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China's EU deal betrays insecurity; not a wedge between US & EU

In our first edition of The Red Pen for 2021, we take a look at an editorial by the FT's Gideon Rachman, who argues that the recent EU-China treaty will complicate President-elect Biden's ability to handle China and rebuild the US-EU relationship. Ian Bremmer and Eurasia Group's Michael Hirson point out the deal actually demonstrates how much Beijing fears being out-maneuvered by Biden.

There's a lot going on in the world, and obviously plenty to discuss right here in the United States where our democracy is getting tested like nobody's business. But that doesn't mean that good op-eds out there don't deserve to be sparred with. And, I don't want to just neglect all those perfectly important writers, so we have one this week.

Turning our attention abroad to how China factors in as President-elect Joe Biden takes office in a short period of time … and what role Europe will play in how the United States approaches the second biggest economy, soon to be first, on the planet.


The op-ed we're marking up is by Gideon Rachman. He's the chief foreign affairs commentator at the Financial Times. And the piece is entitled, "Europe Has Handed China A Strategic Victory." He argues against a recent investment treaty between Europe and China championed by European Commission President Ursula von der Leyen, also heavily supported by German Chancellor Angela Merkel. And it's viewed overall as a deepening of financial ties and commerce between Europe and China.

Now as a little bit of background, the deal, which was several years in the making, boosts market access in China for European firms in sectors such as autos and finance.

Now Gideon argues that the European Union has just handed China a big win despite all of that nation's diplomatic and humanitarian transgressions…and that this is going to further complicate things for incoming President Joe Biden as he tries to figure out how to deal with China.

Now, agree with Gideon, it's a significant development. And also, it's true that Europe does appear to be flexing its muscles a bit here: The US can do a unilateral trade deal with China (Phase One) and so can Europe. But is this going to change the geopolitical landscape? No, and the argument goes too far on that point.

First, Gideon writes, "Ms. Von der Leyen concluded 2020 by sending a truly awful geopolitical message — as her commission signed off on an investment treaty between the EU and China."

Well, the EU also has said it agrees with the United States "on the strategic challenge presented by China's growing international assertiveness." And there are many humanitarian and diplomatic issues Europe as a whole has strongly condemned—from China's attack on democracy in Hong Kong to its treatment of Muslim minorities. This is a fairly narrow deal, not a white flag on the relationship.

"But Ms. Von der Leyen concluded 2020 by sending a truly awful geopolitical message - "  Don't overdo it. This is a narrow deal, not a white flag.

Number two, Gideon describes the timing of the deal as "exquisite" for China, driving a wedge between Europe and the US on the eve of Biden's inauguration.

Now you can make that argument, but let's be clear, Beijing was clearly intent on rushing to get the deal done before Biden took office and ended up giving a lot of benefits to the Europeans accordingly. Does that sound like a confident superpower? Or, rather, like an insecure country worried about being out maneuvered by Biden and preparing to face a lot more coordinated and multilateral pressure? In other words, China might have grabbed what it could at a fire sale before Biden comes in to remove the wedge that has existed between Europe and the United States under the Trump administration.

"We've allowed China to drive a huge wedge between the US and Europe." China rushed to seal the deal before Biden took office.

Now on that, Gideon describes this deal as a "kick in the teeth" to Biden, who wants to restore ties to some of our strongest global allies in Europe.

Now, it's a wake-up call. But Beijing keeps digging its own diplomatic hole, from turning away WHO inspectors to conducting mass arrests in Hong Kong. And that's just this week. The new Biden team's commitment to transatlantic cooperation is going to go a long way to repairing the US-Europe relationship.

"It's also a considerable kick in the teeth for Joe Biden." Wake-up call? Yes. But Beijing keeps digging its own hole.

Finally, Gideon writes that Europe "is naive to believe that China will respect the agreement it has signed…And it is naive to think that the darkening political climate in Beijing will never affect life in Brussels or Berlin."

Now sure, you can point to plenty of examples of China not holding up its end of the bargain. Gideon mentions the WTO agreement in 2001. He's right. Also, in the terms of this EU/China deal, Beijing is expected to deliver on things like climate action, reducing favoritism to state-owned businesses, and improving labor practices. All kind of red lines for the Chinese state capitalist system. Good luck with that. But let's be clear, when China fails to meet those terms, that ends up working in America's favor and makes any EU/China agreement short-lived at best. It gets weaker as a consequence of that.

"It's naive to believe that China will respect the agreement it has signed." Maybe. But the deal's weaknesses mean it could be short-lived.

So, is it the end of the world order as we know it? No. But is China, and how its growing economic influence and power impacts every nation, going to be a big issue for Biden…and beyond? Yes. We just don't think Ursula von der Leyen or the EU did something "truly awful," as Gideon states.

Khant Thaw Htoo is a young engineer who works in Eni's Sakura Tower office in the heart of Yangon. As an HSE engineer, he monitors the safety and environmental impact of onshore and offshore operations. He also looks out for his parents' well-being, in keeping with Myanmar's traditions.

Learn more about Khant in the final episode of the Faces of Eni series, which focuses on Eni's employees around the world.

On his first day as president, Joe Biden signed a remarkable series of executive orders. Boom! The US rejoins the Paris Climate Accord. Bang! The United States rejoins the World Health Organization. Pow! No more ban on immigration from many Muslim-majority countries. Biden's press secretary reminded reporters later in the day that all these orders merely begin complex processes that take time, but the impact is still dramatic.

If you lead a country allied with the US, or you're simply hoping for some specific commitment or clear and credible statement of purpose from the US government, you might feel a little dizzy today. The sight of an American president (Barack Obama) signing his name, of the next president (Donald Trump) erasing that name from the same legislation/bill, and then the following president (Biden) signing it back into law again will raise deep concerns over the long-term reliability of the world's still-most-powerful nation.

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Ian Bremmer discusses the World In (more than) 60 Seconds:

Biden's first scheduled call with a world leader will be with Canada's Justin Trudeau. What's going on with the Keystone Pipeline?

Well, Biden said that that's it. Executive order, one of the first is that he will stop any construction or development of the Keystone Pipeline. This is of course an oil pipeline that would allow further oil sands oil to come to the United States. The infrastructure is significantly overstretched, it's led to backlogs, inefficiency, accidents, all the rest, but it also facilitates more energy development and keeps prices comparatively down if you get it done. So, there are lots of reasons why the energy sector in Canada wants it. Having said all of that, Trudeau, even though he's been a supporter of Keystone XL, let's keep in mind that he did not win support in Alberta, which is where the big energy patch in Canada is located. This is a real problem for the government of Alberta, Canada is a very decentralized federal government, even more so than the United States. The premier of Alberta is immensely unhappy with Biden right now, they've taken a $1.5 billion equity stake in the project. I expect there will actually be litigation against the United States by the government of Alberta. But Trudeau is quite happy with Biden, his relationship was Trump was always walking on eggshells. The USMCA in negotiations ultimately successful but were very challenging for the Canadians, so too with the way Trump engaged in relations on China. All of this, the fact that Trump left the nuclear agreement with Iran, the Paris Climate Accords, WHO, all of that is stuff that Trudeau strongly opposed. He's going to be much more comfortable with this relationship. He's delighted that the first call from Biden is to him. And it certainly creates a level of normalcy in the US-Canada relationship that is very much appreciated by our neighbors to the North.

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Kevin Sneader, Global Managing Partner at McKinsey & Company, provides perspective on what corporate business leaders are thinking during the global coronavirus crisis:

Should businesses be pessimistic or optimistic about 2021?

It's easy to be gloomy about the year ahead when faced with the realities of a cold, bleak winter in much of the world. Add to that lockdowns across Europe, surging case numbers and hospitalizations, and dreadful events in the Capitol in the US to name a few reasons for pessimism. But I think there is a case for optimism when it comes to this year. After all, it's true to say that it's always darkest before the dawn, and my conversations with business leaders suggest there are reasons to be positive by 2021.

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Renowned tech journalist Kara Swisher has no qualms about saying that many of the country's social media companies need to be held accountable for their negative role in our current national discourse. Swisher calls for "a less friendly relationship with tech" by the Biden administration, an "internet bill of rights" around privacy, and an investigation into antitrust issues.

Swisher, who hosts the New York Times podcast Sway, joins Ian Bremmer for the latest episode of GZERO World, airing on public television nationwide beginning this Friday, January 22th. Check local listings.

The GZERO World Podcast with Ian Bremmer. Listen now.

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