Henry Rome, Robert Kahn and Caitlin Dean
Amb. Cui Tiankai on coronavirus aid: "China cannot be safe" until the whole world is safe
Cui Tiankai, China's top diplomat in the U.S., says there is a lack of global coordination in response to the COVID-19 pandemic. While he praises international agencies like the World Health Organization and International Monetary Fund, Cui believes more needs to be done and for a wider swath of impacted nations. China, he says, is poised and ready to lead in aid and relief efforts on a global stage, and he urges the U.S. to also do its part.
The interview is part of a wide-ranging conversation looking back at the origins of the pandemic, the current situation in China, and the state of U.S.–China relations amid this global crisis. GZERO World with Ian Bremmer will devote an upcoming episode to the interview, as well as a look at China's growing importance in the global response to coronavirus. The program begins airing nationally on Friday, April 10, on U.S. public television. Check local listings, and follow GZEROMedia.com for more excerpts throughout the week.