Recommended Weekend Reads
December 15 - 17, 2023
Here are 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
“The Entirely Manufacturing and Dangerous Crisis over the Essequibo” Center for Strategic and International Studies
The authoritarian government of Venezuela held a referendum on December 3, 2023, concerning the Essequibo, a large region controlled by neighboring Guyana but claimed by both nations. In essence, The Venezuela Regime laid claim to more than half of Guyana. Despite an anemic turnout, Venezuelan president Nicolás Maduro has claimed that he now has a mandate to annex the region, significantly raising tensions with his smaller neighbor and putting the militaries of both countries on high alert. There is a small but real risk of military conflict between the two South American nations.
The European Union
“European Elections: A Game-changer in 2024?” Geopolitical Monitor
In 2024, the EU will hold a major election, and from it is expected to be a new composition of the European Parliament, a significant change among the existing EU Commissioners, the possibility of a new Commission President, and undoubtedly a new President of the European Council. This political transition will inevitably bring a shift in policies. The major challenge will be fiscal: Since 2020, the EU has borrowed about €807 billion. Extending foreign policy and influence actions, such as providing aid, and helping conflict zones (Ukraine) and southern European states to manage migration, is expected to require an additional €70 billion in 2024. The EU deficit rules were suspended during the Covid pandemic, which allowed Member States to take whatever they needed to support their economies. In this, the leading borrowers are Italy and Spain. However, we can expect old deficit rules to come back into force in 2024. This will likely impact proposals, with highly indebted countries possibly getting more time to get their affairs in order. It will certainly create tensions between the Member States over who will bear the costs. EU Finance Ministers and leaders are set to make their final decisions on the matter starting next week.
The Ukraine War
“How Much Aid Has the U.S. Sent Ukraine? Here are Six Charts” the Council on Foreign Relations
As the U.S. Congress and EU struggle politically to figure out how to further fund Ukraine in her defense against Russian aggression, two questions repeatedly come up: How much has the U.S. and other allies of Ukraine contributed already? And what is it being spent on? The Council on Foreign Relations answers the question in six interactive charts.
“The Most Consequential Acto of Sabotage in Modern Times” Mark Bowden/The Atlantic
The famed author of “Blackhawk Down” writes that the destruction of the Nord Stream pipeline curtained Europe’s reliance on Russian gas. But who was responsible?
International Economics/Trade
“The Comeback of Industrial Policy: The Next Geopolitical Great Game” Italian Institute for International Political Studies
The ISPI report details how industrial policies are the key element underlying today’s geopolitical scramble and a pillar of national security. In the global supply chains, highlighted by multiple shocks, the US and the EU have started introducing new industrial legislation to make up for lost ground with respect to other industrial powerhouses, such as China.
Geopolitical Shocks and Commodity Market Dynamics: New Evidence from the Russian-Ukraine Conflict” Working Paper by Joshua Aizenman, Robert Lindahl, David Stenvall, Gazi Salah Uddin
Abstract: We investigate the event-based geopolitical shocks from the Russian invasion of Ukraine on selected agricultural and energy commodities using daily event-based structural vector autoregression (SVAR). We find that the geopolitical shock affects the markets of wheat (3%) and European natural gas (12%). However, substantial heterogeneity is observed among the food and energy markets. The regional segment of natural gas markets could explain this. Finally, the dynamics of the impacts of geopolitical news are analyzed in the stock, currency, and bond markets.
China
“Scared Strait: Understanding the Economic and Financial Impacts of a Taiwan Crisis” Center for Strategic and International Affairs
Following Russia’s invasion of Ukraine and Beijing’s demonstrations of force against Taiwan since 2022, Western governments and corporate boardrooms have increasingly debated the likelihood, timing, and methods of a possible invasion or blockade of Taiwan by the People’s Republic of China (PRC). Yet the real economic and financial dimensions of a potential cross-strait conflict remain underemphasized in this policy discourse. All realistic scenarios of PRC aggression will induce fast-moving and unpredictable dynamics, many of which would manifest before the outbreak of hostilities. The Taiwan Strait is central to global maritime trade, and Taiwan is the world’s most advanced and critical semiconductor manufacturing hub. For its own part, China remains an important manufacturing and trade partner for advanced and developing economies. As such, any crisis or conflict in the Taiwan Strait would impose substantial costs on China, the United States and its allies and partners, and the global economy.
Chart of the Week
India Dominated Wikipedia in 2023
Semafor reported this past week that among the top 10 most-read English-language pages on Wikipedia, six were about Indian events and issues. ChatGDPT was the #1 most looked-up issue, followed by “Deaths in 2023.” But after that, India dominated Wikipedia searches. We would also note Oppenheimer (the man and the movie) both made the top 10, too.
