Recommended Weekend Reads
March 15 - 17, 2024
Here are our recommended reads from reports and articles we read last week. We hope you find these useful and that you have a relaxing weekend. Also, let us know if you or someone you know wants to be added to our distribution list.
Americas
“Annual Threat Assessment of the U.S. Intelligence Community” Office of the Director of National Intelligence
The Director of National Intelligence (ODNI) released their annual global threat assessment. The report outlines how, in the coming year, the United States will face an increasingly fragile global order strained by accelerated strategic competition among major powers, more intense and unpredictable transnational challenges, and multiple regional conflicts. The report details the US Intelligence Communities unclassified assessment of China, Russia, Iran, and non-state actors and the risk they pose to the US.
“Redefining US Strategy with Latin American and the Caribbean for a New Era” Atlantic Council
The Atlantic Council launched this study because of the perception of waning US interest, and the rise of external influence necessitates a rejuvenation of and renewed focus on the region. The study focuses on what can be done in four areas: 1) economy, investment, and commerce, 2) energy security, 3) regional migration and security, and 4) democracy, institutions, and governance.
“How banking regulations affect US foreign policy” The Atlantic Council
Economics, finance, and national security overlap. Obvious areas of convergence include sanctions and trade policy. But the average US foreign policymaker is now also expected to develop at least rudimentary knowledge of critical minerals and what constitutes a reserve currency. Banking regulations may seem a step too far, but they must be added to the list because they, too, carry foreign policy implications.
The Puzzling Persistence of Financial Crises” National Bureau of Economic Research
The high social costs of financial crises imply that economists, policymakers, businesses, and households have a tremendous incentive to understand and try to prevent them. And yet, so far, we have failed to learn how to avoid them. In this article, we take a novel approach to studying financial crises. We first build ten case studies of financial crises that stretch over two millennia and then consider their salient points of differences and commonalities. We see this as the beginning of developing a useful taxonomy of crises – an understanding of the most important factors that reappear across the many examples, which also allows (as in any taxonomy) some examples to be more similar to each other than others. From the perspective of our review of the ten crises, we consider the question of why it has proven so difficult to learn from past crises to avoid future ones.
Driving Under the Influence of Allergies: The Effect of Seasonal Pollen on Traffic Fatalities National Bureau of Economic Research
Traffic fatalities are the leading cause of mortality in the United States despite being preventable. While several policies have been introduced to improve traffic safety, and their effects have been well documented, the role of transitory health shocks or situational factors in explaining variations in fatal traffic accidents has been understudied. Exploring daily variation in city-specific pollen counts, this study finds novel evidence that traffic fatalities increase on days in which the local pollen count is particularly high. We find that the effects are present in accidents involving private vehicles and occur most frequently on the weekends, suggesting potentially a missed opportunity to avoid these fatalities. We do not find similar effects for fleet vehicles. These findings remain robust to alternative specifications and alternative definitions of high pollen count. Taken together, this study finds evidence that a prevalent and transitory exogenous health shock, namely pollen allergies, increases traffic fatalities. Given our lack of evidence of avoidance, these effects are not mechanical and are likely driven by cognitive impairments that arise as a result of seasonal allergies.
European Union
“EU-US relations after the Inflation Reduction Act, and the challenges ahead” European Parliamentary Research Service
In this paper, Bruce Stokes, visiting senior fellow at the German Marshall Fund of the United States, and associate fellow at Chatham House, offers an overview of US-EU relations since the passage of the US Inflation Reduction Act of 2022. This paper is based on the author’s interviews with leading European and US experts and published analysis by major think tanks and journalists on both sides of the Atlantic. The paper discusses current efforts to manage longstanding pre-IRA disputes, the Trade and Technology Council, the US Chips and Science Act and the EU’s response, looming issues such as CBAM and critical minerals, and how politics in both the US and Europe may affect the handling of these issues.
“Opening Shots: What to Make of the European Defense Industrial Strategy” European Council on Foreign Relations
The European Commission’s new defense industrial strategy sets out to strengthen the EU’s defense industry through common and local procurements. But it will need both financial and political buy-in to succeed. Firstly, money matters. The €1.5 billion mobilized to establish the European Defense Industrial Policy (EDIP) between 2025 and 2027 represents a fraction of European spending (roughly 0.2 percent), which will make it difficult to shape the market. Significant additional money could only be allocated under the EU’s next multiannual financial framework in 2028.
Secondly, the commission needs to clarify the functioning of different financial tools, including the Fund to Accelerate Defense Supply Chain Transformation (FAST) to support small- and medium-sized enterprises; the Structure for European Armament Programme (SEAP), which bolsters cooperation in part through a VAT exemption; and the European Military Sales mechanism (which is apparently modeled on the US Foreign Military Sales tool, though focused on the availability of EU equipment).
Thirdly, as it grows, this effort needs to be well aligned with defense planning priorities, which are primarily defined at the national level or in NATO. This will require much closer NATO-EU engagement. Fourthly, member states, especially the larger ones, have traditionally been reluctant to Europeanize defense policies and could resist a perceived power grab by the commission. The EU will have to convince them – and their industries – of the added value of this approach, including, for some, the choice to buy European.
Finally, given the money initially allocated and the usual timeframe before implementation, EDIS and EDIP will not address the immediate requirements of Ukraine or short-term capability shortfalls.
NATO
NATO’s decision process has an Achilles’ heel By Eric S. Edelman, David Manning, and Franklin C. Miller The Atlantic Council
In Washington this July, the most successful political-military alliance in modern history will celebrate its seventy-fifth anniversary. Today, the Alliance stands as a barrier to Russian President Vladimir Putin’s ambition to recreate a “Russian world,” bringing Russophone citizens back into something like the borders of the Soviet Union by reabsorbing Ukraine and possibly Moldova and the Baltic states. The Russian autocrat’s invasion of Ukraine has strengthened the Alliance by adding two very capable members (Finland and now, finally, Sweden), and by strengthening the will of member states to stand together against Russian aggression. But the fact is the principle of consensus which holds the alliance together, except in the case of accession, is not enshrined or codified in any Alliance document. What worked for the Alliance earlier, when all of its members were like-minded states facing an overwhelming military challenge, and the memories of World War II were fresh in the minds of both the public and leaders, may not be fit for purpose today with a broader and much more diverse membership.
China
“Export controls: China’s long game to defend its tech advantage” Merics
Rather than abruptly pulling the plug on certain exports, Beijing is gradually sharpening an instrument to better control global tech supply chains and pursue a range of other goals. Chinese export controls came into focus in the summer of 2023 when the Ministry of Commerce (MOFCOM) announced new licensing requirements on the export of gallium and germanium, critical minerals in semiconductor manufacturing. Some saw this as a response to the Dutch government’s new export restrictions – under pressure from the US – on products made by ASML, a major supplier of chipmaking tools to China. And retaliation it was – just not in a simple, tit-for-tat manner, and likely not aimed at that target. If the past year is of any indication, it is plausible that these mineral controls – which do not constitute an export ban – were chiefly aimed at US companies. While germanium is used in fiber optics and solar panels, and gallium in consumer electronics and 5G telecommunications, both are key for the aerospace and defense industries. In 2023, the Chinese government added US defense contractors Lockheed Martin and Raytheon to its Unreliable Entities List – companies China marks for punitive action. It also deemed memory chips from US defense contractor Micron to pose a risk to its domestic critical information infrastructure.
“China’s Food Security: Key Challenges and Emerging Policy Responses” Center for Strategic & International Studies
Feeding China’s vast population is a priority issue for Beijing, given the historic ramifications of famines and food crises for social and regime stability. Yet the task is vast—China must feed nearly 20 percent of the global population but is home to under 10 percent of the world’s arable land—and the challenges to stable food supply are many. These include inefficient agricultural practices, supply chain bottlenecks, changing consumption habits, international trade dynamics, domestic environmental degradation, corruption and data misrepresentation, and a history of food safety scandals. Diagnosing a more contentious international environment, Xi Jinping has placed greater emphasis on agricultural self-sufficiency and diversified sourcing of critical inputs, foodstuffs, technology, and know-how. This brief explores key trends, challenges, and policy measures in China’s pursuit of food security. It is part of a joint CSIS-Brookings Institution project, Advancing Collaboration in an Era of Strategic Competition, which seeks to explore and expand the space for U.S.-China collaboration on matters of shared concern.
Russia
“All the autocrat’s men: the court politics of Putin’s inner circle” The Atlantic Council’s Eurasia Center
There will be very little suspense surrounding Russia’s presidential election this month. Vladimir Putin will certainly win a fifth term as Kremlin leader. This is because Russian elections are not elections. Instead, they are mobilization and legitimization rituals in which the results are preordained. And even such a shock as opposition leader Alexei Navalny’s death probably won’t change this.
However, the lack of suspense surrounding the result of the vote does not mean that it will not be meaningful. On the contrary, this ritual is a political watershed that will determine the landscape in Russia for years to come—and possibly what Russia will look like after Putin finally passes from the scene. That is because, in the absence of institutions, Russian politics are effectively court politics, dominated by the clan battles within the Kremlin leader’s inner circle. What is the state of the “Putin court?” And how has Russia’s war against Ukraine influenced the clan battles that define it? Why does the Kremlin seek to leverage traditional conservative values and the Russian Orthodox Church? This report is based on extensive interviews with dozens of current and former Russian officials who spoke on condition of anonymity to discuss the inner workings of the Kremlin power elite without fear of reprisals.
Statistics and Map of the Week
Which Chinese Local Governments Are Facing The
Most Severe Debt Obligations?
The Financial Times recently reported how officials from China’s most indebted provinces and cities were recently brought into meetings with state bankers in Beijing to attempt to accelerate the renegotiation of debt payments on billions of dollars in outstanding liabilities. Infrastructure spending drove up much of the local debt – much of it now unserviceable. And it is now a severe drag on China’s overall economy and threatening to add new pressure on the country’s effort to get its struggling economy back on track. Most of the provinces are on the outer rim of China and tend to be the poorest areas. It is estimated that 18 local governments have amassed as much as $13 trillion in debt, with a growing number of their public bonds coming due by the end of 2024.
