Recommended Weekend Reads
Why Trump Is Focused on the Panama Canal, America’s Data Center Hotspots, How Iran Lost Before It Lost, The Four Main Groups Opposing Xi Jinping, and Should We Believe the Economic Data?
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Americas
Panama: From Zoned Out to Strategic Opportunity Ryan Berg/Center for Strategic and International Studies
Since his election in November 2024, President Donald Trump has staked out strong positions on the importance of the Western Hemisphere to the United States’ national security interests. A secure, prosperous, and free Western Hemisphere underpins U.S. geopolitical and economic success. Panama is the most strategically significant geography in the Western Hemisphere. With 40 percent of U.S. container traffic passing through the Panama Canal, it rightfully drew President Trump’s attention. Trump has highlighted concerns about the status quo regarding the disposition of the canal, its operation, and People’s Republic of China (PRC)–owned ports dominating the approaches. This commentary will not relitigate the merits of the 1977 Carter-Torrijos treaty, sovereignty, or transit rates but rather highlight the strategic importance of Panama, legitimate concerns over Beijing-owned ports, and the need for sustained diplomatic engagement and U.S. private sector investment.
Trump’s Panama Canal threat revives memories of 1989 US invasion Financial Times
With US President Donald Trump this week threatening to “take back” the Panama Canal, residents who survived the battles 35 years ago are angry that they are once again at the whim of their country’s main ally. “The invasion overthrew the military dictatorship of General Manuel Noriega, who was captured, flown to the US and jailed on drug trafficking charges. Panama has been a democracy and staunch US ally ever since.
Will Trump Focus on the Western Hemisphere? The Net Assessment Podcast
The hosts get together to talk about the second Trump administration’s agenda in the Western Hemisphere. What interests does the United States have in Latin America? Should the United States be pushing back on China’s activities in the region? If so, what carrots and sticks can the United States offer countries there? And will the administration officials eager to focus on the region be able to sustain that focus, when so many other parts of the world are competing for U.S. attention?
It’s Time for a U.S.-Greenland Free Association Agreement Kaush Arha/Alexander Gray/Tom Dans National Interest
American security interests and Greenland’s economic aspirations necessitate an institutional partnership between the two. Greenland, an autonomous territory of Denmark, is part of North America in terms of aspiration and geography. It is high time Greenland’s position in North American orbit was cemented. As the world’s largest island atop the North Atlantic, it is an indispensable U.S. ally in the most proximate theatre between the United States and its NATO allies and the Russia-China authoritarian advance. American investments and markets are essential catalysts to turbocharge Greenland’s economic growth and prosperity and ensure its continued alignment with NATO as its place within the Kingdom of Denmark evolves in the years ahead. It is time for a US-Greenland Free Association.
America’s data center job hot spots Axios
President Trump has announced his support for Stargate, a massive $500 billion AI infrastructure project which, when you break it down, it all about building more data centers. But where are the data center job hotspots in America? Axios breaks it all down.
Middle East
How Iran Lost Before It Lost: The Roll Back of Its Gray Zone Strategy War on the Rocks
“Today, you can get in a car in Tehran and get out in the Dahia, Beirut.” Five years and two months after Gen. Qasem Soleimani made this statement, the Islamic Republic of Iran is in retreat. Iran’s air and ground lines of supply to Lebanon now go through Sunni-dominated Syria, where the Assad regime recently crumbled. Even if Iran could more easily get to Lebanon, Hizballah is the weakest it has been in over a generation, having been relentlessly battered by Israel. In the words of one high-ranking commander in Iran’s Revolutionary Guard Corps: “We lost, we badly lost.” Iran’s ability to deter and wage war in recent decades was largely through gray zone methods. And the structures, resources, and allies that allowed it to do this are now in tatters. But the erosion of Iran’s gray zone strategy was already happening when Assad was still in power and Hizballah loomed over Israel as a fearsome threat. Iran’s economic dysfunction and political disarray prevented it from building and sustaining resilience. This analysis highlights how Iran’s economic malfeasance, fueled by internal divisions among government stakeholders, has undermined its geopolitical ambitions and prevented it from converting regional influence into sustainable economic leverage, marking a potential turning point in its regional strategies.
Indo-Pacific
2025 could be the tipping point for India’s economic aspirations OMFIF
Amid the multiple global shifts taking place today, India stands at a critical juncture. The world’s most populous democracy faces a turbulent landscape of geopolitical rivalries, technological shifts and the urgency of climate action. The question remains: will global economic forces propel India toward leadership, or will they impede its ascent?
The Four Main Groups Challenging Xi Jinping The Jamestown Foundation
Chinese President Xi Jinping faces challenges to his authority from four main groups: 1) retired party elders such as Li Ruihuan and Wen Jiabao; 2) princelings, especially those based overseas; 3) military leaders, such as Zhang Youxia; and 4) parts of the middle and entrepreneurial classes who are voicing their discontent. Xi is unlikely to be overthrown or face a coup, but his ability to force through his agenda may be reduced. Indicators that Xi is embattled include his absence from chairing two recent high-level meetings, references to “collective leadership” the PLA Daily newspaper, and an adjustment to PRC diplomacy to a more conciliatory approach, especially toward the United States. This apparent reduction in power could be a result of the country’s bleak economic situation, which Xi’s policies from last year have not resolved.
China's Economic, Scientific, and Information Activities in the Arctic Rand Corporation
How might China's scientific, information, and commercial activities in the Arctic contribute to the country's broader security goals by enabling the collection of intelligence, allowing access to critical infrastructure, or providing other types of military advantages? China's activities in the Arctic have increased, and China's overall approach to strategic competition, which fuses the public with the private and the civilian sphere with the military, has heightened U.S. concerns that China might be on its way to becoming a security and military actor in the Arctic and that Russia is enabling this pathway. In this report, the authors present an analysis of China's economic, scientific, and information activities in the Arctic and call special attention to the intelligence collection and military risks that they might present, including the threat signals for these risks. The authors explore five categories of activities: natural resource exploitation, knowledge development, access to infrastructure, data transmission, and public diplomacy.
From Fast Lane to Gridlock: Have Chinese Car Exports Peaked? Rhodium Group
China’s auto industry has been a success story in recent years, with car exports emerging as a bright spot in an otherwise slowing economy. Between 2021 and 2024, the number of cars shipped from China surged by 300%, propelling China past Japan to become the world’s largest car exporter by units. However, this rapid growth now faces significant challenges. Trade barriers and outright bans in major markets like the US threaten to stall export momentum. Slumping export growth will put pressure on Chinese automakers, potentially leading to industry consolidation. But incumbent carmakers shouldn’t celebrate too much—even with slower export growth, Chinese carmakers are transforming into formidable global competitors in the auto market.
Geoeconomics
How German Industry Can Survive the Second China Shock Sander Tordoir/Brad Setser Centre for European Reform
Industrial production in the EU’s largest economy has been declining for over five years, a source of profound angst in a country where manufacturing contributes around 5.5 million jobs and 20 percent of gross domestic product (GDP). Germany is starting to realize that China’s new automotive, clean technology and civil aviation industrial base directly competes with Germany’s manufacturing foundation. China’s macroeconomic imbalances now directly infringe on German industrial interests. Germany, with its low debt levels and endangered industrial base, has both the policy space to act and the most to lose if it does not. But it cannot act alone against the new Exportweltmeister. As Henry Kissinger once quipped, Germany is “too big for Europe and too small for the world.”
Use of Artificial Intelligence and Productivity: Evidence from Firm and Worker Surveys RIETI Discussion Paper Series
Abstract: With the rapid diffusion of artificial intelligence (AI), its effects on economic growth and the labor market have attracted the attention of researchers. However, the lack of statistical data on the use of AI has restricted empirical research. Based on original surveys, this study provides an overview of the use of AI and other automation technologies in Japan, the characteristics of firms and workers who use AI, and their views on the impact of AI. According to the results, first, the number of firms using AI is increasing rapidly and firms with a larger share of highly educated workers have a greater tendency to use AI. Robot-using firms are also increasing, but the relationship between their use and workers’ education is weakly negative, suggesting that the impact on the labor market is different for each technology. Second, AI-using firms have higher productivity, wages, and medium-term growth expectations. Third, AI-using firms expect that while it will increase productivity and wages, it may decrease their employment. Fourth, at the worker level, more-educated workers are more likely to use AI, suggesting that AI and education are complementary. Currently, AI may favor high-skill workers in the labor market. Fifth, workers who use AI evaluate their work productivity to have increased by approximately 20% on average, suggesting that AI could potentially have a fairly large productivity enhancing effect.
Should We Believe the Economic Data or Americans “Lyin” Eyes? The Answer is Yes Scott Winship/American Enterprise Institute Center on Opportunity and Social Mobility
Many Americans are convinced the economy is ailing and that life is financially tougher today than a decade—or a generation—ago. Social media posts wax nostalgic for a long-lost era when all single breadwinners allegedly could afford a home and two cars for a family of four. Everyone seemingly knows someone who did everything they were supposed to do but is now stuck with six figures of student loan debt and a string of gig economy jobs. So, are Americans “right to believe their lyin’ eyes,” as Cass claimed in a recent op-ed titled, “Three Cheers for Economic Pessimism”? This formulation begs the question of whether American beliefs about the economy conflict with objective measures. Cass and the declensionists are no more reliable guides to those beliefs than accurate interpreters of economic data. What Americans tell surveyors is consistent with the objective data, for the most part. There has been no long-term decline in economic conditions.
The Upcoming Trump Tariffs: What Americans Expect and How They Are Responding Olivier Coibion/Yuriy Gorodnichieknko, Michael Weber
Abstract: In a recent survey, we asked Americans to tell us about what they thought would happen under Trump’s tariff policies and how this might affect their decisions. The results point toward widespread anticipation of tariffs being imposed on our trading partners, especially China, with significant expected passthrough into the prices of both imported and domestically produced goods and a general acknowledgment that American consumers will bear an important share of the cost of tariffs. In response to higher future tariffs, many Americans, and particularly Democrats, report that they would increase their purchases of foreign goods in anticipation of the upcoming tariffs and higher prices, while simultaneously trying to save more in the face of higher uncertainty about future policies. Managers’ report that their firms would become more likely to raise prices, change their mix of products and seek out alternative suppliers as the rise in tariffs approaches.