Recommended Weekend Reads

December 8 - 10, 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

• “Africa’s Lessons for Latin America”  Americas Quarterly

  Fellow members of the Global South show what a more unified regional approach can achieve. Recent developments in African regional development, from a free trade area to the rise of the African Union, show that it’s time for a paradigm shift: Latin America must consider the invaluable lessons Africa has to offer.

• “3 Key Issues Ahead of Mexico’s 2024 Election Cycle”  Wilson Center Mexico Election Guide

  As the Mexican presidential cycle gets underway, many will talk about the likelihood of each candidate winning or the role that the Lopez Obrador government will play in deciding this outcome. This report argues much more attention should be paid to the policies that these candidates promise to implement if elected to office. For the Mexican elections in 2024, these are three key issues I think everyone should keep an eye out for: Security, Poverty and Inequality, and Tax Reform.

The Ukraine War

• “The Impact of the War on Ukraine’s Energy Landscape”  Foreign Policy Insitute Eurasia Program

  Before Russia’s full-scale invasion in 2022, Ukraine was able to generate substantial revenues from the transit costs of Russian hydrocarbons destined for the European market. Despite the war, Russian oil (and some gas) continues to flow to Europe via Ukraine, and the latter continues to receive transit fees. In the field of hydrocarbons, although Ukraine is far from having hydrocarbon reserves equivalent to those of Russia, it has several assets to offer Europeans, including particularly large storage capacities. Fortunately, these storage facilities are located in the western part of the country, away from much of the fighting.

  Thanks to the successful synchronization of the Ukrainian and the EU power grids, the electricity trade continues. It has become a field of increased cooperation between Kyiv and Brussels, offering a potential blueprint for other sectors with a view to future integration. Despite the immense destruction caused by the Russian army, which specifically targeted the country’s energy infrastructure, Ukraine has shown extraordinary resilience. Ukraine can export electricity to its European partners, creating a profitable situation for both parties and good promises for the future.
  

• “From the Kremlin to the Kitchen: Russian Life in 6 Charts”  Gallup

  As the war in Ukraine crossed the 18-month mark, we recently outlined Ukrainians’ continued support for victory on the battlefield, ambitions to join the EU and NATO, economic strains, and strong support for President Volodymyr Zelenskyy and the military.  Gallup takes stock of public opinion in Russia, outlining six key insights into how life has changed for Russians during the conflict.

• “The Sanctions Against Russia are Starting to Work”  The Atlantic

• Leon Aron, a noted Russia expert, writes that before invading Ukraine, Russia imported most of its key commodities.  Parallel markets cannot make up for the loss of supplies since early 2022.  Many necessities are more expensive, a lot are adulterated, and the quantities available are far smaller than before the war.  Shortages are now emerging across Russia, involving products as varied as tires, printed paper, airplane parts, and cellular towers.  Among the more painful privations is the disappearance of up to 65 percent of crucially important medicines in some large cities.  The Russian Ministry of Health has advised of a coming deficit of almost 200 essential drugs.  More than 40 percent of the Russian government budget goes to defense outlays, and that is set to double in 2024.  The author asks: How long before Putin starts raising taxes and printing banknotes?

• “Blood and Iron: How Nationalist Imperialism Became Russia’s State Ideology”  Carnegie Endowment for International Peace

  The nationalist-imperialist worldview that the Putin regime is imposing on Russians is intended to feed on the past and exploit historical memories and concepts to reshape and manage the mass consciousness of the Russian people.

International Economics/Trade

• “The Radical Reshaping of Global Trade”   Harvard Business Review

  The world is shifting from a global trade order to a devolved one in which bilateral agreements, multiple spheres of influence, and self-interested government policies are likely to loom large. Companies should prepare now for a new, fragmented, non-system that will operate in a “permissionless” manner, where organizations will leverage technology to provide coordination amongst stakeholders. The view of globalization as an arm-in-arm march forward has officially been shattered. As companies navigate the reality of new spheres of influence, and bilateral, rules-based trading agreements, those who can build organizations that are resilient and permissionless will benefit the most

• “Norway’s Parliament Backs Deep-Sea Mining Plans”   Financial Times
  Norway has secured a parliamentary majority for its plans to open up for deep-sea mining despite opposition from environmentalists and the fishing industry, who warn that the move risks further damage to fragile oceans.  This opens up about 280,000 sq km — an area just smaller than Italy — for exploration, where they believe there are vast deposits of minerals needed for electric batteries, wind turbines, and other green industries, including copper, cobalt, and rare earth metals such as neodymium and dysprosium.

• “Outlier or not? The Ukrainian Economic Preparedness for EU Accession”  The Vienna Institute for International Economics

  Ukraine’s status as an EU candidate country has prompted a debate about its readiness for the accession process and some doubts about whether Ukraine can meet the Copenhagen Criteria to join the EU. In this study, VIIE investigates Ukraine's ability to meet the economic aspects of the Copenhagen Criteria, comparing it with EU-CEE countries at the time of their membership applications and accession. The study finds that Ukraine is mostly a typical CESEE country and on many indicators, can be compared with the likes of Romania, Poland, and the Baltic countries at the time of their application or accession or both. In certain industries, we already find that Ukraine has a decent level of competitiveness, which bodes well for future convergence prospects. When the war ends, if Ukraine receives security guarantees, it can feasibly follow the successful EU-CEE convergence and integration path with the EU. Ukraine’s main weaknesses are its negative demographic outlook, historical difficulties in attracting FDI, and limited level of existing economic integration with the EU. Tackling these issues should be among the main economic priorities when the war ends. 

China

• “EU and China Between De-Risking and Cooperation: Scenarios by 2035”  Jacques Delors Institute

  At a time when China’s political and economic future and its global relationships have never been so uncertain, the Jacques Delors Institute has gathered experts to chart scenarios for 2035 on key issues in Sino-European relations.  The aim is to pinpoint transformative factors and shed light on pivotal decisions to prevent shifts harmful to European interests.  The scenarios are not mutually exclusive for a given issue. They don’t follow either a predictable path across different sectors based on whether they predict cooperation or conflict. Rather than searching for broad, overarching narratives, the study reveals a labyrinth of possible interconnections. In this age of de-risking, a one-size-fits-all approach to China is inadequate. Europe must craft tools for a finely tuned understanding of mutual strengths and strategies to prevent systemic rivalry from overshadowing partnership and competition.  

• “China’s Economic Plan is Bankrupt”  UnHerd

  Cambridge University Political Economist John Rapley argues the legitimacy of the ruling Communist Party rests substantially on its ability to deliver better lives for its citizens. The historical memory of China’s “century of humiliation” — when the proud country became the playground for Western empires from the mid-19th century to the end of the Second World War — hangs heavily over the country’s leaders. They know they must keep pace with their major Western rivals, not least the United States. But the debt-fuelled economic model of the last 25 years is running out of road. News this week that Chinese borrowers are defaulting in record numbers on their debts, everything from mortgages to business loans, led Moody’s credit agency to downgrade the country’s debt rating, highlighting the challenges it faces trying to reinvigorate its economy.

• “Will Property Implode China’s Economy?  Not Necessarily”   Kenneth Rogoff/Asia Times

  China’s property problems are deep, the remedies will be difficult, and the future holds much slower economic growth – but not financial collapse.

• “Who Killed the Chinese Economy?”    Foreign Affairs Podcast

  The Foreign Affairs Podcast has a conversation with Peterson Institute for International Economics President Adam Posen and economists Zonguyan Zoe Liu and Michael Pettis – all of whom have different views on the exact causes of China’s economic stagnation.