Recommended Weekend Reading

April 21 - 23, 2023

Here are our recommended reads from stories we saw in the last week.  Let us know your thoughts and if you or a colleague want to be added to our distribution list. We hope you find these useful and have a great weekend.  

·       “Russian Blackmail and the Black Sea Grain Initiative: The (Limited) Impact of the War in Ukraine on Global Food Security” Finish Institute of International Affairs

Ukraine and Russia are both major exporters of foodstuffs and fertilizers. Consequently, Russia’s invasion of Ukraine in February 2022 led to fears of an impending food crisis, particularly in the Middle East and North Africa.  The UN-brokered Black Sea Grain Initiative (BSGI) helped mitigate a global food security crisis. The BSGI runs on a five-month timeline, needing to be renewed each time.  In March, Russia would only renew the GSGI until May.  What happens if Russia pulls out of the deal?

·       “Wheat is the New Fault Line for Ukraine in Europe” Foreign Policy

The European Union is rushing to appease enraged Eastern European farmers after Poland, Hungary, Slovakia, and Bulgaria banned Ukrainian grain imports, contentious moves that threaten to undermine EU solidarity over Ukraine and compound pressures on already-vulnerable Ukrainian producers. 

·       Supply Chain Interdependence and Geopolitical Vulnerability: the Case of Taiwan and High-End Semiconductors” The Rand Corporation

To assess the geopolitical implications of Taiwan's semiconductor dominance, the authors conducted a tabletop exercise (TTX) with representatives from the executive and legislative branches of the U.S. government and a variety of industries that rely on semiconductors. The exercise revealed that there are generally no good short-term options for responding to the disruption to the global semiconductor supply chain that would result if China attempted to unify with Taiwan.

·       “The U.S. Dollar as an International Currency and Its Economic Effects”  Congressional Budget Office

The U.S. dollar plays an important role as the most widely used currency in global goods, services, and financial markets. Strong international demand for U.S. dollars and dollar-denominated assets associated with the dollar’s status as an international currency has increased the value of the dollar in foreign exchange markets and the value of dollar-denominated assets in financial markets. As a result, the dollar’s status has contributed to persistent U.S. trade deficits and, by lowering interest rates, to increased access to credit for U.S. households, businesses, and the federal government. Over the next decade, the dollar’s international use is expected to decline very gradually, in the Congressional Budget Office’s assessment, but it will not be overtaken by either of its closest competitors, the euro or the Chinese renminbi.

“Economic sanctions against Russia: How Effective? How Durable?”  Jeffrey J. Schott, Peterson Institute for International Economics

Sanctions have contributed to a sharp compression of Russian imports, forced Russia’s military and industry to source from more costly and inefficient suppliers at home and abroad, and slowly begun to put a squeeze on Russian government finances. Russia’s efforts to circumvent the sanctions have had only small-scale success in transshipping goods via Middle Eastern and Asian countries and have made it highly dependent on the Chinese market. Over time, sanctions-imposed costs will increasingly burden the Russian economy and impair its capacity to pursue conventional warfare.

Chart of the Week 

India Overtakes China as the Most Populous Nation in the World

India’s population is overtaking China’s population with an estimated 1.428 billion people compared to China’s 1.425 billion.  Of note, India’s population is expected to continue growing as China’s substantially declines.  Population growth is politically sensitive in both countries but for different reasons.  China argues, according to its foreign ministry, “…that population dividends don’t only depend on quantity but also quality” – a response to growing concern the smaller Chinese population will negatively impact China’s economy and the global economy.   

India faces the challenge of catching up to China economically as it lags behind China in terms of foreign direct investment and investment in infrastructure – challenges many economists believe could take India two decades to achieve.

Pew Research recently published an interesting report entitled “Key Facts as India Surpasses China as the World’s Most Populous Country.”  It contains a fascinating set of data points and is well worth the read.