Recommended Weekend Reads
May 3 - 5, 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.
European Union
Enrico Letta’s Report: More Than a Market, But Less Than An Agenda Centre For European Reform
On April 18th, former Italian prime minister Enrico Letta published his long-awaited report on the future of the EU’s single market, entitled ‘Much more than a market’. Letta describes the EU single market as unsuited for a world where the EU’s share of the world economy is shrinking and where it faces competitors less willing to play by global norms. His report correctly identifies many of the EU’s most urgent problems. It has proposals on everything from the need for high-speed rail, investments in outer space, and a more unified health sector, to more quotidian efforts to improve EU law-making processes. But many of Letta’s recommendations echo ideas which have been raised repeatedly in recent years, offering something for everyone while glossing over trade-offs. This is illustrated by his somewhat quixotic call for the EU to strike “a balance between competitiveness, strategic independence and equitable global conditions, avoiding the imposition of detrimental regulations and instead fostering strategic partnerships based on well-founded policies”.
EU’s red tape Is helping Russia Australian Strategic Policy Institute
The European Union’s spending rules and public-procurement processes are plainly inadequate to the threat posed by Russia’s full-scale invasion of Ukraine. If the World War II Allies had been subject to such strictures, they would have been unable to buy landing craft for the invasion of Normandy in 1944, equip General Charles de Gaulle’s Free French Army, or issue war bonds in time. The EU’s regulations undermine its capacity to mitigate the war’s effects on Europe itself, weaken its ability to protect itself from a broad range of hybrid attacks, and prolong Russia’s military aggression against Ukraine.
Security of Supply in Times of Geopolitical Fragmentation German Institute for International and Security Affairs
The recent political consensus on the European Critical Raw Materials Act (CRMA) marks a significant step towards a common raw materials policy within the European Union (EU). Against the backdrop of increasing geopolitical tensions, the EU aims to bolster its “strategic autonomy” within its raw material supply chains. To achieve this goal, it is essential for the EU and its member states to enhance collaboration with mineral-rich third countries. The current geopolitical environment will require a concerted effort on the part of the EU with respect to its raw material diplomacy, as only through such effective engagement will the EU be able to diplomatically and programmatically implement raw material partnerships that appeal to third countries.
Europe can’t afford to decouple from China UnHerd
Last week, US Secretary of State Antony Blinken travelled to Beijing to meet senior Chinese government representatives. His reception was somewhat frosty, as officials told him that the United States must choose between a policy of “confrontation or cooperation” with the Chinese. Beijing’s diplomatic well is now pretty dry, and its representatives are signaling clearly that the Americans need to make a decision on their Chinese strategy.
China
“Keeping Up with the Pacing Threat: Unveiling the True Size of Beijing’s Military Spending” American Enterprise Institute
Beijing’s publicly released military budget is inaccurate and does not adequately capture the colossal scope and scale of China’s ongoing military buildup and wide-ranging armed forces modernization. After accounting for economic adjustments and estimating reasonable but uncounted expenditures, the buying power of China’s 2022 military budget balloons to an estimated $711 billion—triple Beijing’s claimed topline and nearly equal with the United States’ military budget that same year. Equal defense spending between the United States and China plays to Beijing’s benefit. As a global power, the United States must balance competing priorities in the Indo-Pacific and elsewhere, which spreads Washington’s budget thinly across multiple theaters. Meanwhile, each yuan China invests in its military directly builds its regional combat power in Asia.
The Potential Chinese Responses to a U.S. Ban on TikTok Carnegie Endowment for International Peace
In March, the U.S. House of Representatives overwhelmingly passed a bill that would require TikTok to divest from its Chinese parent company, ByteDance, or face a ban within the United States. The Senate is expected to vote on this matter soon, with President Joe Biden expressing his intention to sign the bill into law. However, factors such as the timing of the Senate vote, the November U.S. presidential election, and legal action by TikTok make the app’s U.S. future anything but certain.
Russia and Ukraine
Russia’s Shadow Fleet Goes Rogue Center for European Policy Analysis
The frequent presence of the Kremlin’s sanctions-dodging vessels off the coast of Gotland, where they perform dangerous ship-to-ship transfers of oil, is a clear provocation, not to mention a looming threat to marine life. Now the Swedish Navy reports that shadow vessels in the waters of Sweden’s exclusive economic zone don’t just conduct their regular business: they’re also equipped with communications gear that is in no way needed by standard merchant vessels. The Russian shadow fleet appears to simultaneously be a spy fleet.
In the aftermath of Russia’s full-scale invasion of Ukraine, over 14 million people — nearly one-third of Ukraine’s pre-war population — were forced to flee their homes. For many of those hoping to someday return, however, Moscow’s war of aggression has left them without a home to go back to. In addition to homes now under Russian occupation, approximately 250,000 buildings in Ukraine (the majority of which were residential) have been completely destroyed. Meduza spoke to four Ukrainian families who once dreamed of the day they could finally return home. Today, all that remains of their homes can fit in the palm of their hands: their keys.
Stick, Carrot and More Stick: The Kremlin and Russian Youth Center for European Policy Analysis
The Russian authorities are increasing the indoctrination of children and young people in an attempt to secure their support. In mid-April, the Ministry of Education ordered teachers to tell pupils about heroes of the “Special Military Operation,” “wartime heroic deeds” and “spiritual-moral values, including service to the Fatherland.”
Does It Matter If Ukraine Loses? Centre for European Reform
In war, the ‘right’ side does not always win. Franco’s Nationalists won the Spanish Civil War; the Taliban drove the West out of Afghanistan. Ukraine’s president, Volodymyr Zelenskyy, said recently that without more US help, Ukraine would lose the war. The commander of Ukrainian forces, Oleksandr Syrskyy, warned on April 13th that the situation in the east of the country had deteriorated significantly. Even if the aid belatedly approved by the US House of Representatives on April 20th arrives in the next few weeks, democratic Ukraine could still be defeated by authoritarian Russia. Western countries – especially European countries – need to decide how much this matters to them. At present, some, such as the Baltic states, are doing all they can to ensure that Russia does not win. A few, such as Hungary, seem to be actively working against Ukraine. But for most countries, there is a sizeable gap between leaders’ rhetoric, proclaiming support for Ukraine, and their revealed priorities, in terms of defense spending, weapons delivery and willingness to talk honestly to their domestic audience about the war.
United States
Immigration Has Helped Boost US Economic Growth Peterson Institute for International Economics
Immigration into the United States has surged in recent years, and it has boosted economic growth. Based on an analysis of records from the Department of Homeland Security and other sources, the Congressional Budget Office (CBO) has substantially revised up its estimates of net immigration into the United States. CBO now estimates net annual immigration averaged 3 million in both 2022 and 2023 and projects that this year’s pace will be high as well. Many new immigrants have likely joined the US labor force, increasing the productive capacity of the macroeconomy. The implied increase in “potential output growth” helps explain how the US economy could have grown at a robust 3.1 percent pace over the four quarters of 2023 without generating more inflation pressures.
The Hidden Monetary State Arizona State Law Journal
Money is a motley. While the state typically enjoys a monopoly on issuing new physical currency, a variety of instruments serve money-like roles in the financial system. The United States relies heavily on its commercial banking system to augment the money supply through issuing deposits. Alongside, and on top of the commercial banking system, a shadow banking system has also developed, offering a range of deposit substitutes. This article seeks to cast new light on the U.S. financial system by exploring how, over the course of the twentieth century, federal policymakers engaged in a series of distinct and largely uncoordinated monetary experiments. As we show through historical case studies, federal authorities designed, promoted, and repurposed financial instruments, endowing them with money-like characteristics by providing them with liquidity support, credit support, or both. In essence, policymakers created special purpose moneys to further national policy ambitions.
Africa
The Mirage of African Independence Compact Magazine
50 years ago, Portugal’s colonial project in Africa unraveled, bringing to a close the age of overt European imperialism on the continent. In the decades after World War II, dozens of newly independent nations arose in the African territories previously colonized by Britain, France, and Belgium. By the end of the 1960s, among Europe’s imperial powers, just one holdout had remained: Portugal, which had also been the first European nation to acquire African territory with the 1415 conquest of Ceuta, on the North African coast.
Chart of the Week
The Rainy Season Hits Panama and the Canal May Be Getting Back to Normal
The long drought in Panama appears to be over. Per Bloomberg: “The rainy season is arriving at the Panama Canal as predicted, fueling hopes that a prominent trade chokepoint will clear up just in time for shipping’s busy time of year. The seven-day moving average of daily vessel crossings reached 25 last week, up from a low of about 21 set in late-January but still well below the long-term average before the drought of about 35 a day, according to data compiled by IMF PortWatch. The canal authority announced recently that it will lift booking slots to 31 daily transits in the second half of May and then to 32 starting in June. Maximum draft rules — which limit the total weight of a ship’s cargo — will rise starting in June, too.”
