Recommended Weekend Reads
July 5 - 7. 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.
U.S. Elections
Trade Isn’t Great Retail Politics for Either Party Kevin Nealer/Council on Foreign Relations
Since the United States trade imbalance flipped sharply negative in the mid-1970s and nose-dived in the Ronald Reagan years, both the Democratic and Republican parties have sought to weaponize trade as a political wedge issue. That approach has not worked for either of them. As a result, trade is unlikely to be a major theme in the 2024 election cycle. Broadly, Americans are now less supportive of the role of trade in the U.S. economy. But the picture gets muddled as you dig into those sentiments, with a bare majority believing trade does more good than harm. Support for trade has largely recovered from the historic low of the 2016 campaign levels, but a sharp partisan divide that reverses decades of preconceptions reveals Democrats are now more favorable to trade’s impacts than Republicans by a margin of nearly 2:1. Yet trade as an issue virtually never breaks into the top-ten list of voter concerns. Certainly, the term trade is often subsumed under broader economic concerns; voters rightly include trade neuralgia with macro-policy worries such as inflation and interest rates.
Tension in the Himalayas
Why do India and China Keep Fighting Over This Desolate Terrain? New York Times Magazine
The 2,100-mile border separating India and China passes through some of the world’s most inhospitable terrain. In the west, it runs along India’s Ladakh region at an altitude of 13,000 to 20,000 feet. During the months when the area isn’t covered in snow, the ground resembles a moonscape. The earth is sandy, strewn with rocks and pebbles; not a blade of grass grows anywhere; there are no visible signs of animal life. In winter, temperatures can drop to –40 degrees. The bleak conditions and barren vistas can induce despair in those who set foot on the land. “I’ve been to those places,” a former Indian diplomat who now works for an international Buddhist organization in Delhi told me. “When you visit, you tend to think, Who the hell even wants this area?”
Why the Himalayan Region is Integral to a Rules-Based Order in the Indo-Pacific The Diplomat
Chinese militarization and expansionism in the Himalayas remains a perennial concern not just for India but for the United States – and its Indo-Pacific allies and partners. China has been pursuing a “salami tactic” strategy with its neighboring states, including India and Bhutan, trying to rebrand the entire Himalayan region as “Xizang,” a Mandarin term for Tibet.
China
China’s Growing Risk Tolerance in Space: Peoples Liberation Army Perspectives and Escalation Dynamics Rand Corporation
Chinese leaders see themselves in competition with the United States to build military power in space. The multiplication of U.S. and Chinese capabilities could lead to unstable competition in space, raising the risk of rapid, and perhaps unintended, military escalation. This report surveys open-source literature across the Chinese defense enterprise to present a composite image of People’s Liberation Army (PLA) perspectives and key factors for U.S.-China crisis stability in space. It draws on authoritative Chinese writings to understand Chinese perceptions of threats from the United States by reviewing Chinese publications on U.S. intent and capabilities in space. The report additionally traces the evolution of PLA thinking on escalation dynamics in space over the past two decades. The report concludes with an assessment of the challenges facing U.S. officials looking to manage U.S.-China crisis dynamics in space.
National Perspectives on Europe’s De-Risking from China Metrics
The “de-risking” of relations with China has become an organizing principle for the European Union (EU) since it was first put forward by President of the European Commission Ursula von der Leyen in March 2023. This report of the European Think-tank Network on China (ETNC) analyses how 21 EU member states and the United Kingdom view de-risking from a national context. Each chapter is written by China experts who broadly set out to address the same set of questions with respect to their own country: What is the country’s standpoint on the EU’s approach to de-risking? Which China-related risks is that country most concerned about? Was the country’s standpoint on de-risking resulted in any concrete measures? How does that standpoint affect the country’s views on or approach to China?
Global Markets and Geoeconomics
Sovereign Wealth Funds: Corruption and Other Governance Risks Carnegie Endowment for International Peace
In the 1990s, SWFs held $500 billion in assets, but by 2020, they had more than $7.5 trillion in assets under management (AUM), equal to about 7 percent of the global AUM of $111.2 trillion. Globally, prior to 2010, there were only fifty-eight SWFs. Today, however, SWFs have become an increasingly fashionable type of state-owned entity to set up, and there are currently 118 operating or prospective SWFs. In the African continent alone, prior to 2000, there were only two SWFs. Since 2000, sixteen new SWFs have been set up. The report argues that what is particularly concerning about this dramatic growth is that SWFs have been established not just in countries with strong rule of law and civil liberty protections but also in countries marked by high corruption risks, insecurity, violence, and weak or absent rule of law.
The Eclipse of the Petrodollar Hippolyte Fofack/Project Syndicate
Much of the reporting earlier this month about the “non-renewal” of a decades-old “petrodollar agreement” between Saudi Arabia and the United States was riddled with inaccuracies and half-truths. Some outlets even went so far as to allege that Saudi Arabia would “stop using the US dollar for oil sales.” Still, despite these errors, and although the dollar remains dominant, the momentum for de-dollarization is building, reflecting broad geopolitical and macroeconomic shifts.
Top Dollar: Why the Dominance of America’s Currency is Harder Than Ever to Overturn Eswar Prasad/Foreign Affairs
The U.S. economy is no longer the colossus it once was. Its public debt is gargantuan and rising, and policymaking in Washington is erratic and unpredictable. Persistent threats of debt defaults undercut the perception that U.S. government bonds are safe. It would be no surprise, then, if the dollar were rapidly losing its power. But in fact the opposite is happening: the trends that would be expected to weaken the dollar, many of them driven by U.S. policy, are only strengthening its global dominance. The dollar remains on top in part because of the U.S. economy’s size and dynamism relative to other major economies. But more than that, although American institutions are fraying, those in other parts of the world are in no better shape, with populism and authoritarianism on the rise. Moreover, economic and geopolitical turmoil serves only to intensify the quest for safe investments, usually leading investors back to the dollar, which remains the most trusted currency. The United States financial markets are much larger than those of other countries, making dollar assets easier and cheaper to buy and sell.