Recommended Thanksgiving Weekend Reads

November 23 - 16, 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.  We hope you have a wonderful Thanksgiving weekend!

The Middle East

• “US Wants a ‘revitalized’ Palestinian Authority, but can Abbas deliver?” Al Monitor

  As the international community and Western think tanks continue to discuss the future of Gaza and Palestinian leadership, US President Joe Biden weighed in on Nov. 18 in an opinion piece for The Washington Post in which he called for Gaza and the West Bank to be reunited "under a single governance structure, ultimately under a revitalized Palestinian Authority." 

• “The making of a ‘more for more’ deal in the Gaza War”  David Ignatius/Washington Post

  How was a deal reached between Israel and Hamas on releasing hostages?  Washington Post columnist David Ignatius talks to a high-ranking Israeli official and a high-ranking Qatari official to shed light on how the deal came into effect and what it might mean going forward.

• “Hamas’s Asymmetric Advantage”  Foreign Affairs

  That Israel met Hamas’s violence with violence is not remotely surprising, given the Israeli military’s incomparable conventional military superiority to Hamas. Israel has long responded to Palestinian terrorism with inordinate force. The Israeli military is stronger, larger, and better resourced than Hamas and other Palestinian terrorist groups, and Israeli planners know that their foes cannot go toe to toe with the Israel Defense Forces (IDF).  Yet Israel’s military advantages are growing slimmer. Hamas has proved difficult, if not impossible, to vanquish with military force. Technology has shrunk the gap between states and terrorists, allowing nonstate groups to behave in ways that mimic the operations of countries; Hamas can launch sophisticated attacks and spread propaganda as much as Israel can. Ancient tactics, too, such as the construction of a warren of tunnels beneath Gaza, have helped Hamas fend off a more powerful adversary. And Hamas gained leverage by capturing some 240 hostages. States have always struggled to defeat terrorist groups, but the Israel-Hamas war shows why it has gotten even harder to do so.

European Union & UK 

• “German budget disarray sends out powerful ripples beyond Berlin”  OMFIF

  David Marsh, the Chairman of the Official Monetary and Financial Institutions Forum (OMFIF), argues that while many observers of the recent German Constitutional Court decision on budgetary policy are missing the broader implications to Germany and the EU – most especially, it will likely influence the European Central Bank’s monetary policy perspectives.

• “Modern Slavery and Human Trafficking: An Expanding UK Market”   Royal United Services Institute (RUSI)

  Across the globe, supply chains of every description are tainted by exploited labor. The UK is no exception: here, as elsewhere, labor is often the greatest cost to business. Reducing this cost offers the fastest route to increased margins. For some businesses, they will use whatever means possible.  In the UK, according to the report, human trafficking and modern slavery have likely increased substantially over the last decade.

Americas

• “Americas Quarterly Podcast: Mexico’s Elections Begin to Take Shape”   Americas Quarterly

  In June 2024, Mexico will elect a new president.  Samuel García, the young governor of Nuevo León, Mexico’s industrial powerhouse, announced he will run, while former Foreign Minister Marcelo Ebrard, who was seen as a possible aspirant, said he will not. Although García’s candidacy is seen as a long shot, how might it affect the campaigns of the current favorite, Claudia Sheinbaum, from the governing Morena coalition, and Xóchitl Gálvez, the candidate from the opposition Frente Amplio por México? What does this electoral cycle reveal about the current state of Mexican politics? And what are the factors that could shape the race going forward? Political consultant Carlos Ramírez joins us to explore these and other questions.

• “Canada’s bid to attract technology talent”  Institute for Strategic Studies

  The Canadian government has launched a Tech Talent Strategy that eases immigration restrictions to attract foreign entrepreneurs and skilled workers. The initiative, greeted with overwhelming demand on its launch, responds to a shortage of tech skills in the domestic workforce and targets H-1B visa holders in the United States. If Canada succeeds in significantly raising its profile as a home for technological innovation, it will, on net, contribute to the cause of Western technological independence from China. At least some of this success, however, would likely come at the expense of the US and serve as a signal to Washington that its immigration policies, last overhauled by Congress in 1986, are dampening domestic innovation and economic growth.

• “Estimating the Effects of Political Pressure on the Fed: A Narrative Approach with New Data”  Thomas Dreschsel/University of Maryland

  Abstract: This paper combines new data and a narrative approach to identify shocks to political pressure on the Federal Reserve. From archival records, I built a data set of personal interactions between U.S. Presidents and Fed officials between 1933 and 2016. Since personal interactions do not necessarily reflect political interference and can arise endogenously, I use a narrative identification strategy. To get re-elected, President Nixon pressured Fed Chair Burns to ease monetary policy in 1971. I exploit this episode through narrative sign restrictions in an SVAR that includes the personal interaction data and typical macro data. I find that political pressure shocks (i) increase inflation strongly and persistently, (ii) lead to statistically weak negative effects on activity, (iii) contribute to other inflationary episodes outside of the Nixon era, and (iv) transmit differently from standard expansionary monetary policy shocks, in particular by having a stronger effect on inflation expectations. While the benefits of central bank independence have previously been shown using cross-country data, my estimates cover one economy through time and are quantitative: increasing political pressure 50% as much as Nixon, for six months, raises the U.S. price level by more than 8%.

China

• “Foreign direct investment is existing China”  Peterson Institute for International Economics

  New Chinese data imply that foreign firms operating in China are not only declining to reinvest their earnings but—for the first time ever—they are large net sellers of their existing investments to Chinese companies and repatriating the funds.  These outflows exceeded $100 billion in the first three quarters of 2023 and are likely to grow further based on trends to date. The investment selloffs are contributing to downward pressure on the value of the Chinese currency and, if sustained, will modestly reduce China’s potential growth.

• “Podcast: The Philippines Perspective of China’s Role in the South China Sea” China Power/CSIS

  The podcast takes a look at the Philippines’s view of the recent escalation of tensions in the South China Sea and China’s behavior in the waters and beyond., diving into China’s coercive tactics in the Second Thomas Shoal and the Scarborough Shoal and its repeated violations of international law in those areas.

• “Investigating state support for China’s medical technology companies” Merics

  Medical technologies are a key focus of China's industrial policy strategy and central to Beijing’s plans to move up the value chain. To spur on the development of local firms and promote self-reliance in this highly innovative sector, Chinese officials are steering research into key technologies and offering financial assistance to promising firms. In addition, biased procurement processes and regulatory barriers are limiting market access opportunities for foreign firms.  This study seeks to quantify the value of state support in China's MedTech sector. While data limitations obscure the impact of market access barriers, it shows that measurable forms of financial support directed to Chinese MedTech firms have grown about five times between 2017 and 2022. Beijing is facilitating the rise of increasingly competitive domestic players, posing a challenge for foreign firms both in China as well as abroad.

The Race for Critical Minerals

and Alternative Energy

• “The Geopolitics of Hydrogen”  German Institute for International and Security Affairs

  The transition to a hydrogen-based economy is gaining momentum in both Germany and the European Union (EU). Used as an energy carrier, hydrogen holds the promise of freeing hard-to-decarbonize sectors like heavy industry, aviation, and maritime trade from their emissions. At the same time, policymakers hope that hydrogen will promote Europe’s energy independence, push sustainable development, and strengthen value-based trade. This study presents three plausible yet disruptive scenarios for the geopolitics of hydrogen up to the year 2040 (developed with a team of experts in a multi-stage foresight process). “Hydrogen Realignment” considers the possibility of an eastward shift of industry, power, and technological leadership; “Hydrogen (In)Dependence” depicts a future in which Europe pursues hydrogen self-sufficiency but becomes dependent on raw material supply; and “Hydrogen Imperialism” delves into the dystopian scenario of a hydrogen transition dominated by hegemons and despots.

• “China Aims to Corner the Undersea Mineral Market, Too”   Foreign Policy

  Hungry for more critical minerals to power the energy transition, a slew of countries and companies are desperate to start mining the seafloor for a potential cache of metals—including cobalt, nickel, copper, and manganese—that will be critical to the scramble to build ever more batteries. International negotiations are now underway to craft a mining rulebook for the high seas, and China doesn’t want to be left out of the race. Eager to maintain its command of the world’s critical mineral supply chains, experts say that Beijing is positioning itself for success in the prospective industry by ramping up investment and shaping negotiations, even though it doesn’t appear to be in a rush to begin mining.

• “A rush for Lithium in Africa risks fueling corruption and failing citizens”   Global Witness

  Efforts to address the global climate emergency are leading to an increased demand for renewable energy technology, particularly in the Global North, including electric vehicles and the batteries required to power them. Africa is one of the new frontiers in a race for battery metals, and lithium – sometimes referred to as ‘white gold’ – is one of the most sought-after commodities.  Global Witness investigated three emerging lithium mines in Zimbabwe, Namibia, and the Democratic Republic of Congo (DRC). What we found shows that the rush for lithium on the continent – far from delivering a ‘just energy transition’ – risks fueling corruption and a range of other environmental, social, and governance (ESG) problems. For generations, African nations have been exploited for their minerals, and as the demand for ‘transition minerals’ increase, there is a danger of history repeating itself.