The renminbi seems to be back in business as a Chinese tool of retaliation against US tariffs. A 1.5 per cent fall in the currency early this month in response to proposed new US tariffs was only a start. Since the middle of August the renminbi has weakened further, and the exchange rate is now 4 per cent weaker than at the start of the month. We may well see more of a ‘weaponized’ renminbi, but there are four good reasons why Beijing might be wise to think before shooting.

The first has to do with how China seeks to promote its place in the world. China has been at pains to manage the collapse of its relations with the US in a way that allows it to present itself as an alternative pillar of global order, and as a source of stability in the international system, not to mention moral authority. This has deep roots.

Anyone investigating the history of Chinese statecraft will quickly come across an enduring distinction in Chinese thought: between wang dao, the kingly, or righteous way, and ba dao, the way of the hegemon. Since Chinese thinkers and officials routinely describe US behaviour since the Second World War as hegemonic, it behoves Chinese policymakers to do as much as possible to stay on moral high-ground in their behaviour towards Washington. Only in that way would President Xi be able properly to assert China’s claim to leadership.

Indeed, China has a notable track record of using exchange rate stability to enhance its reputation as a force for global stability. Both in the aftermath of the Asian crisis in 1997, and of the Global Financial Crisis in 2008, Chinese exchange rate stability was offered as a way of demonstrating China’s trustworthiness and its commitment to multilateral order.

Devaluing the renminbi in a meaningful way now might have a different rationale, but the cost to China’s claim to virtue, and its bid to offer itself as a guardian of global stability, might be considerable.

That’s particularly true because of the second problem China has in thinking about a weaker renminbi: it may not be all that effective in sustaining Chinese trade. One reason for this is the increasing co-movement with the renminbi of currencies in countries with whom China competes.

As the renminbi changes against the dollar, so do the Taiwan dollar, the Korean won, the Singapore dollar and the Indian rupee. In addition, the short-run impact of a weaker renminbi is more likely to curb imports than to expand exports, and so its effects might be contractionary. 

An ineffective devaluation of the renminbi would be particularly useless because of the third risk China needs to consider, namely the risk of retaliation by the US administration. Of this there is already plenty of evidence, of course.

The US Treasury’s declaration of China as a ‘currency manipulator’ on 5 August bears little relationship to the actual formal criteria that the Treasury uses to define that term, but equally the US had warned the Chinese back in May that these criteria don’t bind its hand. By abandoning a rules-based approach to the definition of currency manipulation, the US has opened wide the door to further antagonism, and Beijing should have no doubt that Washington will walk through that door if it wants to.

The fourth, and possibly most self-destructive, risk that China has to consider is that a weaker renminbi might destabilize China’s capital account, fuelling capital outflows that would leave China’s policymakers feeling very uncomfortable.

Indeed, there is already evidence that Chinese residents feel less confident that the renminbi is a reliable store of value, now that there is no longer a sense that the currency is destined to appreciate against the dollar. The best illustration of this comes from the ‘errors and omissions’, or unaccounted-for outflows, in China’s balance of payments.

The past few years have seen these outflows rise a lot, averaging some $200 billion per year during the past four calendar years, or almost 2 per cent GDP; and around $90 billion in the first three months of 2019 alone. These are scarily large numbers.

The risk here is that Chinese expectations about the renminbi are ‘adaptive’: the more the exchange rate weakens, the more Chinese residents expect it to weaken, and so the demand for dollars goes up. In principle, the only way to deal with this risk would be for the People's Bank of China (PBOC) to implement a large, one-off devaluation of the renminbi to a level at which dollars are expensive enough that no one wants to buy them anymore.

This would be very dangerous, though: it presupposes that the PBOC could know in advance the ‘equilibrium’ value of the renminbi. It would take an unusually brave central banker to claim such foresight, especially since that equilibrium value could itself be altered by the mere fact of such a dramatic change in policy.

No one really knows precisely by what mechanism capital outflows from China have accelerated in recent years, but a very good candidate is tourism. The expenditure of outbound Chinese tourists abroad has risen a lot in recent years, and that increase very closely mirrors the rise in ‘errors and omissions’. So the suspicion must be that the increasing flow of Chinese tourists – nearly one half of whom last year simply travelled to capital-controls-free Hong Kong and Macao – is just creating opportunities for unrecorded capital flight.

This raises a disturbing possibility: that the most effective way for China to devalue the renminbi without the backfire of capital outflows would be simultaneously to stem the outflow of Chinese tourists. China has form in this regard, albeit for differing reasons: this month it suspended a programme that allowed individual tourists from 47 Chinese cities to travel to Taiwan.

A more global restriction on Chinese tourism might make a devaluation of the renminbi ‘safer’, and it would have the collateral benefit of helping to increase China’s current account surplus, the evaporation of which in recent years owes a lot to rising tourism expenditure and which is almost certainly a source of unhappiness in Beijing, where mercantilism remains popular.

But a world where China could impose such draconian measures would be one where nationalism has reached heights we haven’t yet seen. Let’s hope we don’t go there.

This article was originally published in the Financial Times.

There were several notable achievements during last week’s Spring meetings. The Fund’s frank set of forecasts for world GDP growth are a grim but valuable reminder of the scale of the crisis we are facing, and the Fund’s richer members will finance a temporary suspension on payments to the IMF for 29 very poor countries.

Most importantly, a boost to the Fund’s main emergency facilities - the Rapid Credit Facility and the Rapid Financing Instrument - now makes $100bn of proper relief available to a wide range of countries. But the core problem is that the vast bulk of the Fund’s firepower is effectively inert.

This is because of the idea of 'conditionality', which underpins almost all of the IMF’s lending relationships with member states. Under normal circumstances, when the IMF is the last-resort lender to a country, it insists that the borrowing government tighten its belt and exercise restraint in public spending.

This helps to achieve three objectives. One is to stabilise the public debt burden, to ensure that the resources made available are not wasted. The second is to limit the whole economy’s need for foreign exchange, a shortage of which had prompted a country to seek IMF help in the first place. And the third is to ensure that the IMF can get repaid.

Role within the international monetary system

Since the IMF does not take any physical collateral from countries to whom it is lending, the belt-tightening helps to act as a kind of collateral for the IMF. It helps to maximise the probability that the IMF does not suffer losses on its own loan portfolio — losses that would have bad consequences for the Fund’s role within the international monetary system.

This is a perfectly respectable goal. Walter Bagehot, the legendary editor of The Economist, established modern conventional wisdom about managing panics. Relying on a medical metaphor that feels oddly relevant today, he said that a panic 'is a species of neuralgia, and according to the rules of science you must not starve it.' 

Managing a panic, therefore, requires lending to stricken borrowers 'whenever the security is good', as Bagehot put it. The IMF has had to invent its own form of collateral, and conditionality is the result. The problem, though, is that belt-tightening is a completely inappropriate approach to managing the current crisis.

Countries are stricken not because they have indulged in any irresponsible spending sprees that led to a shortage of foreign exchange, but because of a virus beyond their control. Indeed, it would seem almost grotesque for the Fund to ask countries to cut spending at a time when, if anything, more spending is needed to stop people dying or from falling into a permanent trap of unemployment.

The obvious solution to this problem would be to increase the amount of money that any country can access from the Fund’s emergency facilities well beyond the $100bn now available. But that kind of solution would quickly run up against the IMF’s collateral problem.

The more the IMF makes available as 'true' emergency financing with few or no strings attached, the more it begins to undermine the quality of its loan portfolio. And if the IMF’s senior creditor status is undermined, then an important building block of the international monetary system would be at risk.

One way out of this might have been an emergency allocation of Special Drawing Rights, a tool last used in 2009. This would credit member countries’ accounts with new, unconditional liquidity that could be exchanged for the five currencies that underpin the SDR: the dollar, the yen, the euro, sterling and the renminbi. That will not be happening, though, since the US is firmly opposed, for reasons bad and good.

So in the end the IMF and its shareholders face a huge problem. It either lends more money on easy terms without the 'collateral' of conditionality, at the expense of undermining its own balance sheet - or it remains, in systemic terms, on the sidelines of this crisis.

And since the legacy of this crisis will be some eye-watering increases in the public debt burdens of many emerging economies, the IMF’s struggle to find a way to administer its medicine will certainly outlive this round of the coronavirus outbreak.

This article is a version of a piece which was originally published in the Financial Times

Yemen suffered from the excessive control of the central government prior to the current conflict. Federalism has been put forward by many Yemeni political parties since the National Dialogue Conference (NDC) as the supposed magic cure for this significant problem. Today, Yemen is more fragmented than ever, its state central institutions have been scattered and lack leadership and the state has lost most of its sovereignty. The prevailing narrative that decentralization through federalism is Yemen’s inevitable path post-conflict often fails to acknowledge that there are prerequisites for effective local governance, beyond political will.  

In a recent article, Osamah Al Rawhani addressed how the weakness of central state institutions is the key challenge to proceeding with federalism in Yemen and highlighted prerequisites and contextual factors that need to be addressed before reforming the structure of the state. He argued that the viability of decentralization relies on the presence of a functioning, representative central government that is capable of devolving power but also able to keep the state from further fragmentation. 

In this webinar, part of the Chatham House project on The Future of the State in the Middle East and North Africa, the article’s author will discuss recent developments in Yemen, where shifting frontlines and regional divisions are fragmenting the country in new ways. The speaker will explore alternative approaches to pursue the path of federalism that recognize the current realities and the critical need for strong central institutions. He will also survey the internal and external factors that must be considered to rebuild a stable state in Yemen.

You can express your interest in attending by following this link. You will receive a Zoom confirmation email should your registration be successful. Alternatively, you can watch the event live on the MENA Programme Facebook page.

Seeing geo-strategic rivalry between the US and China as the sole variable in Asia-Pacific security risks becoming a self-fulfilling prophecy, according to a forthcoming Chatham House paper.            

As Xi Jinping’s visit to the US approaches, The Asia-Pacific Power Balance: Beyond the US–China Narrative, warns against deploying Cold War-type narratives that pit the two countries against each other. Such narratives not only misunderstand the complexity of the region and the growing influence of India, Japan and Indonesia, but also risk increasing the likelihood of conflict and of missing vital opportunities for future cooperation.                

The paper, by John Nilsson-Wright, Tim Summers and Xenia Wickett argues that by focusing too heavily on the US and China, policymakers risk narrowing the aperture through which they evaluate policy choices regarding major regional challenges. Some of the key findings include the following:

Military

• Despite rapidly rising defence spending across Asia, the relative importance of traditional military means is declining relative to instruments such as development assistance and cyber offence.
• The militaries of Japan and India are becoming – in very different ways – more versatile and potentially expanding their remits. In the future, there will be a larger number of more capable military powers in the region, including South Korea and Vietnam.
• Current perceptions that the main dynamic is China’s rising military capabilities outstripping others in the region, therefore, need to be tempered. India’s defence spending, for example, as a percentage of GDP has surpassed China’s for the past several decades.

Economics

• Although China has the world’s second-largest economy and – despite recent problems – is growing faster than most major economies, its growth rate is in secular decline. China has gone from near-constant double-digit growth over the past four decades to 7.4 per cent in 2014 and could dip below 7 per cent this year.
• Whilst India’s economy remains notably smaller than those of China, the US and Japan, it will surpass China’s growth rate this year and has a lot of potential.
• If the Trans-Pacific Partnership (TPP) is successfully negotiated, the potential for integration and growth between the United States, Japan and the other 10 TPP members may reduce their current trade dependence on China.

Demography

• The demography of Asia is another reason to look beyond the US-China nexus, as China faces the challenge of an aging society, while countries such as India have the advantage of a younger population and decades of demographic dividend ahead of them.
• Likewise populations across much of Southeast Asia, such as the Philippines and Indonesia are growing rapidly and expanding their middle classes. 

About 90 per cent of refugees living in camps have no access to electricity and many lack any form of lighting at night, says a Chatham House report for the Moving Energy Initiative. Energy poverty in refugee settlements is not on the radar of international initiatives and humanitarian agencies are ill-equipped to deal with the scale of need. 

Heat Light and Power for Refugees: Saving Lives, Reducing Costs zooms in on the energy needs of refugees and displaced people worldwide, and presents the first ever estimates of the volume and costs of what they use.

'The problem goes beyond electricity. 80 per cent of those in camps rely on firewood for cooking and, as a result, we estimate that some 20,000 people die prematurely each year due to the pollution from indoor fires. Exposure to extremes of cold and heat are also killers for people living in flimsy, temporary shelter,' says Glada Lahn, senior research fellow at Chatham House. 'The current lack of provision for energy undermines the fundamental aims of humanitarian assistance,' she adds.

There are nearly 60 million forcibly displaced people in the world, and they pay staggering costs for energy. The 83,277 households living in Dadaab in Kenya, the world’s largest refugee settlement, spent an estimated $6.2 million on firewood last year, which accounts for approximately 24 per cent of their overall household income. (The average UK household spent 4 per cent of its income on energy in 2011.) In Uganda, almost half of refugee households surveyed by the UNHCR skip meals because they do not have enough fuel to cook with.

'The imperative is to find humane, creative and cost-effective ways to respond to the needs of so many individuals, most of whom are women and children.  Improving access to clean, safe and sustainable energy offers a promising way forward,' says Kofi Annan in the report’s foreword.

The report calls for an overhaul in the way that heat, light and power are delivered in humanitarian crises. It makes the case for new partnerships between humanitarian agencies and private providers to increase clean energy access in refugee settlements. Investment in energy infrastructure will also benefit host communities in some of the world’s poorest countries.

'As refugee households spend approximately $2.1 billion on energy each year, developing local markets for energy services could be part of a mix of solutions,' adds Lahn. 'Using green, culturally appropriate technologies could save lives, reduce CO2 emissions by 11 million tonnes per year and radically improve living standards. Introducing even the most basic solutions, such as improved cookstoves and basic solar lanterns, could save $323 million a year in fuel costs.' 

Other findings include:

• Rape and violence against women is common in many unlit camps. Only 4 per cent of women and girls in households in the Goudoubo camp in Burkina Faso would go out after dark due to the lack of streetlights.
• Wood equalling around 49,000 football pitches worth of forest (64,700 acres) is burned by displaced families living in camps each year, mainly in countries suffering severe deforestation, because they have no alternative sources of energy.
• Firewood consumption emits nearly twice as much CO2 as liquid petroleum gas and produces little energy in comparison to its carbon intensity.

International Development Minister Grant Shapps said:

‘Across sub-Saharan Africa, hundreds of millions of people still do not have access to electricity. Women and girls are at risk of violence after dark, families are forced to inhale toxic kerosene fumes, and energy remains unaffordable for many.

‘With the technology in place and investors coming on board, the time to act is now. The UK's Energy Africa campaign is already kick-starting a solar revolution across the continent.

‘Supporting the Moving Energy Initiative is another way Britain can help boost access to clean, reliable and affordable energy. This will transform people’s lives and help achieve the UN’s goal of universal energy access by 2030.’

In the week before governments assemble in Paris to agree a global climate deal, a new report from Chatham House shows that a worldwide shift to healthier diets could help close the gap between current emissions reduction plans and what is needed to prevent dangerous climate change.

Pledges from countries attending the 21st UNFCCC Conference of the Parties put the world on track for around 3 degrees of warming by 2100, leaving governments with much more still to do. Changing diets to healthy levels of meat consumption could generate a quarter of the remaining emission reductions needed to keep warming below the ‘danger level’ of 2 degrees Celsius – the main goal of the climate negotiations.

Changing Climate, Changing Diets: Pathways to Lower Meat Consumption by Laura Wellesley, Catherine Happer and Antony Froggatt argues that, ultimately, dietary change is fundamental to achieving the 2 degrees goal. The livestock sector is already responsible for 15 per cent of global greenhouse gas emissions. Unless strong demand growth for meat is curtailed, livestock sector emissions will increase to the point where dangerous climate change is unavoidable.

Dietary change would also have major health benefits. Global per capita meat consumption is already above healthy levels, and double the recommended amount in industrialized countries. Too much red and processed meat is associated with an increased risk of non-communicable diseases, in particular cancer, as found most recently by the World Health Organization.

'Reducing meat consumption is a real win-win for health and for the climate,' says report author Laura Wellesley. 'As governments look for strategies to close the Paris emissions gap quickly and cheaply, dietary change should be high on the list.'

However, the report finds that governments are ignoring the opportunity. Reducing meat consumption does not feature in a single national emissions reduction plan submitted in advance of the Paris meeting. Governments are afraid to interfere in lifestyle choices for fear of public backlash.

But new research undertaken for the report, including an innovative public survey in 12 countries and focus groups in Brazil, China, the United Kingdom, and the United States shows that government fears are exaggerated. Once aware of the link between meat and climate change, consumers accept the need for government action. Even unpopular interventions to make meat more expensive, for example through a carbon tax, would face diminishing resistance as publics come to understand the rationale behind intervention.

To build support for government action, the report recommends initiatives to raise public awareness of the climate and health impacts of excessive meat consumption. Governments should pursue comprehensive strategies to shift diets, including policies on labelling, public procurement, regulation and pricing.

'Raising awareness about the health and environmental impacts of meat is an important first step, but on its own it will not lead to significant behaviour change. Governments must do more to influence diets,' added Wellesley.

Chatham House has been named Prospect magazine’s Think-Tank of the Year at a ceremony in the Houses of Parliament. The institute was also the winner in the UK categories for International Affairs and Energy and Environment. The quality, credibility and impact of Chatham House’s research was acknowledged for helping to create better understanding of key global phenomena at this critical time in world affairs. The judges commented that the institute’s work is ‘reliably excellent’ and a ‘gold standard of knowledge and professionalism’.  

Specifically, the US and the Americas and Asia programmes’ joint report Asia-Pacific Power Balance: Beyond the US-China Narrative, by Xenia Wickett, John Nilsson-Wright and Tim Summers, was singled out for being an important resource to help explain the developing geopolitical relationship between the United States and China.

The Energy, Environment and Resources department’s livestock project was a major factor in their award in the Energy & Environment UK category, including the report Changing Climate, Changing Diets: Pathways to Lower Meat Consumption by Laura Wellesley, Antony Froggatt and Catherine Happer, which developed recommendations for how dietary change can be effected in different national and cultural contexts.

Dr Robin Niblett, director of Chatham House said ‘The integrity and authority of Chatham House’s research is needed more than ever and I am extremely proud of our staff and their work particularly during this difficult and challenging year in world affairs’.

The ‘Cavaliere’ of the Order of ‘Stella d’Italia’ is presented to individuals who have made a positive contribution to Italy’s reputation abroad and who have fostered positive relations and cooperation with other countries and their ties with Italy.

Founded in 1947 to recognize civilian and military expatriates or non-Italians who made an outstanding contribution to Italy’s post-war reconstruction, the focus of this honour has now shifted to acknowledge individuals who have made specific contributions to Italy’s image and relationships overseas.

Dr Subacchi’s research and work at Chatham House was praised for its quality and rigour and for encouraging international dialogue. Dr Subacchi’s influence through her books, articles and media appearances were also noted for the impact they created, in particular in the context of the wider platform and reputation of Chatham House. 

Accepting the award from Vincenzo Celeste, Dr Subacchi said: ‘I am very proud to accept this award. In particular I would like to thank my family, friends and colleagues for their support, friendship and mentoring and I am delighted to share this honour with them.’

The Academy was launched by Her Majesty the Queen in November 2014 to offer potential and established leaders from around the world the opportunity to spend ten months as Academy fellows and develop the tools needed to address the major policy challenges and critical issues facing the world today.

Academy fellows are drawn from government and the broader policy community, the private sector, media and civil society. During their time at the Academy, fellows deepen their understanding of critical issues, learn new skills, develop their networks and propose new ideas and solutions to complex policy challenges and opportunities.

Dr Leslie Vinjamuri, Dean, QEII Academy for Leadership in International Affairs says:

'Chatham House recognizes the need for inspirational and effective leadership in today’s complex and rapidly changing global environment. We remain absolutely committed to the mission of developing leadership skills and feel privileged to welcome the 2018-19 Academy Fellows. The Queen Elizabeth II Academy is uniquely well-positioned, drawing on the historical depth of expertise at Chatham House, our international and national networks, and the dynamism of London to develop skills, knowledge, and global insights that benefit emerging and accomplished leaders across diverse sectors in Europe, Africa, the Middle East, Asia and the Americas.'

Academy Fellows 2018/19

Rustam Anshba
Rustam’s research will explore the prospects for transforming the Georgian-Abkhaz conflict. He will be hosted by the Russia and Eurasia Programme. His fellowship is supported by the Robert Bosch Stiftung.

Rita Dayoub
Rita will analyse attacks against healthcare systems during conflicts in Syria and South Sudan. She will be hosted by the Centre on Global Health Security. Her fellowship is supported by the Asfari Foundation.

Isabel Dunstan
Isabel’s research will focus on digital literacy among women as a means to counter radicalization and intolerance in Indonesia. She will be hosted by the Asia-Pacific Programme. Her fellowship is supported by Mr Richard Hayden.

Sophia Ignatidou
Sophia will examine the political and security implications of Artificial Intelligence. She will be hosted by the International Security Department. Her fellowship is supported by the Stavros Niarchos Foundation.

Anna Korbut
Anna’s research will examine the current media landscape in Ukraine and its transformative potential. She will be hosted by the Russia and Eurasia Programme. Her fellowship is supported by the Robert Bosch Stiftung.

Damir Kurtagic
Damir will research the challenges and possibilities of private sector engagement in Sub-Saharan Africa. He will be hosted by the Africa Programme. His fellowship is supported by the Robert Bosch Stiftung.

Zaki Mehchy
Zaki will research the role and dynamics of non-state actors in Syria and their relationship with state institutions. He will be hosted by the Middle East and North Africa Programme. His fellowship is supported by the Asfari Foundation.

Anne Nyambane
Anne will examine the synergies and trade-offs involved in the implementation of the Sustainable Development Goals (SDGs). She will be hosted by the Energy, Environment and Resources Department. Her fellowship is supported by the Mo Ibrahim Foundation.

Masterclass
The Academy is also pleased to welcome three Masterclass participants from the European Bank for Reconstruction and Development.

The Chatham House Prize is awarded to the person, persons or organization who is deemed to have made the most significant contribution to the improvement of international relations in the previous year. The presentation ceremony and panel discussion with the winners will be livestreamed on Wednesday.

The Blue Planet II series highlighted the damage caused by discarded plastics to the world’s oceans and marine wildlife. It is estimated that there are more than 150 million tonnes of plastic in the world’s oceans; resulting in the deaths of 1 million birds and 100,000 sea mammals each year. 

Dr Robin Niblett, director of Chatham House said: ‘Plastic pollution is one of the gravest challenges facing the world’s oceans, and undoubtedly an international issue. Sir David and the BBC Studios Natural History Unit played an instrumental role in helping to put this issue at the forefront of the public agenda. Blue Planet II spurred a passionate global response and generated clear behavioural and policy change.’

This year the G20 agreed on an international framework to address marine plastic litter, acknowledging the increasing urgency of the issue and the need for an international solution. This follows action from the UK government, including a plan to ban common plastic items and investment in global research.

See full award citation

Read more about Chatham House's research work in this area

Other nominees

Dr Niblett thanked Chatham House members for voting and acknowledged the outstanding achievements of the 2019 nominees:

Abiy Ahmed, prime minister of Ethiopia, nominated for his efforts to transform civic leadership and promote plural politics, free speech and peace in Ethiopia 

Katrín Jakobsdóttir, prime minister of Iceland, nominated for her commitment to gender equality and women’s financial inclusion in Iceland 

Event

The Prize was presented to Sir David and Julian Hector by Her Majesty The Queen at Chatham House on Wednesday 20 November.

Watch video from the event

For more information please contact

Chatham House Press Office
pressoffice@chathamhouse.org
+44 (0)207 957 5739

BBC Studios Natural History Unit Communications Manager
Lynn.li@bbc.co.uk
+44 (0) 7513 137893

About the Chatham House Prize

The Chatham House Prize is voted for by Chatham House members, following nominations from the institute’s staff. The award is presented on behalf of the institute's patron, Her Majesty the Queen, representing the non-partisan and authoritative character of the Prize.

The Chatham House Prize was launched in 2005. Previous recipients of the Prize include the Committee to Protect Journalists, Colombian president Juan Manuel Santos, president of Ghana John Kufuor, Médecins Sans Frontières and Melinda Gates, co-founder of the Bill and Melinda Gates Foundation.

Chatham House is a world-leading policy institute based in London. Our mission is to help governments and societies build a sustainably secure, prosperous and just world. We engage governments, the private sector, civil society and our members in open debate and private discussions about the most significant developments in international affairs.  Our research and policy ideas involve rigorous analysis of critical global, regional and country-specific challenges and opportunities.

About BBC Studios Natural History Unit 

BBC Studios Natural History Unit produces the world’s most iconic natural history programmes, such as Blue Planet II and Planet Earth II, which have been watched by more than a billion people globally. Ranging from technically challenging live shows and super-landmarks to long-running series and children’s content, The Natural History Unit programmes include Dynasties, Blue Planet Live, Springwatch, Animal Babies: First Year On Earth, Andy’s Dinosaur Adventures as well as the currently on air Seven Worlds, One Planet presented by Sir David Attenborough and third-party commissions for Discovery, Apple, Quibi, National Geographic and BBC America. 

The Natural History Unit is part of BBC Studios, a subsidiary of the BBC, which develops, produces and distributes bold, British content, making over 2,500 hours of content each year, operating in 22 markets globally and generating revenue of around £1.4bn. In the year to March 2019, it returned £243m to the BBC Group, complementing the BBC’s licence fee and enhancing programmes for UK audiences.

The situation in Ukraine remains in flux and despite Europe and the US toughening sanctions on Russia, President Putin continues to increase the scope of Russia’s involvement in the conflict between the Ukrainian government and the separatists. It remains unclear how far Putin is willing to go, what his broader regional ambitions are, and what he will do if forced further into a corner by Western actions. In this time of uncertainty and instability it is therefore vital to assess how the transatlantic partners should respond to this increasingly precarious situation. 

At this all-day event, the group will discuss how US policy towards Russia is changing, what this means for Europe and, subsequently, how Europe should respond. 

Attencance at this event is by invitation only.

The event is part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will come together to discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Stiftung.

In an open podcast recorded following the event, Robin Niblett discussed the state of the transatlantic relationship with International New York Times London Bureau Chief Steven Erlanger, former UK defence secretary Liam Fox and former Foreign Affairs Committee chair Mike Gapes.

The roundtable was held under the Chatham House Rule.

 

While revelations about the activities of the NSA and GCHQ confirmed the depth of cooperation between the US and the UK over intelligence, the debate over the UK’s membership of the EU and difficulties in coordinating a response to the Syria crisis have raised tensions between policy-makers in Washington and London. With the two countries now facing an array of shared international challenges – not least in Ukraine, Afghanistan and Iraq – this roundtable will examine the current state of the transatlantic relationship.

Drawing on his experience as governor of Wisconsin, Scott Walker will outline the importance of forging strong global partnerships to fuel business growth and build prosperous local economies. Governor Walker will consider how mutually beneficial partnerships can be developed within the global community and the impact of these on local communities.

LIVE STREAM: This event will be live streamed. The live stream will be made available at 18:00 GMT on Wednesday 11 February.

ASK A QUESTION: Send questions for the speaker by email to questions@chathamhouse.org or using #CHEvents on Twitter. A selection will be put to him during the event.

With the Middle East in chaos and the future of many states increasingly uncertain, there is a large amount of attention as to how policy-makers in Europe and the US should respond. In particular, many in Europe are unsure of long-term US policy in light of competing American priorities, budgetary constraints and a public adverse to committing further resources abroad. In this context, it is important that European and American policy-makers understand each other’s positions.

At this all-day event, a group of experts will discuss how US policy towards the Middle East is changing, what this means for Europe and, subsequently, how Europe should respond. 

Attendance at this event is by invitation only.

The workshop is held as part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Foundation, with support for this event provided by the Delegation of Strategic Affairs of the French Ministry of Defence and the British Embassy in Paris.

Europe and the United States have dominated global institutions for over 70 years. However, as the emerging markets take up a greater share of the global economy it is becoming increasingly difficult for the transatlantic powers to maintain the current system. This event will examine the changes needed in order to avoid a collapse of the current system.

The workshop is held as part of the Transatlantic Strategy Group on the Future of US Global Leadership run jointly with the German Marshall Fund of the United States. Over the course of a year, this group will discuss how US policy is changing on key issues and the implications for Europe. This project is supported by the Fritz Thyssen Foundation, with support for this event provided by the Bertelsmann Foundation. 

Early last month NATO launched a new maritime security mission, ostensibly to prevent people smuggling across the Aegean Sea. This mission, however, was not originally a reaction to the humanitarian catastrophe at sea. Instead, it was a response to growing Russian assertiveness.

A maritime patrol unit was first discussed in the North Atlantic Council in December 2015, when the Alliance agreed to provide a ‘tailored package of assurances’ to Ankara in a period of heightened tensions after Turkey shot down a Russian jet. The package included measures such as early reconnaissance planes (AWACS), air policing, naval presence in the Eastern Mediterranean, provisions for Maritime Patrol Aircrafts (MPA) and Intelligence, Surveillance & Reconnaissance (ISR), and port visits. None of the discussion at the time linked it with protecting refugees. Now framing this decision in that light creates a new mission for NATO’s Maritime Command (MARCOM), a mission that it has never conducted before.

Neither NATO’s founding documents or the most recent 2010 Strategic Concept provide for this type of mission, and NATO units are not trained to carry out an actual rescue mission. Protecting strategic assets and goods, such as oil tankers, escorting naval vessels providing food into conflict zones, deterring piracy and monitoring the Mediterranean for terrorist activity have been the main priorities for MARCOM in the post-Cold War period. These activities and maritime exercises were aimed at defence against non-state actors.

The positioning of NATO’s maritime fleet in the Aegean Sea to save refugees, however, has the potential to be used as a deterrent against Russia’s Anti Access/Anti-Denial capacity in the eastern Mediterranean. Russia, meanwhile, has increased its naval presence at the Tartus naval base in Syria, which it has used to support its air campaigns in Syria. This level of reciprocated military build-up is hard to sustain in the long-run.   

NATO−Russia tensions

Over the past few years, Russia’s assertive policies – its multiple military operations, the continuing modernization of its army and ‘simulated attacks’ such as the one in 2013 that tested Sweden’s air defence response mechanisms − have increasingly worried the Alliance and its partners. Clashing interests over Syria’s future and Russia’s attacks against the Western-supported rebel groups have also served to increase tensions between NATO member states and Russia. Recent analysis logged 60 dangerous incidents in the Euro-Atlantic area between Russia and NATO counties in the period between March 2014 and March 2015. NATO’s preparedness has been severely tested by these incidents, and has led the alliance to strengthen its presence on Europe’s southern flank.

Such increased tensions could create a situation whereby accidents and miscalculations lead to escalation. NATO forces and Russia are already engaged in further force posturing − the decision to accelerate Montenegro’s accession to NATO and the increased conduct of wartime exercises, such as NATO’s search for submarines in open waters (Dynamic Manta 2016), reconnaissance operations (Cold Operation 16) or Russia’s simulated exercises, for instance – which could undermine global stability. Three weeks after the Russian jet was shot down, a Russian patrol ship fired warning shots at a Turkish vessel to attract attention and avoid a collision. This event did not escalate but given the heightened tensions, similar events may spiral out of control.  

The tentative cease-fire in Syria is a confidence building measure that could normalize and rebuild relations. But further steps should be taken to establish political dialogue, open up the channels for potential meetings at the NATO−Russia Council, and increase transparency and risk mitigation in exercises and activities. The longer both sides wait, the more likely a confrontation will be.

To comment on this article, please contact Chatham House Feedback

The US−UK ‘Special Relationship’ is in decline, and a British decision to leave the EU would hasten its demise. As Great Britain increasingly becomes just one of America’s many strategic relationships, Brexit would speed the transfer of US attention and energy from the UK to the continent. This, however, does not need to be inevitable. The necessary ingredient to reverse this decline is stronger British leadership internationally.

The US government has made it abundantly clear that its preference is to see the UK remain in the European Union. In January 2013, when David Cameron had not yet committed to a referendum, Phil Gordon, the US assistant secretary of state for European affairs bluntly stated that it is in the American interest for the US ‘to see a strong British voice in that European Union.’ The fact that a senior US official would go so far – to be seen to intervene so early in a divisive domestic political issue – spoke volumes about how important this is to America. This week, President Obama will visit the UK to send an equally firm, if polite, message to the British public.

Why does the US want the UK to remain in Europe?

From the US perspective, there are three principal elements that the UK brings to the table in the bilateral relationship. The first stems from Britain’s capabilities, particularly in the military and intelligence arenas. US−UK intelligence sharing, the closest for both countries, has a long history dating back to the Second World War. For good or ill the UK has been among America’s leading allies in every major conflict the US has been involved in for the last quarter of a century – in the Gulf War, Bosnia and Kosovo, Afghanistan, the war in Iraq, the interventions in Libya as well as current operations against ISIS in Iraq and, belatedly, Syria.

The second relates to the political value of having a reliable partner in international engagements – and thereby avoiding the perception of acting unilaterally. Shared history and values, and thus often perspectives (as well as capabilities) have ensured that the UK has long been the first port of call for the US when seeking to solve international problems or build coalitions. At the same time, Britain’s historical global reach and diplomatic experience around the world (not least in areas of current concern such as Afghanistan, Pakistan, Israel and Palestine, and Iraq) have provided American policy-makers with valuable input on foreign policy issues that has contributed to their own internal decision making.

The third area of added value for the US is Britain’s place in the EU. While British and US policy preferences may at times diverge, as they have recently on the Israel−Palestine issue, for example, their common outlooks and interests mean that Britain is the closest thing that the United States has to having a voice in the EU. At the same time, the US also sees the UK as the country most likely to support an open trade and investment agenda and a more proactive approach to dealing with the challenges in Europe’s neighbourhood, policies that leaders in both countries agree are necessary to make the EU a more effective actor and better partner to the US on the international scene.

The transition from US−UK ties to US−European ties

In recent years, however, the US has begun to diversify its relationships within Europe, in part as the UK has become unable or unwilling to step up and fulfil these three elements of paramount importance to the US.

Defence and intelligence

With regards to defence capabilities, it is no longer the UK that the United States inevitably looks to first. In Libya, the operation that started with the defence of Benghazi from Gaddafi’s forces in March 2012 (that eventually came to remove Gaddafi himself) was jointly led by the French and the British, although then-French president Nicolas Sarkozy appeared to be the driving force. More recently, it was the French with whom the US partnered in responding to the terrorist activities in Mali and who were first to support the US in action in Syria (following a UK parliamentary vote to stay out in August 2013 and a belated vote to act in December 2015). But in recent years others have worked more closely with the United States militarily as well, including in particular Poland and Denmark (although with the new government in Poland, the relationship might wither again).

This trend towards more diversified military engagement with other European states looks set to continue in the near term. Despite taking a tough position in the 2014 NATO Summit to reinforce the NATO commitment of two per cent of GDP spending on defence, the Cameron government came very close to falling below this line in 2015 (after five years of real defence cuts). The eventual decision to commit to meet this target, along with the newly released Strategic Defence and Security Review (SDSR), have somewhat reassured American policy-makers of the UK’s continued ambition and capabilities. But there remains a lack of US confidence that this is only a temporary uptick in UK attention on defence. Meanwhile, America will continue to expand its horizons.

The story on intelligence sharing is slightly different, but here too obstacles have arisen in the close US-UK exchange of information. Since the end of the Second World War, the US and UK have been part of the ‘Five Eyes’ alliance – with Australia, New Zealand and Canada – that allows the close sharing of intelligence. And arguably, within the Five Eyes, the links between the US and UK are the closest of all. However, more recently, tensions have emerged. Over the past five or so years, the British judicial system in particular has pushed back on US confidentiality rules in ways that make the US intelligence services nervous of continuing to share information; given the current close relationship, this could be more of an obstacle than it is for other countries sharing intel with the US.

At the same time, with the ISIS-inspired resurgence in the terrorist threat in both Europe and the US, it is becoming increasingly clear that the close intelligence sharing between the US and UK must take place much more widely. The current systems – through NATO or INTERPOL – have proven too slow and ineffective, as the recent attacks in Paris and Brussels have made clear. Sharing among the US and UK, or even among the Five Eyes, is insufficient – increasingly the relationships will have to be broadened.

Partnership

The US is also looking elsewhere for partnership in its international engagements, including on some of the issues that are at the top of the inbox for the American president.

On responding to Russian actions in Ukraine, it is clear that German Chancellor Angela Merkel is in the lead, both in corralling Europeans to maintain the sanctions but also in negotiating with Russian President Vladimir Putin. This was highlighted in the creation of the Normandy format in the summer of 2014, a group encompassing Germany, France, Russia and Ukraine (but not the UK or the US), to resolve the situation in the east of Ukraine. On another issue of significant import to the United States, European economic prosperity and stability, Merkel is again the leading actor in Europe.

In the case of targeted bombing in Syria, it was not the British that were first to join the United States in the offensive against ISIS, but instead the French. President Francois Hollande also proved far more proactive after Syrian President Assad crossed the chemical weapons ‘redline’ in 2013, although in the end France was left hanging when President Obama decided to step back from military action after the failure of the British parliamentary vote to authorize UK involvement.

Finally, on at least one issue of great import to the US – China – the UK appears to be diverging meaningfully. The most recent case – the UK decision to join the Asian Infrastructure Investment Bank in March 2015 – is perhaps the starkest example of such differing policy positions that have caused significant frustration in the US.

Influence in the European Union

With regards to Europe, even before the referendum was formally announced, it was increasingly clear that the UK was less inclined to engage proactively in the EU. A number of factors have ensured that, particularly since 2010, the UK has become less influential there.

British influence has been diminished through actions by the Cameron government that have, perhaps unnecessarily, antagonized many across the Channel. Many European conservatives became frustrated early in Cameron’s tenure when he decided to take the Conservative Party out of the principal conservative group in the European parliament, the European People’s Party. This sentiment only worsened in recent years as, albeit for perhaps understandable domestic political reasons, Cameron conducted an adversarial negotiation with his European partners in an effort to secure reforms to the EU and changes in Britain’s terms of membership.

The UK also no longer sends its best and brightest to EU institutions. Many of the leading British officials who once occupied high offices there have left and been replaced by other continental Europeans. This deprives Britain of an important source of influence within the EU.

It is clear that if the US wants influence in the EU, it needs more partners there than just the UK. Britain is still important, and would be a strong driver to make the institution more efficient, but as its influence declines it is no longer sufficient. A Leave vote would immediately dispose of that influence entirely.

The UK is ‘one among many’ for the US

What is clear is that increasingly the UK is not ‘first among equals’ in Europe but ‘one among many’ for the United States. America is diversifying its relationships. More and more the US can find other allies and friends to fulfil the needs in which the UK no longer has interest.

If the UK leaves the European Union, the pace of this trend will only quicken. In addition to needing to find alternative partners to address these policy gaps, the UK will likely no longer have the time to devote to the United States that it does today. If Brexit takes place, Whitehall will find itself inundated with issues which had previously been managed by the EU, from trade deals with third parties to negotiating constant market access adjustments with the EU. Thus, very quickly, British resources are likely to be pulled from the US portfolio, and issues of common concern will get drowned out by other agendas. At least for a while, the US will likely get short shrift.

America’s response then can only be to hasten its search for other partners both in Europe and beyond. And there lies an inevitable negative spiral for the Special Relationship.

Can anything be done to save the Special Relationship?

There is no question that the US and UK will continue to have a strong and positive relationship, but it is clear that, without action, either in or out of Europe, its ‘specialness’ will decline. As the arguments above lay out, the only question is how fast this demise takes place. But there is something that could not only halt, but also reverse this trend.

As President Obama made starkly clear in his interviews with Jeffrey Goldberg in the Atlantic, what he wants most from partners and allies is for them to step up – to show more leadership (a sentiment that the Republican candidates for president would push even further). With the perceived failure of interventions over the last 15 years – from Afghanistan to Iraq to Libya –many politicians and publics have become wary of foreign military intervention. This is true in Europe and the US; but Americans have often felt that they have been left holding both the bag and the blame.  

It should be noted that more leadership does not necessarily mean more military engagement. Or even, necessarily, more spending on foreign policy tools (whether diplomatic, military or development). But it does mean a willingness to step up and take responsibility for trying to guide international events and for promoting common interests.

In the UK’s SDSR released towards the end of 2015, the government stated its intention to remain fully engaged globally; however, its actions belie this. Where Asia is concerned – an issue that is front and centre for the US – the UK joins other European powers in arguing that its lack of resources in the region makes it unable to contribute meaningfully to maintaining stability. Even closer to home, in the Middle East, the UK has been wary of leading.

It is understandable why the UK is hesitant to take such a leadership role, even as part of a coalition, in some of the larger strategic challenges the world faces. There are few benefits. Merely finding the human capital to coordinate an international response is difficult. The complexity of these problems ensures they rarely work out as hoped, and more often lead to international contempt rather than approbation. Thus it is no great surprise that the UK, along with much of the rest of the world, resists the temptation to be out in front. But there are opportunities – two issues that the US would likely welcome greater British leadership on would be building support in Europe for the Transatlantic Trade and Investment Partnership and taking a more active role in maintaining stability in Asia. Further, having a stronger European partner on issues in the Middle East (from Yemen to Syria) – Europe’s near abroad – is something that many American policy-makers have suggested. 

But the UK would not have to stand alone. With a little leadership from the UK, the US would provide support, as would many others currently loath to take the lead but with very strong interests in the outcomes. But someone has to start; as Obama made clear, there needs to be less ‘free riding’.

If the UK wants to reverse the decline of the Special Relationship, it will need to show more leadership internationally. This should not be as hard as it might seem. Not only does it conform to the government’s own strategy (as laid out in the SDSR) but public concern over further interventions is weaker than one might imagine. Such a leadership role would once again show to the United States the value of the Special Relationship.

This article has also been published by Real Clear World.

To comment on this article, please contact Chatham House Feedback

Summary

• The United States’ transatlantic allies need to appreciate how its global leadership is changing and what this means for their interests, and respond accordingly. Notions of US decline have been overstated, but the country is not going to play the same international role in the future that it has previously.
• As the United States’ international engagement changes, Canada and Europe should increase coordination with it to prevent power vacuums from emerging. The transatlantic allies should work together to build greater links at all stages of the policy process, from perceptions of threat, prioritization, analysis, threat definition and policy formation to implementation and action.  
• As the United States’ capabilities adapt to its changed circumstances and role, so too must those of its allies. This adjustment must go far beyond military aspects to enhancing diplomatic, energy, economic, intelligence and other resources.
• In addition to the challenges around differing interests, priorities and capabilities inherent in any alliance, Europe appears to have lost its confidence. In part this is due to its growing disengagement and introspection. But Europe retains huge potential for influence if it uses its resources effectively. There is much that European states can do, individually and together, to take more control over advancing their strategic interests. Equally, by working together they can do much to nudge the United States in helpful directions to support the mutual interests of all parties.
• The conversation on reforming global institutions such as the IMF must move beyond the need for change per se towards articulating the actual shape of such changes. Europe and Canada will likely need to push the United States into accepting reform of these institutions to better reflect today’s reality and tomorrow’s challenges. Global institutions need more diversified leaderships if they are to ensure their long-term legitimacy and influence. This will be difficult to push through politically in the United States, but by working with new regional and global powers to propose reforms, Europe and Canada can help find an acceptable solution.
• The use of ad hoc coalitions does not necessarily damage the efficacy of broader consensus institutions such as NATO. In fact, flexible coalitions may often be desirable when solutions to new challenges need to be developed and agreed quickly.
• Canada and Europe should consider partnering with other actors besides the United States where necessary. This may be expedient for meeting individual objectives, and would have the secondary benefit of demonstrating to emerging powers that the West does not exclude cooperation with others out of an arbitrary loyalty to the United States.
• Europe needs to appreciate the potentially dire consequences of failing to adapt to changing US leadership and an increasingly complex world. There is a real chance that the European project could unravel in the next few years due to external and internal pressures. While many European policy-makers display an understanding of these challenges in private, in public there is little appetite for taking the decisions necessary to bring long-term stability to the continent. 

A British exit from the EU would add to growing strains on the United States’ relations with Britain and the rest of Europe, but by itself would not lead to a breakdown in transatlantic relations due to the scale of shared ideas and interests, institutional links, international pressures and commitments by individual leaders. It would, however, add to pressures on the US that could change the direction of the transatlantic relationship. From the perspective of Washington, Britain risks becoming an awkward inbetweener, beholden more than ever before to a wider transatlantic relationship where the US and EU are navigating the challenges of an emerging multipolar world. The article outlines developments in the UK, EU, Europe and the US in order to explain what Brexit could mean for the United States’ approaches to transatlantic relations. By doing so the article moves beyond a narrow view of Brexit and transatlantic relations that focuses on the future of UK–US relations. In the conclusion we map out several ways in which US views of the transatlantic relationship could be changed.

With Donald Trump in the White House, US trade policy will probably look very different from the past 70 years - seven decades across which successive Republican and Democratic administrations have participated in and led global trade liberalization initiatives. If the president-elect delivers on his major campaign promises on trade, the negative effects on the American economy would be severe and the United States would give up its role in shaping the global trading system.

But there is no need to panic. Trump will likely leave behind the rhetoric of the campaign trail once he sits in the Oval Office. Trump will probably moderate his proposals, because a faction of the Republican-dominated Congress continues to support free trade. He might also be reined in by his team, though that depends on who best catches the ear of the president: individuals such as Vice-President-elect Mike Pence, who has supported free-trade agreements in the past, or trade-skeptical advisors such as Dan DiMicco, who now heads the transition team for the Office of the United States Trade Representative. 

So what does the Trump presidency actually mean for trade?

Trump won’t likely follow through on his most extreme plans, such as leaving the World Trade Organization. But he will lead a more protectionist United States that focuses on its trade deficits – with particular attention being paid to China and Mexico. Trump will probably impose tariffs on imports from those countries; however, duties will be lower than the mooted 45 per cent and 35 per cent, respectively. With regards to China, Trump will probably bring trade cases against Beijing’s subsidy arrangements and look into alleged currency manipulation (even though most economists accept that the renminbi is no longer undervalued).

Given the prominence of the North American Free Trade Agreement on the campaign trail, Trump will have to address the deal with Canada and Mexico. Whether that means renegotiating or pulling out remains to be seen. One thing is certain: Trump will not move forward with mega-regional trade accords such as the Trans-Pacific Partnership or the US-EU Transatlantic Trade and Investment Partnership. Those would-be pacts are a lost opportunity, but this is not the end of the trade world. Trump will focus instead on striking trade deals with individual countries. One such potential bilateral trade deal could be a US–UK agreement, which Trump and his advisers, despite the prognostications of the current president, see at the front of the queue.  

Opportunity to rethink the trade framework

The fact that Trump is not necessarily against free trade per se bears hope. And there is another silver lining in the dark cloud hanging over trade. Trump has pointed to some valid concerns about the current trading system. His victory can be an opportunity to address these shortcomings. 

NAFTA does need an update. The agreement entered into force in 1994 - before the internet took off. Thus, provisions to include standards to protect digital freedoms could modernize NAFTA and expand its scope to cover 21st century economic issues. In addition, labour rights and environmental protections were not included in NAFTA but were incorporated into side agreements with weak, unenforceable provisions. By better addressing labour and environmental issues, NAFTA could be significantly upgraded.

Trump will aim to tackle unfair competition and look to enforce existing trade deals more vigilantly. This is another important and legitimate issue, and could be tackled in conjunction with European allies. The European Commission has recently proposed redesigning and updating its trade defence instruments because non-market economy practices and state intervention by some WTO countries - for example, China’s overcapacity in the steel sector - have hurt domestic industries. Without action by major players such as the United States or the European Union, China would have no incentive to reform its distortionary policies. Trust in the rules-based trading system requires that existing trade agreements are properly and fairly enforced.

Trump’s win highlights the need for better compensation for those who have felt the adverse effects of trade. His victory was partly fuelled by tapping into economic anxieties and appealing to voters who feel left behind by globalization. Better mechanisms to cushion the blows to the losers of globalization are indeed required. In the United States, Trade Adjustment Assistance has been insufficiently funded and is ineffective. More needs to be done to replace the wages of workers whose jobs have been lost due to trade and to provide them with skills training for re-employment. This reconsideration of assistance for those who are hurt by free trade could provide a foundation for the future. Once the current wave of anti-trade sentiment subsides, new trade agreements can be struck that don’t leave so many citizens feeling left behind. 

Instead of worrying about how Trump might blow up the underpinnings of the global trading system, this is an opportunity to rethink what a new trade framework might look like.

This piece was published in collaboration with Real Clear World.

To comment on this article, please contact Chatham House Feedback

Summary

• The United States and the European Union are deeply integrated economically in terms of movement of goods, services and capital across the Atlantic, but this is not matched by the mobility of labour. Freer movement of high-skilled workers across the Atlantic has a potentially critical role to play in maintaining and strengthening the bilateral economic relationship.
• Both the US and EU seek to attract high-skilled labour through the use of temporary visa programmes. Various routes are available for highly skilled workers from the EU to temporarily work in the US (for instance, through the H-1B visa for foreign nationals in ‘specialty occupations’, as well as other visa categories for treaty traders and investors, intra-company transferees, and international students seeking work authorization in the US before or after graduation). The main ways for highly skilled workers from the US to temporarily work in EU member states are through EU-wide schemes that apply in 25 out of the 28 member states (for holders of EU Blue Cards or intra-company transferees); or via member states’ parallel national schemes.
• The experiences of US and EU employers and workers under the US H-1B programme and the EU’s Blue Card scheme differ greatly. The EU Blue Card scheme avoids many of the drawbacks of the H-1B visa. It does not have an annual cap on the number of visas issued. It also grants greater autonomy to the worker by not requiring the employer to sponsor long-term residence, by providing greater flexibility to switch employment, and by having a longer grace period for visa-holders to find new employment after dismissal.
• The US visa system hampers America’s economic growth. Restrictive policies such as an annual limit on the number of H-1B visas issued, and the associated uncertainty for employees and employers, hinder the ability of US companies to expand and innovate. The complex and costly visa application process is a particular burden for small and medium-sized enterprises. Problems around the timely availability of visas frustrate investors both from the US and from abroad (including from the EU). European firms face difficulties in acquiring visas for intra-company transferees, and not all EU member states have access to the treaty trader and treaty investor visa categories. At times, this impedes foreign direct investment and restricts US job creation. In addition, current policies hinder the economy’s retention of EU and other graduates of US universities. This is of particular concern given that skilled graduates have a critical role to play in addressing the US’s growing shortage of workers in the science, technology, engineering and mathematics (STEM) fields.
• Given the comparability of US and EU wages and labour markets, US concerns about foreign workers ‘stealing’ their jobs or depressing wages generally do not apply to EU citizens. On the contrary, a more open immigration policy for high-skilled workers – in particular for EU citizens – would benefit the US economy.
• Efforts to reform visa systems for high-skilled labour are under way in both the US and EU. In order to facilitate the movement of highly skilled workers across the Atlantic, this research paper recommends (1) creating a special visa for highly skilled EU citizens to work temporarily in the US; (2) extending the availability of treaty trader and investor visas to all EU member states; and (3) increasing efforts to eliminate fraud and abuse in the H-1B system. These measures could potentially help to create more investment, jobs and economic growth in the US.

Megan Greene will join us for a discussion on the prospect of future economic and political uncertainty on both sides of the Atlantic.

The first year of Donald Trump’s presidency and the ongoing saga of Brexit negotiations underscore the amount of uncertainty about the economic future on both sides of the Atlantic.

Despite that, business and consumer confidence in the US and continental Europe have soared. Are we still stuck in secular stagnation, or are we breaking out of the low growth, low inflation, low rate environment we’ve been in for years?

What opportunities and risks are posed by this year’s elections in France and Germany, the upcoming elections in Italy, and the mid-term elections in the US?

This event is part of the US and Americas Programme ongoing series on Transatlantic Perspectives on Common Economic Challenges. This series examines some of the principal global challenges that we face today and potentially differing perspectives from across Europe and the US.

Attendance at this event is by invitation only.

Events over the past 18 months, in particular with the UK’s decision to leave the European Union and the election of Donald Trump, have elevated concerns among many Europeans and Americans over the health of the transatlantic relationship. With the EU looking inward and President Trump’s rejection of a number of historically common US-European interests, such as NATO, the JCPOA on Iran, and the Paris Agreement, the continuation of close transatlantic collaboration is in question.

Xenia Wickett will discuss the future of the transatlantic relationship. Is there a clear structural divergence between the US and the UK or is the partnership merely going through a temporary hiccup? She will explore the importance of recent events as well as structural, long-term factors that affect the US and Europe similarly. And what actions, if any, can be taken to mitigate differences and best manage the current situation of uncertainty?

Please note, this event is online only. Members will be able to watch the webinar from a computer or other internet-ready device and do not need to come to Chatham House to attend.

Read all our analysis on the Coronavirus Response

The coronavirus outbreak comes at a difficult time for China’s ruling party. A tumultuous 2019 saw the country fighting an economic slowdown coupled with an increasingly hostile international environment. As authorities take assertive steps to contain the virus, the emergency has - at least temporarily - disrupted global trade and supply chains, depressed asset prices and forced multinational businesses to make consequential decisions with limited information. 

Against this backdrop, panellists reflect on the country’s nascent economic transition from 2020 onward. What has been China’s progress towards a sustainable innovation-led economy so far? To what extent is the ruling party addressing growing concerns over job losses, wealth inequality and a lack of social mobility? And how are foreign investors responding to these developments in China?

The coronavirus outbreak in China poses a tremendous test for Beijing. Beyond the immediate public health crisis, the Chinese Communist Party faces a stuttering economy, growing public anger and distrust, and a potentially heavy blow to its global reputation.

The hesitant early response to the outbreak sheds light on the way the Chinese bureaucracy approaches crises at a time when the party leadership is tightening control at almost all levels of society. At first, officials in Wuhan attempted to censor online discussions of the virus. This changed only after President Xi Jinping’s call for a much more robust approach was followed by a sudden increase in the state media coverage of the outbreak. There is no doubt that Xi’s intervention will greatly speed up the response to the crisis, which should be welcomed.

Despite China’s experience with the SARS epidemic between 2002 and 2004, the sluggish reaction by officials in Wuhan should not have come as a surprise. The tendency among bureaucrats to play down crises is deeply entrenched. And, ironically, the party leadership’s recent push for greater bureaucratic accountability and its promise of stiffer punishment for those who take a 'do little' approach have also contributed to the habit of covering up disasters.

Xi has launched an ambitious programme to reform the governance of the Communist Party and re-centralize political control. This has reinforced the tendency of officials to avoid making important decisions and instead to wait for instructions from the party leadership.

For decades, local governments have made things happen in China. But with tighter regulation of lower-level bureaucrats, civil servants across the system now seem less ready, and able, to provide their input, making ineffective and even mistaken policy more likely.

Moreover, the coronavirus outbreak could not have happened at a worse time. Last year was tumultuous and saw China fighting an economic slowdown while also dealing with an increasingly hostile international environment. Now, as the authorities take steps to contain the disease, economic activity has come to a near standstill, with public transport curbed and restaurants and entertainment venues shuttered.

This contrasts with SARS, when double-digit growth in gross domestic product enabled Beijing to raise government expenditure to tackle the outbreak. Today, the Chinese economy is running into some of the most difficult challenges it has faced since the global financial crisis.

In response to the slowdown in growth, Beijing has adopted loose fiscal policy, with an emphasis on public investment. It also continues to push big banks to cut interest rates for individual borrowers and small businesses which were already suffering from the effects of the trade war with the US before the coronavirus struck.

The outbreak should give new impetus to governments, not least those that have close economic ties with China. Being a great power with ambitions for global leadership, as well as domestic reform, is not easy. Even without multi-party elections, it involves increasing, and often uncomfortable, scrutiny. As President Xi himself has put it: the road is long and the task is weighty.

This article was originally published in the Financial Times.

As the COVID-19 crisis roars on, so have debates about China’s role in it. Based on what is known, it is clear that some Chinese officials made a major error in late December and early January, when they tried to prevent disclosures of the coronavirus outbreak in Wuhan, even silencing healthcare workers who tried to sound the alarm.

China’s leaders will have to live with these mistakes, even if they succeed in resolving the crisis and adopting adequate measures to prevent a future outbreak. What is less clear is why other countries think it is in their interest to keep referring to China’s initial errors, rather than working toward solutions.

For many governments, naming and shaming China appears to be a ploy to divert attention from their own lack of preparedness. Equally concerning is the growing criticism of the World Health Organization (WHO), not least by Donald Trump who has attacked the organization - and threatens to withdraw US funding - for supposedly failing to hold the Chinese government to account.

Unhelpful and dangerous

At a time when the top global priority should be to organize a comprehensive coordinated response to the dual health and economic crises unleashed by the coronavirus, this blame game is not just unhelpful but dangerous.

Globally and at the country level, we all desperately need to do everything possible to accelerate the development of a safe and effective vaccine, while in the meantime stepping up collective efforts to deploy the diagnostic and therapeutic tools necessary to keep the health crisis under control.

Given there is no other global health organization with the capacity to confront the pandemic, the WHO will remain at the center of the response, whether certain political leaders like it or not.

Having dealt with the WHO to a modest degree during my time as chairman of the UK’s independent Review on Antimicrobial Resistance (AMR), I can say that it is similar to most large, bureaucratic international organizations.

Like the International Monetary Fund (IMF), the World Bank, and the United Nations, it is not especially dynamic or inclined to think outside the box. But rather than sniping at these organizations from the sidelines, we should be working to improve them.

In the current crisis, we all should be doing everything we can to help both the WHO and the IMF to play an effective, leading role in the global response. As I have argued before, the IMF should expand the scope of its annual Article IV assessments to include national public-health systems, given that these are critical determinants in a country’s ability to prevent or at least manage a crisis like the one we are now experiencing.

I have even raised this idea with IMF officials themselves, only to be told that such reporting falls outside their remit because they lack the relevant expertise. That answer was not good enough then, and it definitely isn’t good enough now.

If the IMF lacks the expertise to assess public health systems, it should acquire it. As the COVID-19 crisis makes abundantly clear, there is no useful distinction to be made between health and finance. The two policy domains are deeply interconnected, and should be treated as such.

In thinking about an international response to today’s health and economic emergency, the obvious analogy is the 2008 global financial crisis which started with an unsustainable US housing bubble, fed by foreign savings owing to the lack of domestic savings in the United States.

When the bubble finally burst, many other countries sustained more harm than the US did, just as the COVID-19 pandemic has hit some countries much harder than it hit China.

And yet not many countries around the world sought to single out the US for presiding over a massively destructive housing bubble, even though the scars from that previous crisis are still visible. On the contrary, many welcomed the US economy’s return to sustained growth in recent years, because a strong US economy benefits the rest of the world.

So, rather than applying a double standard and fixating on China’s undoubtedly large errors, we would do better to consider what China can teach us. Specifically, we should be focused on better understanding the technologies and diagnostic techniques that China used to keep its - apparent - death toll so low compared to other countries, and to restart parts of its economy within weeks of the height of the outbreak.

And for our own sakes, we also should be considering what policies China could adopt to put itself back on a path toward 6% annual growth, because the Chinese economy inevitably will play a significant role in the global recovery.

If China’s post-pandemic growth model makes good on its leaders’ efforts in recent years to boost domestic consumption and imports from the rest of the world, we will all be better off.

This article was originally published in Project Syndicate

A controversial debate during COVID-19 is the state of readiness within governments and health systems for a pandemic, with lines of the debate drawn on the issues of testing provision, personal protective equipment (PPE), and the speed of decision-making.

President Macron in a speech to the nation admitted French medical workers did not have enough PPE and that mistakes had been made: ‘Were we prepared for this crisis? We have to say that no, we weren’t, but we have to admit our errors … and we will learn from this’.

In reality few governments were fully prepared. In years to come, all will ask: ‘how could we have been better prepared, what did we do wrong, and what can we learn?’. But after every crisis, governments ask these same questions.

Most countries have put in place national risk assessments and established processes and systems to monitor and stress-test crisis-preparedness. So why have some countries been seemingly better prepared?

Comparing different approaches

Some have had more time and been able to watch the spread of the disease and learn from those countries that had it first. Others have taken their own routes, and there will be much to learn from comparing these different approaches in the longer run.

Governments in Asia have been strongly influenced by the experience of the SARS epidemic in 2002-3 and - South Korea in particular - the MERS-CoV outbreak in 2015 which was the largest outside the Middle East. Several carried out preparatory work in terms of risk assessment, preparedness measures and resilience planning for a wide range of threats.

Case Study of Preparedness: South Korea By 2007, South Korea had established the Division of Public Health Crisis Response in Korea Centers for Disease Control and Prevention (KCDC) and, in 2016, the KCDC Center for Public Health Emergency Preparedness and Response had established a round-the-clock Emergency Operations Center with rapid response teams. KCDC is responsible for the distribution of antiviral stockpiles to 16 cities and provinces that are required by law to hold and manage antiviral stockpiles.

And, at the international level, there are frameworks for preparedness for pandemics. The International Health Regulations (IHR) - adopted at the 2005 World Health Assembly and binding on member states - require countries to report certain disease outbreaks and public health events to the World Health Organization (WHO) and ‘prevent, protect against, control and provide a public health response to the international spread of disease in ways that are commensurate with and restricted to public health risks, and which avoid unnecessary interference with international traffic and trade’.

Under IHR, governments committed to a programme of building core capacities including coordination, surveillance, response and preparedness. The UN Sendai Framework for Disaster Risk highlights disaster preparedness for effective response as one of its main purposes and has already incorporated these measures into the Sustainable Development Goals (SDGs) and other Agenda 2030 initiatives. UN Secretary-General António Guterres has said COVID-19 ‘poses a significant threat to the maintenance of international peace and security’ and that ‘a signal of unity and resolve from the Council would count for a lot at this anxious time’.

Case Study of Preparedness: United States The National Institutes of Health (NIH) and the Center for Disease Control (CDC) established PERRC – the Preparedness for Emergency Response Research Centers - as a requirement of the 2006 Pandemic and All-Hazards Preparedness Act, which required research to ‘improve federal, state, local, and tribal public health preparedness and response systems’. The 2006 Act has since been supplanted by the 2019 Pandemic and All-Hazards Preparedness and Advancing Innovation Act. This created the post of Assistant Secretary for Preparedness and Response (ASPR) in the Department for Health and Human Services (HHS) and authorised the development and acquisitions of medical countermeasures and a quadrennial National Health Security Strategy. The 2019 Act also set in place a number of measures including the requirement for the US government to re-evaluate several important metrics of the Public Health Emergency Preparedness cooperative agreement and the Hospital Preparedness Program, and a requirement for a report on the states of preparedness and response in US healthcare facilities.

This pandemic looks set to continue to be a grave threat to humanity. But there will also be future pandemics – whether another type of coronavirus or a new influenza virus – and our species will be threatened again, we just don’t know when.

Other disasters too will befall us – we already see the impacts of climate change arriving on our doorsteps characterised by increased numbers and intensity of floods, hurricanes, fires, crop failure and other manifestations of a warming, increasingly turbulent atmosphere and we will continue to suffer major volcanic eruptions, earthquakes and tsunamis. All high impact, unknown probability events.

Preparedness for an unknown future is expensive and requires a great deal of effort for events that may not happen within the preparers’ lifetimes. It is hard to imagine now, but people will forget this crisis, and revert to their imagined projections of the future where crises don’t occur, and progress follows progress. But history shows us otherwise.

Preparations for future crises always fall prey to financial cuts and austerity measures in lean times unless there is a mechanism to prevent that. Cost-benefit analyses will understandably tend to prioritise the urgent over the long-term. So governments should put in place legislation – or strengthen existing legislation – now to ensure their countries are as prepared as possible for whatever crisis is coming.

Such a legal requirement would require governments to report back to parliament every year on the state of their national preparations detailing such measures as:

• The exact levels of stocks of essential materials (including medical equipment)
• The ability of hospitals to cope with large influx of patients
• How many drills, exercises and simulations had been organised – and their findings
• What was being done to implement lessons learned & improve preparedness

In addition, further actions should be taken:

• Parliamentary committees such as the UK Joint Committee on the National Security Strategy should scrutinise the government’s readiness for the potential threats outlined in the National Risk register for Civil Emergencies in-depth on an annual basis.
• Parliamentarians, including ministers, with responsibility for national security and resilience should participate in drills, table-top exercises and simulations to see for themselves the problems inherent with dealing with crises.
• All governments should have a minister (or equivalent) with the sole responsibility for national crisis preparedness and resilience. The Minister would be empowered to liaise internationally and coordinate local responses such as local resilience groups.
• There should be ring-fenced budget lines in annual budgets specifically for preparedness and resilience measures, annually reported on and assessed by parliaments as part of the due diligence process.

And at the international level:

• The UN Security Council should establish a Crisis Preparedness Committee to bolster the ability of United Nations Member States to respond to international crisis such as pandemics, within their borders and across regions. The Committee would function in a similar fashion as the Counter Terrorism Committee that was established following the 9/11 terrorist attacks in the United States.
• States should present reports on their level of preparedness to the UN Security Council. The Crisis Preparedness Committee could establish a group of experts who would conduct expert assessments of each member state’s risks and preparedness and facilitate technical assistance as required.
• Regional bodies such as the OSCE, ASEAN and ARF, the AU, the OAS, the PIF etc could also request national reports on crisis preparedness for discussion and cooperation at the regional level.

COVID-19 has been referred to as the 9/11 of crisis preparedness and response. Just as that shocking terrorist attack shifted the world and created a series of measures to address terrorism, we now recognise our security frameworks need far more emphasis on being prepared and being resilient. Whatever has been done in the past, it is clear that was nowhere near enough and that has to change.

Case Study of Preparedness: The UK The National Risk Register was first published in 2008 as part of the undertakings laid out in the National Security Strategy (the UK also published the Biological Security Strategy in July 2018). Now entitled the National Risk Register for Civil Emergencies it has been updated regularly to analyse the risks of major emergencies that could affect the UK in the next five years and provide resilience advice and guidance. The latest edition - produced in 2017 when the UK had a Minister for Government Resilience and Efficiency - placed the risk of a pandemic influenza in the ‘highly likely and most severe’ category. It stood out from all the other identified risks, whereas an emerging disease (such as COVID-19) was identified as ‘highly likely but with moderate impact’. However, much preparatory work for an influenza pandemic is the same as for COVID-19, particularly in prepositioning large stocks of PPE, readiness within large hospitals, and the creation of new hospitals and facilities. One key issue is that the 2017 NHS Operating Framework for Managing the Response to Pandemic Influenza was dependent on pre-positioned ’just in case’ stockpiles of PPE. But as it became clear the PPE stocks were not adequate for the pandemic, it was reported that recommendations about the stockpile by NERVTAG (the New and Emerging Respiratory Virus Threats Advisory Group which advises the government on the threat posed by new and emerging respiratory viruses) had been subjected to an ‘economic assessment’ and decisions reversed on, for example, eye protection. The UK chief medical officer Dame Sally Davies, when speaking at the World Health Organization about Operation Cygnus – a 2016 three-day exercise on a flu pandemic in the UK – reportedly said the UK was not ready for a severe flu attack and ‘a lot of things need improving’. Aware of the significance of the situation, the UK Parliamentary Joint Committee on the National Security Strategy launched an inquiry in 2019 on ‘Biosecurity and human health: preparing for emerging infectious diseases and bioweapons’ which intended to coordinate a cross-government approach to biosecurity threats. But the inquiry had to postpone its oral hearings scheduled for late October 2019 and, because of the general election in December 2019, the committee was obliged to close the inquiry.