Recommended Weekend Reads
March 1 - 3, 2024
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.
Supply Chain Security
“How Russia’s Invasion of Ukraine Impacts Global Food Security” Australian Strategic Policy Institute
Russia and Ukraine are key suppliers to the global food market and together constituted 12% of global food trade between 2019 and 2021. However, since 2022, the export of grain, sunflower oil, and other products from Ukraine has been drastically cut by Russia’s blockade of the Black Sea ports. The Black Sea grain initiative was established to ensure the safe passage of grain from Ukraine, but Russia withdrew from the agreement. Blocking these exports has contributed to an increase in global crop and food prices, which were already higher than pre-COVID-19 levels. Higher food prices have worsened hunger and poverty around the world, with 345 million people now in immediate danger from acute food insecurity. In addition, disruptions in the Suez Canal due to attacks on ships in the Red Sea along with plummeting transits in the Panama Canal due to dwindling water levels from climate change-induced drought have compounded global food insecurity.
“Washington Tackles a New National Security Threat: Chinese Made Cranes” Carnegie Endowment for International Peace
Last week, the Biden Administration rolled out a coordinated set of efforts to mitigate cybersecurity risks to U.S. port infrastructure and supply chains. These plans included an ambitious international project to improve U.S. manufacturing competitiveness in a strategic sector: port equipment. The primary and explicit motivation for these actions, according to national security officials, arises from the complex threat posed by the People’s Republic of China (PRC). However, even the fairly strong remedies proposed are likely to fall well short of the mark without extraordinary compliance from unenthusiastic commercial actors. There is also no timeline for producing a viable, technical substitute for China’s outsized role in U.S. maritime transport systems.
Critical Minerals
“Washington Wants to Revive a Critical Minerals Mega-Railway Through Africa” Foreign Policy
As geopolitical tensions electrify the global scramble for critical minerals—the raw materials that underpin advanced defense systems and clean energy technologies—the United States and China have been racing to expand their influence over the mineral market in Africa. In one of the most ambitious U.S. infrastructure bids in Africa yet, the Biden administration has pledged to lend hundreds of millions of dollars toward reviving the Lobito Corridor, a 1,200-mile-long railway that would transport critical minerals from the Democratic Republic of the Congo and Zambia to the Angolan coast. The DRC is home to the world’s biggest cobalt reserves, while Zambia is rich in copper.
“Critical Minerals: 5 Things to Watch in a Consolidation Year” Control Risks
Control Risks looks at the key trends that are likely to impact global supply-chain for critical minerals in 2024. These include: 1) gigafactories will make demand estimates concrete, 2) trade controls will go global, 3) producing countries face a maturity test, 4) technology disruptions will shape new trends, and 5) risers and fallers: winners and losers will become clear.
Economic & Trade Policy
“Will AI Save or Sink the U.S. Economy?” Peterson Institute for International Economics
It would seem that researchers and policymakers are counting on artificial intelligence tools to reverse the global productivity slowdown identified by many as the key element to foster higher future growth. But how confident can we be about that prospect? Not very, it turns out. So the author turned ChatGPT-4 itself: How is AI going to improve labor productivity? The answers were surprising.
“Climate Policy Reform Options in 2025” National Bureau of Economic Research
Abstract: With the expiration of many tax cuts and unmet climate targets, 2025 could be a crucial year for climate policy in the United States. Using an integrated model of energy supply and demand, this paper aims to assess climate policies that the U.S. federal government may consider in 2025 and to evaluate emissions reductions, fiscal costs and revenues, and household energy expenditures across a range of policy scenarios. Model results suggest that the emissions reductions of the Inflation Reduction Act are significantly augmented under scenarios that add a modest carbon fee or, to a lesser extent, that implement a clean electricity standard in the power sector. Second, net fiscal costs can be substantially reduced in scenarios that include a carbon fee, especially if fossil fuel exports are taxed. Third, expanding the IRA tax credits yields modest additional emissions reductions with higher fiscal costs. Finally, although none of the policy combinations across these scenarios achieve the U.S. target of a 50-52% economy-wide emissions reduction by 2030 from 2005 levels, the carbon fee and clean electricity standard scenarios achieve these levels between 2030 and 2035.
“Memo to the Fed: Stop the News Conferences” Random Observations for Students of Economics/Greg Mankiw’s Blog
Noted Harvard University Economics Professor Greg Mankiw argues that Fed Chair Jay Powell’s news conferences are the opposite of good economics communications and that he should stop.
China
“China Isn’t Just Spending More; It’s Spending Smarter” RealClearDefense
China’s inflation-adjusted military spending is at least three times larger than it was in the year 2000 and by some counts is hundreds of millions of dollars larger than the official numbers suggest. Yet even these dramatic top-line estimates do not tell the whole story of China’s military rise because it has also increased efficiencies within its defense budget – meaning that, unlike the United States, China isn’t just spending more, it’s spending smarter.
Russia
“Nuclear Destruction, The War’s Popularity, and Boosting Birth Rates” Meduza
News agencies around the world reported on Russian President Vladimir Putin’s nuclear threats made during his annual state of the nation speech before the Russian Duma. But they did not report on what he spent more than half of his two-hour speech on: Domestic policy in general and, in great detail, how serious the demographic decline has become for Russia. Putin announced a number of new initiatives aimed at boosting birth rates, including one program he calls “Family” which will spend close to a billion dollars just encouraging Russians to have children as well as special mortgage programs and “maternity capital” programs for the next seven years. Currently, the Russian population is on track to decline by at least 10 percent over the next 20 years, per Russia’s Federal State Statistics Service. Add to that the more than an estimated 300,000 war casualties, and the hundreds of thousands of draft-age Russian men who have fled the country, and the country is in a demographic free-fall.
“Global Perspectives on Ending the Russia-Ukraine War” Council of Councils
The Council of Councils, an imitative of the Council on Foreign Relations seeing to connect leading foreign policy institutes in policy discussions and analysis, published last week a memo where think tank scholars from 13 countries offered their thought-provoking and unique thoughts on how the Ukraine War could be brought to an end.