Webinar: Is It All Over For Globalization? 15 April 2020 — 1:00PM TO 2:00PM Anonymous (not verified) 8 April 2020

The coronavirus pandemic has led many to predict the end of globalization. Confronted with unprecedented social and economic challenges, countries are prioritizing their own citizens. Now, more than ever, international cooperation is necessary but, amidst the rise of nationalist-populist governments, global partnerships are absent or faltering. And as economies grind to a halt, so does international commerce — particularly in trade-dependent Asia, a region whose rise drove the period of ‘hyper-globalization’ which preceded the global financial crisis.

Yet there are other possible futures too. The level of scientific collaboration and information-sharing now underway in search of a vaccine is unprecedented, and after a hesitant beginning the major powers have woken up to the importance of concerted economic stimuli. The virus may in some ways have the paradoxical result of bringing countries together, not driving them apart. Rather than causing its demise, it could help begin a new period in which globalization is not as deep, but at least is better managed and more equitable? Could this be the catalyst for a new coming together at home and abroad?

In this webinar, speakers debate what impact the COVID-19 pandemic will have on the future of globalization, both in Asia and around the world.

China's Evolving Economic Relations with North Africa: Before and After COVID-19 10 September 2020 — 12:00PM TO 1:30PM Anonymous (not verified) 20 August 2020 Online

China’s economic presence across North Africa has grown in recent years. The global power has forged close economic relationships with Egypt and Algeria, while also continuing to develop ties with Morocco and Tunisia.

Beijing, which views the region as a geostrategic intersection between Mediterranean, Middle East, and Africa, has primarily focused its efforts on developing bilateral relations, while also working within the Forum on China–Africa Cooperation (FOCAC) and the China–Arab States Cooperation Forum (CASCF).

All countries of the region have agreed to participate in China’s Belt and Road initiative (BRI), which has raised concerns among Western powers. As North African countries grapple with fiscal constraints as part of the fallout from COVID-19 (and the oil price drop for hydrocarbon exporters such as Algeria), it is yet to be seen whether China’s ambitions and relations within the region will continue to develop at the same pace going forward.

In this webinar, organized by Chatham House’s MENA and Asia-Pacific Programmes, experts will discuss the evolving economic relationship between China and North African states, and explore the impact of China’s pandemic diplomacy across the region.

How asymmetric are economic relations between China and North African states? Which sectors are most important, and what are the prospects for China to develop the region’s digital and healthcare infrastructure? Will China’s increasing economic interests necessitate an increasing political and security engagement? Should North African states be wary of Chinese loans? What is the public opinion of China’s economic presence in North Africa? Have Chinese ‘soft power’ efforts helped to bolster economic (and political) ties? What will be the likely fallout of COVID-19 on BRI and infrastructure projects in the region?

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.

Why the UN matters for Britain Interview LJefferson 6 September 2022

In the fourth of a series of interviews with Queen Elizabeth II Academy faculty, Jeremy Greenstock argues that the UN is still important in a polarized world.

For many people looking at the United Nations (UN) today, the institution (and the world) appears to be at an inflection point and the UN seems ill-equipped to meet these challenges. From your vantage point, how does this period look in relative terms? 

I think for an institution like the UN founded on principles and compromises laid down in 1945, the passage of time is bound to be difficult because society changes quicker than an institution can reform. We can talk about reform later, but the UN has challenges. Where do these challenges come from? I see them coming from a crisis in governance, in governments around the world.

The UN is a forum of member states, and the member states carry their national labels at the UN and follow their national interests at the UN. And almost all governments are suffering huge challenges, not just from the circumstances of geopolitics, but from the expectations of their own people, which they find difficult to meet.

The UN is a servant in that sense, of governments, and so what happens at the UN reflects what is happening in and between governments. We need to keep that in perspective. The UN still retains a tremendous value as a forum. It is a natural forum for governments to talk before they shoot, which was not there in previous eras, and that has had a significant effect since 1945 in reducing the incidence of war between states, particularly between the largest states.

It has obviously been more difficult to deal with local and regional conflicts, but the kind of confrontation that threatens to escalate into a global war has been severely restricted by the UN. The habit of talking at the UN General Assembly (UNGA), artificial as it may seem, is an extremely important part of the avoidance of conflict in the modern age.  

There is a deep scepticism about the UN. Many people think there is a lot of talking but that the real action takes place elsewhere. What is the value of the UN?  

Well, there are two aspects to this. One is the fact that leaders must give their reasons for their policymaking to an international public. This has a force in today’s digital world where most people have access to a megaphone of some kind. The legitimacy of what governments do is exposed at the UNGA.

Secondly, alongside the open meetings and the publicized speeches, there are countless side meetings that go on, and it is an opportunity for leaders to test each other out, and to have private words that may differ from the public words they have to produce for their own followers in their own capitals.

It is an opportunity for personal diplomacy which is highly valuable, and which might not otherwise happen, particularly between leaders who have very serious differences. And I think that the testing of the legitimacy of policy in both the public and the private spheres is an important aspect of international diplomacy that the UNGA provides an opportunity for.  

At the UNGA, states are called to account before the UN, and this can expose hypocrisies. But sometimes there are fundamental clashes over interests and also over values. How would you characterize the UN’s handling of Russia’s invasion of Ukraine?

It is a different audience at the UN from the audience that they have back in their capitals or in their own groups of like-minded people. They must justify themselves in different ways, and there are a whole host of inconsistencies in foreign policy that get exposed at the UN when people must explain themselves in public.

A lot of member states around the world have not condemned the Russian invasion of Ukraine; yet underneath their non-condemnation is a general regret because Russia has broken a huge taboo of the UN Charter, which is the sacrosanctity of independent sovereign territories in Article 2.7.

And that article is valuable to member states who feel threatened by more powerful member states. Russia, as a permanent member, has ridden roughshod over sovereign independence. China and India will have equivocal feelings about that, but they can’t say so in public because they want some of the West’s hypocrisies and inconsistencies exposed, and because they find the approach of sanctions very unpalatable.

Sanctions are unpopular, and the use of sanctions has become a major weapon of non-war by the United States in particular. So, the Russian invasion is unpopular, but the approach of the West is also unpopular for not better looking after the interests of emerging economies and lower-income states, particularly on climate change, but also on economic development.

So, a whole host of different considerations come into play over Ukraine at the UNGA.

How do you think the UN could be best repurposed or reformed?  

It is terribly difficult, because if you open the UN Charter for one reason, you are opening it up to a host of demands from member states for other reforms. And remember that no reform of the Charter can happen without a 2/3 majority at the General Assembly, and that is an effective blocker, because you will always find more people opposing a particular reform that supporting it.

So, I think formal reform remains a bit of a dream in the circumstances of a polarized world. I want to divert discussions about UN reform into areas where the Secretary General has a competence without needing a vote from member states.

I am talking about improvement in methodologies, in the meritocracy of appointments, in the day-to-day workings of the UN. It looks unambitious on a large-scale basis, but just improving the competence of the UN and its agencies will ensure the relevance of the UN to people’s material interests in terms of human rights, refugees, food distribution, and children, and all the other things that the agencies look after.

So, I would prefer to concentrate reform energy into competence reforms, management reforms, rather than reforms of the Charter. 

This takes us to the question of the permanent members of the Security Council, and especially the US and the UK. You have experienced first-hand America’s ambivalence towards the UN. How much has this undercut the UN’s relevance?

I was frequently disappointed by the approach of the US to issues of policy at the UN. The US finds it very difficult as a nation to move beyond the primacy of its own domestic public opinion.

That perspective – that we have democracy at home, but we will not, as Americans, allow international democracy – is regarded around the world as an untenable position for the superpower. And I think it is more than untenable, it is against the US’s long-term interests to demand such national exceptionalism.

That exceptionalism is extremely unpopular, and the US’s extraterritorial reach is very unpopular. That loss of legitimacy around the world is affecting American interests, in the Middle East, over Afghanistan, over the reaction to the Russian invasion of Ukraine; America losing the argument with international public opinion has a material effect on American power, influence and interests.

Has America paid the price for asserting its exceptionalism? From your perspective, representing the UK, arguably the closest ally of the US and one with a permanent seat on the Security Council, how did you manage this?

Well, I had a long experience of that in my job in Baghdad. Yes, the UK normally supports the US in international forums because our interests coincide. In foreign policy, interests are more important than values, and sometimes you have to make compromises and shade your values in order to get results and to avoid conflict.

I found myself taking up the US’ arguments and trying to deliver them as the UK, because the US was more unpopular than the UK and we could act more subtly. The US was more unpopular than the UK because the UK – and a lot of the time France – tried a lot harder than other permanent members to work for the common interest of UN members.

There were times I argued publicly against the US at the Security Council because their logic was incompatible with a multilateral approach, over the International Criminal Court for instance, or over some approaches to the Middle East. I would take a different view, not just because I didn’t want to seem like a constant puppet of the US, but because I thought the logic that they were following was constraining for them, and the counter-productiveness washed off on us.

Here, I want to make an important point. You won’t get governments coming together to form a multilateral approach with all the compromises that this entails unless they are confident of their position at home. They can’t otherwise explain those compromises to their domestic public opinion. If governments are insecure at home, they won’t pursue a multilateral approach because of that insecurity.

The UK is seeking to define a new global role for itself. It has been one of the most influential states at the UN. Do you see this changing?

I don’t think the change of leader makes a terrific difference for the UK in the UN because there is cross-party parliamentary agreement that the UN is important.

I was disappointed that the UK did not take the UN more seriously at a political level except when it badly needed it at a particular moment. At an official level, there was plenty of support from London, but I don’t think that politicians ever gave much priority to the health of the UN.

In conversation with Ursula Burns 27 September 2022 — 1:00PM TO 2:00PM Anonymous (not verified) 15 September 2022 Chatham House and Online

Ursula Burns and Fred P. Hochberg share insights on American business and corporate life.

In the next of our conversations with CEOs, Ursula Burns, former CEO of the Xerox corporation, joins Fred P. Hochberg, former chairman of the Export-Import Bank of the United States, to share her insights on American business and corporate life.

Drawing from her recent book, Where You Are is not Who You Are, Burns will offer her reflections on the challenges leadership faces in a corporate world with rapidly changing technology and creating a diverse work environment. Hochberg and Burns will also discuss her views on racial and economic justice, as well as prospects for future business and economic growth.

Why burning biomass is not zero-carbon Explainer Video NCapeling 17 October 2022

Short animation explaining why burning biomass produces more carbon dioxide per unit of energy generated than almost all fossil fuels.

The climate emergency requires countries to transition away from fossil fuels, but it is important to be careful about the alternative energy sources chosen.

In particular, concern is growing over the use of biomass for energy, which is generated when wood or other plant material is burnt to generate heat and electricity. Many governments treat biomass energy as zero-carbon at the point of combustion, and subsidize it in the same way as renewables such as solar or wind, resulting in a large increase in the use of biomass for energy in the UK and the European Union (EU) over the past 15 years.

The treatment of biomass as zero-carbon in policy frameworks rests on the argument that biomass emissions will be reabsorbed by forest growth, particularly from trees planted to replace those cut down to burn.

But growing trees to maturity takes many years and, depending on the feedstock used, biomass burning increases global warming for decades to centuries. This is called the ‘carbon payback period’ – the time it takes for carbon dioxide levels to return to what they would have been if biomass had not been used.

New research from Chatham House and the Woodwell Climate Research Center calculated the real climate impact of burning US wood pellets in the UK and EU. In 2019, according to this analysis, US-sourced pellets burned for energy in the UK were responsible for between 13 million and 16 million tonnes of carbon dioxide, equivalent to the annual greenhouse gas emissions from 6-7 million passenger vehicles.

But because biomass is treated as zero-carbon, almost none of these emissions were included in the UK’s national greenhouse gas reports. And the removal of forest carbon from US forests is not included accurately in US reports, either.

Director's briefing: What next for America? 17 November 2022 — 8:00AM TO 9:15AM Anonymous (not verified) 7 November 2022 Chatham House

Chatham House’s Director of the US and America’s Programme discusses what is next for America following one of the most contentious midterms races to date.

Hosted by Bronwen Maddox, Director, Chatham House, this Director’s Briefing is an opportunity to digest the outcomes of the US Midterm elections with Chatham House’s Director of the US and Americas Programme, Dr Leslie Vinjamuri. 

Arguably one of the most contentious midterm races to date, this election has key implications for the rest of the world also. At this event, Dr Leslie Vinjamuri and Bronwen Maddox will discuss the crucial themes coming out of the election and the key issues on voters’ minds. What impact will the results have on US foreign policy more broadly? What might the outcome of the election signal about Trumpism? And how confident can we be about the strength of US democracy?

This event is only open to Chatham House Partners and Major Corporate Members as well as selected giving circles of Chatham House. If you would like to attend, please RSVP to Linda Bedford at RSVP@chathamhouse.org.

America’s vote shows a desire for stability and calm Expert comment NCapeling 11 November 2022

Joe Biden has presided over the best midterm election results by a party in power in two decades, but the future for the Republican Party leadership is now uncertain.

For a president continually struggling with low approval ratings, the midterms provided a stunning result as the widely anticipated Republican red wave failed to materialize.

Although Democrats look set to lose their majority in the House, it is by a much smaller margin than either history or today’s pollsters anticipated. Democrats have maintained their majority in the Senate, a result that was confirmed four days after election day when Senator Catherine Cortez Masto won reelection. The final Senate seat will be decided by a 6 December run-off in the state of Georgia. 

The midterm elections were not good for the Republican party but were especially bad for Donald Trump who has until now managed to defy expectations and maintain his grip on the party even after his 2020 defeat at the polls.

Trump managed to win the presidency once but he lost the popular vote twice and at no stage during his time in office did his approval ratings go above 40 per cent. Now, after six years of the most divisive and disruptive leadership the US has ever seen, he has presided over the worst midterm results a party out of power has suffered in two decades.

Trump’s influence is on the wane

Many of the candidates endorsed by the former president – including in battleground states such as Pennsylvania and Arizona – lost. In Georgia, the Republican governor and Trump GOP rival won, despite Trump’s opposition, and the candidate he endorsed for the US Senate has come up short of the 50 per cent needed to get over the line in the first round.

Trump’s nemesis, Ron DeSantis, the Republican governor of Florida, won a second four-year term in a landslide. Trump is suffering attacks from his own party and many loyal media supporters, such as Fox News, the New York Post, and the Wall Street Journal. None of this bodes well for the prospect of Trump leading the party through the 2024 presidential election.

After six years of chaos, this upset has been delivered with remarkably little chaos and, so far, no violence in a win for democracy and stability in the US which will reverberate beyond the US shores.

The system has worked, with multiple elections held across all 50 states. Hotly contested seats were decided peacefully even when the margins were thin. The midterm elections were also a win for democracy. In every battleground state, election deniers that were nominated to run for offices that would control state election systems, including in the 2024 presidential elections, have been defeated.

For a country with a polarized electorate and a radical Republican leader who has continued to spread disinformation and sought to rile his base, this election has been surprisingly normal.

This means the debate about the future of America’s international leadership is postponed. Biden is still in the saddle and, instead of a battle for control inside the Democratic party, it is the Republicans who look set to descend into internal conflict and recrimination.

The unofficial contest to win the Republican nomination for president has already begun. Donald Trump has signalled loudly that he plans to run. If he does, it could impact Republican prospects in the 6 December runoff for the final seat in the Senate. DeSantis may also run and could be followed by several aspiring Republican candidates. A disrupted party facing a period of significant change seems likely. 

Inflation and the economy proved key factors

As always, foreign policy barely featured in the elections but the result promises a period of continuity. Instead of facing dangerous sniping on Ukraine from an emboldened Republican House leadership, the Biden administration looks set to hold to its Ukraine policy.

Biden’s increasingly hard-line policy on China will continue to be qualified by a clear-headed determination – however hard – to cooperate on climate. Trade policy will remain stuck, as will US policy in the developing world.

Exit polls show Democrats were motivated to vote by the reversal of Roe vs Wade and the restrictions on abortion rights that followed, while Republicans voted against inflation.

But Democrats at the national level continually failed to effectively communicate the positive impacts of Biden’s legislative agenda for ordinary Americans, or to deliver a clear economic message.

The national leadership veered from abortion rights to the Inflation Reduction Act, to the future of democracy in the US – all of which proved too complicated to cut through.

The state level shows a more complex picture because inflation and the economy – which could have swept Republicans to victory – were blunted by dogged local campaigning from Democrats who knew their voters and spoke to the cost-of-living concerns which were top of their minds.

World in brief: Biden seeks to win over African leaders The World Today mhiggins.drupal 29 November 2022

At the US-Africa Leaders Summit, Washington will need to go beyond strategic geopolitical interest to compete with China’s offer, says James Orr.

African heads of state will join President Joe Biden in Washington in mid-December to take part in the second United States-Africa Leaders Summit. Some 50 African leaders will travel to the US capital for the two-day conference, which starts on December 13. 

Senior policymakers say  talks will focus on economic engagement, human rights, food security and climate, with an emphasis on partnerships that demonstrate an intention to go beyond strategic geo-political interest. President Biden has said he hopes to ‘reinforce the US-Africa commitment to democracy; mitigate the impact of Covid, respond to the climate crisis and amplify diaspora ties’. The White House will seek to offer reassurance to African governments concerned by a perceived cooling in relations with the US.

Africa’s cooling relations with the US 

‘As trite as it might sound, the key objective of this conference should really be to enhance trust between African leaders and the United States,’ said Gilbert Kaplan, a former under-secretary at the US Department of Commerce.  ‘I was in Africa in 2018 leading the President’s Advisory Council on Doing Business in Africa and the foreign minister of Ethiopia said to me: “Well you’re here but are you really here?” What he meant was: is the United States really committed to a long-term, strong relationship with the African continent or is it just a drive-through and a hello without making major commitments?’

The first summit was held by President Barack Obama in 2014. Addressing the inaugural conference, he spoke of the ‘blood of Africa’ that ran through his veins and how ‘the bonds between our countries are deeply personal’. Today, however, a succession of abstentions or no votes from African states over United Nations resolutions on Russia’s invasion of Ukraine points to a growing misalignment in the relationship. This is indicative of expanding Chinese and Russian influence on the continent, say analysts.

‘Africa is faced with some of the biggest governance challenges on the globe,’ said Kah Walla, president of the Cameroon People’s Party and the first woman in the nation’s history to run as a presidential candidate in 2011. ‘We need government that is functional, competent and innovative, and what we are getting instead is the US and a global international system that is supporting [via financial aid] autocratic and dysfunctional governments. We can’t continue in this way.’

Africa’s 54 nation states span six time zones and the continent’s population of 1.4 billion is on course to make up a quarter of the global population by 2050. It boasts the youngest demographic in the world, a potentially huge labour resource for private sector investors seeking to expand in manufacturing and processing, for example. The current median age in Africa is 18.8 years, compared with a global median age of 30.

In July this year, the US provided nearly $1.3 billion in humanitarian assistance to help stave off hunger due to drought in the Horn of Africa. Since June 2019, the US, under its Prosper Africa programme, has also helped close some 800 export and investment deals across 45 African nations with an estimated value of $50 billion.

The US is losing out to China in Africa

Meanwhile, China surpassed the US as Africa’s largest trade partner in 2009, with total bilateral trade reaching more than $254 billion in 2021, a 35 per cent rise on 2020.

‘Despite Africa’s tremendous economic potential, the US has lost substantial ground to traditional and emerging partners, especially China,’ Landry Signé, a member of the World Economic Forum’s Regional Action Group for Africa, told a Senate subcommittee on Africa last year. ‘While recent trends indicate that the US engagement with the region has fallen, it has not and should not cede its relationship with the region to other powers.’

National security and transatlantic unity top Biden’s agenda Expert comment NCapeling 1 February 2023

The timing of the State of the Union address is significant as Joe Biden tries to maintain focus on Ukraine and China while navigating partisanship at home.

Although primarily a domestic affair, the president’s remarks in the annual State of the Union (SOTU) telegraph the US’s foreign policy priorities to the rest of the world. They reveal the prism through which the US understands its national security and its role in the world.

The 2023 address comes as the first anniversary of the Ukraine invasion rapidly approaches, and the US is also trying to build international support for tough economic measures towards China. Domestically, Republican control of the House of Representatives will exert new pressure on US foreign policy choices. Electoral pressures are also around the corner and Joe Biden should announce soon whether he plans to run for president in 2024.

Alliances and partnerships are a driving force for Biden. As pressure to end the war in Ukraine intensifies, maintaining transatlantic unity on Ukraine will be a key priority for the president. And as US electoral politics rise to the fore, ensuring the visibility of Europe’s role as a security provider in its own backyard will be essential.

For a US president who sees China and the Indo-Pacific as America’s most significant long-term geopolitical challenge – and the only peer competitor to the US – transatlantic unity on China will also come under pressure.

Ukraine, China, and controlling domestic division

Republican leaders who now chair key committees in the House of Representatives continue to signal support for Ukraine, and polling shows a majority of US public opinion (54 per cent) favours sending either weapons or air defence systems.

But recent polls also reveal a growing gap between Democrat and Republican supporters with a slight majority of Republicans (52 per cent) now opposing further support for Ukraine.

Biden’s ability to demonstrate that America and its European partners remain unified in their policy towards Ukraine and Russia will help him ward off partisanship at home. Congressional approval of $45 billion for Ukraine in its end of year spending budget will help the president remain above the fray of partisan politics for now. But if there is an absence of clear signs Ukraine is succeeding in its war aims, the challenge of maintaining domestic support could become more difficult.

A greater US focus on China, India, and on the Indo-Pacific in 2023 is also likely. Bipartisanship is strong on China, Republicans are more singular and hawkish in their approach to China than the US president, and the public support tough measures. At a time of war in Europe, the president will place great emphasis on the need to maintain transatlantic unity and to work with a broader coalition of partners in the Indo-Pacific.

The groundwork for focus on China has already been laid. Throughout 2022, the Biden administration worked steadily, but quietly, to set out its China policy. Just before Russia’s invasion of Ukraine in February 2022, the US released its new US-Indo Pacific Strategy stressing regional partnerships – especially the Quad and ASEAN – and it’s determination to shape essential norms for the region.

It stated boldly – albeit in a document which was largely unnoticed – that the objective is not to change China but to ‘shape the strategic environment in which it operates’, a policy which signifies a clear departure from the more ideological approach pursued by the US during Donald Trump’s final year in office. And in May, the US announced its economic strategy for the region, the Indo-Pacific Economic Framework.

Now the terrain for competition with China and alignment with US partners and allies is heavily focused on technology and the daylight between national security and economic strategy in US China policy is rapidly disappearing. Biden’s policy focus of ‘invest (at home), align (with allies and partners), and compete (with China)’ has overshadowed earlier talk of cooperation between the US and China.

But as China opens its doors and Europe looks to bolster its economies, the US will have to work far harder to maintain transatlantic unity. Japan and the Netherlands embracing the US adoption of export controls on semiconductor chips is a positive sign, but the US’s economic strategy towards China may present harder choices to come for Europe. If China leans into its diplomacy, the pressure on transatlantic unity will also grow.

The new US Congress will only sharpen the president’s tough stance on China. Some Republican leaders still deny climate change and have demonstrated little interest in cooperating with China on debt relief for developing countries. The prospects for addressing critical global challenges appear dim without China’s collaboration, and the UK and Europe should work with the US president and Congress to correct this.

President Biden has clearly recognized that diplomacy will be critical in the months ahead. At a time of growing tensions, the potential for misperceptions or misunderstandings to create conflict will also increase, and so a US – and also European – commitment to broadening and deepening diplomacy with China is urgent but it also needs to be patient and sustained.

A new American industrial policy?

Those listening carefully to the State of the Union and who have followed US policy will also note the unchallenged hegemony of neoliberalism is rapidly vanishing. The American state appeared to be disturbingly absent in the early months of the US pandemic response – but now it is back and, in a surprising turn of events, is being cast as a solution not a problem.

Directors Briefing: Constraints on US foreign policy 20 February 2023 — 8:00AM TO 9:15AM Anonymous (not verified) 8 February 2023 Chatham House

In conversation with Dr Richard Haass.

The US is facing external threats from foreign actors including Russia, China and North Korea. Alongside geopolitical challenges, the US is also experiencing threats from within. Though the US has a long history of enshrining civic rights and democratic freedoms, the institutions of democracy are being weakened through polarization and disinformation. To combat this challenge, the idea of citizenship must be revised and expanded to allow for a functioning, and even a flourishing, democracy.

• What are the implications of a weakening democracy at home for US foreign policy?
• How can civic rights in the US be reimagined to reduce divisions within America and protect the future of democracy?

World economy is fracturing, not deglobalizing Expert comment LJefferson 8 February 2023

Geopolitics are creating a more uncertain economic environment as the global economy splinters into competing blocs.

There is now broad agreement among economists and commentators that the world has reached peak globalization, but there is little consensus about what comes next. One view is that we are entering a period of ‘deglobalization’, in which global trade volumes decline and cross-border capital flows recede. An alternative and more likely outcome is that the global economy starts to splinter into competing blocs.

This would result in an altogether more volatile macroeconomic and market environment which would pose a formidable challenge to some countries and companies operating in vulnerable sectors. But this process needn’t involve any significant shrinkage of international flows of goods, services and capital, nor a broad reversal of other gains of globalization.

This most recent era of globalization was underpinned by a belief that economic integration would lead to China and the former Eastern Bloc countries becoming what former World Bank Chief Robert Zoellick termed ‘responsible stakeholders’ within the global system.

But China has instead emerged as a strategic rival to the US. This strategic rivalry is already forcing others to pick sides as the world splinters into two blocs: one that aligns primarily with the US and another that aligns primarily with China.

Increasingly, policy choices within these blocs will be shaped by geopolitical considerations. This process can be thought of as ‘global fracturing’. Whereas the period of globalization was driven by governments and companies working in unison, fracturing is being driven by governments alone. 

The effects of fracturing

Viewed this way, ‘deglobalization’ is by no means inevitable. There are few compelling geopolitical reasons why the US or Europe should stop importing the majority of consumer goods from China. Roll the clock forward ten years and it is likely that the West will still be buying toys and furniture from China. Instead, fracturing between the blocs will take place along fault lines that are geopolitically important.

In some aspects, the effects of fracturing will be profound. But in other areas, warnings of a seismic reordering of the global economy and financial system will prove wide of the mark.

For example, the politically-driven nature of fracturing will have a significant impact on the operating environment for US and European firms in those sectors that are most exposed to restrictions on trade, such as technology and pharmaceuticals. And all firms and investors will be operating in a different environment in which geopolitical considerations play a greater role in decisions over the allocation of resources.

But where production is moved to alternative locations, this is likely to only involve the manufacture of goods that are deemed to be strategically significant. This may include those with substantial technological and/or intellectual property components: think iPhones, pharmaceuticals, or high-end engineering products.

What’s more, in cases where production does shift location, it is likely to be to other low-cost centres that align more clearly with the US. There will be no great ‘reshoring’ of manufacturing jobs.

Within this process, trade linkages will be reordered, rather than severed. This will result in trade’s share of global GDP flatlining in the coming years, rather than shrinking outright, as is being forecast under many attempts to quantify deglobalization’s potential impact.

Finances of global fracturing

There will be a substantial financial component to global fracturing, but once again the implications are likely to be more nuanced than the current debate suggests. Cross-border financial links are likely to grow more slowly, and the overall stock of cross-border claims will plateau relative to global GDP. But whereas the first era of globalization in the 1870s was followed by a broad retreat in global capital flows during the interwar years, the same is unlikely to happen today.

Similarly, while financial fracturing will fuel growing speculation about the dollar’s role as the world’s reserve currency, reports of its impending demise are exaggerated. Beijing will increasingly push its partners to settle trade in renminbi but three factors suggest that this is unlikely to seriously challenge the dollar’s position.

First, while trade between China and its partners is growing, it still accounts for only six per cent of global trade. Most trade still happens between US-aligned countries, and will continue to be denominated in US dollars (see chart).

Second, China runs a large current account surplus, which will make it harder for the renminbi to supplant the dollar. High demand for reserve assets means that reserve countries tend to run current account deficits. 

Finally, the dollar still has several things working in its favour. For a currency to be widely used as an international medium of exchange, it must be readily and cheaply available around the world. In turn, that depends on foreigners being willing to hold it in large volumes: in other words, it must function as a store of value. 

Japan’s G7 leadership: Defending the liberal order amid crisis 28 February 2023 — 9:00AM TO 10:00AM Anonymous (not verified) 20 February 2023 Online

How G7 countries should best respond to global economic and security challenges in order to defend the liberal international order.

In May 2023 Japan hosts the G7 summit in Hiroshima, where leaders of the US, UK, Canada, France, Germany and Italy come to discuss the most urgent challenges facing the world.

This year’s summit takes place against a backdrop of continued global economic and political instability from the war in Ukraine to intensifying competition between China and the West.

The speakers discuss Japanese Prime Minister Fumio Kishida’s priorities at the summit and consider how G7 countries should best respond to global economic and security challenges in order to defend the liberal international order.

This event is the third of a three-part series held in partnership with Japan House London.

Watch the first event which looked at Africa-Japan relations here, and the second event, on the UK and Japan’s engagement with Southeast Asia, here.

Nuclear stability for all put at risk by Putin's speech Explainer NCapeling 22 February 2023

Explaining the risks of Russia’s decision to suspend the New START nuclear treaty with the US, and the wider implications for international relations.

Why is New START important?

Following the collapse of the Intermediate-range Nuclear Forces treaty (INF), New START is the only remaining nuclear arms control treaty between the US and Russia.

This means that without it there would be no limits on numbers or the type of Russian and US deployed nuclear warheads. The limits set under New START are lower than those set under its predecessor, the Strategic Arms Reduction Treaty (START).

It is also important for maintaining some form of strategic arms control between Russia and the US. The treaty provides the US and Russia with mechanisms for transparency and confidence-building, for instance through regular biannual data exchanges, as well as measures for verification.

What is Russia able to do next after suspending participation?

President Vladimir Putin’s decision to suspend its participation could pave the way for Russia to increase the number of deployed warheads, delivery vehicles and launchers, potentially exceeding the limits placed on numbers under the new START.

Putin stated he would resume testing of nuclear weapons if the US resumed – Russia is a full state party to the nuclear Comprehensive Test Ban Treaty (CTBT) negotiated in 1996, as is the UK and France. The US has signed, as has China, but neither state has yet ratified the treaty.

Other countries required to ratify the treaty for it to enter into force include Egypt, India, Iran, Israel, North Korea, and Pakistan.

Although the US is modernizing its nuclear weapons forces, there is no need – or plan – for the US to test nuclear warheads, and it is the same for the UK and France.

Concerns are now rising that Russia could point to no-fissionable yield experiments – which are allowed under the treaty and which the US and other nuclear weapons possessors conduct primarily for safety purposes – and then falsely declare those to be nuclear weapons tests, thus paving the way for a narrative to justify the resumption of nuclear testing by Russia.

Conducting a nuclear weapons test would be seen clearly as a further step on the escalation scale towards nuclear use for Russia.

While inspections of nuclear weapons sites had not resumed since COVID-19, Russia’s suspension of its participation could result in the further halting of other transparency and verification measures under New START, including the regular mutual data exchanges between the US and Russia – for example on warhead numbers, locations, and technical information on weapons systems and their sites – which are conducted through the Bilateral Consultative Commission (BCC).

What is the difference between withdrawing from New START and ‘suspending’ participation?

In his speech, Putin announced the suspension of Russian participation in New START. While this does not mean Russia has formally withdrawn from the treaty, the suspension could enable Russia to continue preventing the US from inspecting its nuclear weapons sites and halt Russia’s participation in other obligations, such as the routine reporting and data exchanges on nuclear weapons as well as meetings of the BCC.

The decision to suspend participation rather than withdraw from the treaty means Russia retains the option to return to compliance at a later point. However, it is not yet clear under what conditions Russia would opt to return to compliance with the treaty, or whether this means the US will, in turn, suspend their own obligations.

The treaty text itself does not provide for a suspension of participation by parties to the treaty. However, the Vienna Convention on the Law of Treaties does address the mechanisms for suspension of participation in a treaty. Russia is a full state party to the Vienna Convention, but the US has remained a signatory without ratification since 1970.

There is a precedent of Russia suspending its membership in arms control treaties rather than withdrawing, which is when Russia suspended its participation in the original Treaty on Conventional Armed Forces in Europe (CFE) in 2007.

The US does not recognize Russia’s suspension of its participation in the CFE treaty, but this does not make a material difference to Russian actions.

What does the suspension mean for the wider international treaty regime?

Russia’s suspension of the New START could signal the end of strategic arms control between the two countries. There is now virtually no regular scheduled arms control communication between the two countries bilaterally – this is a dangerous position to be in, especially in times of crisis.

The suspension of New START further erodes limited recourse for communication between the two countries, by suspending information exchange and meetings of the BCC under the treaty.

This is likely to have wider implications for progress on nuclear non-proliferation under the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), as well as the wider international security treaty regime.

Will this increase the nuclear threat or the likelihood of nuclear use?

New START provides both the US and Russia with a degree of transparency surrounding nuclear weapons systems. Without an avenue for regular data exchange and notification, and mechanisms for verification through mutual nuclear weapons site inspections, the risk of misperception or misunderstanding could increase and fuel uncertainty which could increases the perception of threat between Russia and the US.

What are Putin’s reasons for suspending Russia’s participation?

Putin and various members of his government have been linking the future of New START to the war in Ukraine rhetorically for several months now, threatening that Russia may not be willing to negotiate a follow-on treaty for when New START expires in Feb 2026 because of US support for Ukraine.

By announcing Russia’s suspension of the treaty in his main address on the anniversary of the invasion of Ukraine, Putin is sending a signal about Russia’s intent for the future.

Russia’s new hypersonic glide vehicle Avangard was already counted under New START and it is likely follow-on negotiations would have focused on some of Russia’s other hypersonic capabilities or other new nuclear systems.

Without the treaty, Russia might be less inhibited in its development of new nuclear systems.

Have both the US and Russia been compliant with the treaty until now?

Both the US and Russia have remained within the central limits of the treaty since its entry into force in 2011. Following the outbreak of COVID-19, both sides agreed to suspend in-person inspections due to restrictions on travel, and attempts to recommence in-person inspections in 2022 were unsuccessful.

In August 2022, Russia prevented US on-site inspections under New START and a November 2022 meeting of the BCC was called off by Russian officials. Russia has blamed both the ongoing COVID-19 pandemic and the sanctions burden on Russia as reasons for not wanting to resume inspections.

SVB collapse shows interest rate financial stability threat Expert comment LJefferson 15 March 2023

Governments must resist pressure to relax post-financial crisis regulation, while central banks should moderate their attack on inflation if financial stability is at risk.

The collapse of California’s Silicon Valley Bank (SVB) on 10 March has triggered a wave of volatility in global bank equity prices, raised questions about whether US bank regulation and its tech industry funding model are fit for purpose, and forced a rethink on the extent and pace of monetary policy tightening appropriate for the US and other advanced economies.

SVB was the US’s 16th largest bank with total assets of $212bn at the end of 2022 and a presence in eight countries around the world, including the UK. Since it was founded 40 years ago, it has maintained a strong focus on the technology sector, claiming recently that nearly half of all US venture-backed technology and life science companies banked with it. Partly as a consequence, some 95 per cent of its deposits came from corporates and hedge funds, far higher than the one-third typical of similarly sized banks.

What led to SVB’s collapse?

Ironically, SVB’s failure did not result from its core business model of serving a relatively high-risk and fast-growing sector, but rather from a dramatic failure in liquidity management. During the pandemic, SVB saw a very large inflow of corporate deposits. But rather than disincentivizing depositors or investing the funds attracted in assets of matching maturity, it chose to invest them in low credit risk, but long maturity bonds attracted by a small pick-up in return over shorter-term assets. 

When US interest rates began to rise rapidly in 2022 following Russia’s invasion of Ukraine, the value of SVB’s long-term bond portfolio declined sharply. It was left facing a large capital loss of some $15bn, roughly equivalent to its total shareholder funds. The management attempted to repair SVB’s balance sheet last week by crystalizing some of the loss and raising new capital.

But when this failed, the US supervisory authorities had no choice but to step in and close the institution.  This action was quickly followed by emergency action from other regulators vis-a-vis SVB subsidiaries and offices around the world.

The US entity has formally been taken over by the FDIC and a bridge bank established. All depositors have had their funds guaranteed, going beyond the normal federal deposit insurance limit of $250,000 per customer. However, bond holders and equity holders have been wiped out. The authorities have said that any loss will be covered by the industry as a whole via the FDIC.

In the UK, the Bank of England was able to sell the ring-fenced UK subsidiary of SVB to HSBC for £1 over the weekend, so that all its depositors and other liability holders have effectively had their funds guaranteed. In contrast to previous Bank of England rescues (such as Johnson Matthey Bank in 1984, the ‘small banks’ crisis in 1991 and the global financial crisis in 2008-9) no public money has been put at risk.

Four key questions

SVB’s rapid collapse raises four central questions:

First, how was it that the bank was able to take on such a risky interest rate maturity mismatch in its US operations? Maturity transformation is standard banking industry practice, but it is usually closely monitored by regulators who place limits on the extent of interest rate maturity mismatch and require liquidity buffers to offset the risk of deposit flight and forced asset sales.

SVB’s very high concentration of corporate deposits as compared to ‘sticky’ retail deposits, means that the risk of deposit flight was unusually high and so the bank should have been more, not less, cautious in its liquidity policy. SVB was classed as a regional bank in the US which means that it did not have to meet international regulatory standards under Basle III. And in 2018, the Trump administration approved legislation removing the post-financial crisis requirement that banks with assets under $250bn submit to stress testing and relaxing liquidity buffer requirements.

But it is still hard to understand why regulators allowed SVB to commit such a classic banking error. On Monday, the Federal Reserve ordered an inquiry into what it has correctly described as a regulatory failure. This should look at the role played by all the elements of the oversight system including the auditors, KPMG.

Second, does SVB’s failure reflect a much bigger underlying risk in the US banking sector, and potentially other banking systems around the world, built up over the prolonged period of ultra-low interest rates? SVB’s collapse was followed by the failure of the $110bn Signature Bank in New York, as well as sharp falls in US regional bank stock prices – by close of play on 14 March, the S&P Regional Bank Index was down 22 per cent on a week before, with some individual bank stocks seeing much sharper falls.  

To the extent that banks have been covered by international bank regulatory requirements, the risk of a much broader problem should be limited because stress testing and other regulatory tests would have looked at precisely the scenario that has happened. Even where large market losses have been incurred, capital buffers should be sufficient to cover them. But as SVB has shown, there are some large banks that are seemingly not required to follow international rules, while the latest developments at Credit Suisse indicate that market concerns may still arise when other factors are in play.

Third, how far, in the light of the potential vulnerability in banking systems, should central banks in advanced countries moderate their efforts to squeeze out inflationary pressures? While inflation already appears to have peaked in many economies and the pace of interest rate rises was expected to slow, inflation is far from vanquished, as recent data in the US has demonstrated.

Fourth, does the failure of SVB tell us something new about the financial risks facing the high technology sector?  It was remarkable that a single (and not particularly large, by international standards) financial institution could have played such a central role in the tech sector in both the US and UK. 

Why was this the case and does it reflect special features of the tech/start-up sector (e.g. the need for substantial cash deposits to cover relatively large negative cash flows in the early years of operation, or the need for highly specialized lending expertise). If so, should governments take steps to mitigate such risks, given the outsized importance of this sector in many national economic strategies? 

World in brief: Ukraine and nuclear proliferation to dominate G7 The World Today mhiggins.drupal 28 March 2023

Following Russia’s ongoing intimidation, Japan will use its presidency of the G7 – and its history – to prioritize the dangers of nuclear threats, writes James Orr.

Two issues are expected to dominate the agenda as Japan hosts the G7 summit in Hiroshima from May 19-21. Central to talks will be the conflict in Ukraine, with member states eager to highlight a message of unity and resolve in the face of Russia’s continuing aggression.

Fumio Kishida, Japan’s prime minister, made an unannounced visit to Kyiv on March 21, meeting the Ukrainian president Volodymyr Zelenskyy.  This coincided with a visit to Moscow by China’s leader Xi Jinping, who described Russian president Vladimir Putin as a friend and partner.

‘Absolutely unacceptable’

Hosting the G7 summit in Hiroshima is significant, too, with Kishida expected to emphasize the ‘absolutely unacceptable’ threat of nuclear proliferation. Ongoing tensions between China and Taiwan, together with recent North Korean ballistic missile tests, have heightened fears of a breakdown in security in the region.

Meanwhile, President Vladimir Putin’s menacing references to the use of nuclear weapons in Ukraine has raised the prospect of a potentially devastating conflict with NATO. ‘Kishida’s principal goal for the presidency of the G7 is to try to draw the world away from the path of destruction that is another nuclear conflict,’ said Duncan Bartlett, a research associate at SOAS, the School of Oriental and African Studies, in London.

‘Early last year, Putin warned of terrible consequences if NATO and the West interfered in the Ukraine conflict, and that was widely seen as being a nuclear threat. North Korea is also pursuing its nuclear weapons programme, and in February an intercontinental ballistic missile went into the sea just near the northern Japanese island of Hokkaido,’ said Bartlett.

After Russia invaded Ukraine in February 2022, Kishida has taken a firm position on Putin, in line with his G7 peers. President Zelenskyy has addressed the Japanese parliament via video link and Dmytro Kuleba, Ukraine’s minister of foreign affairs, was invited by his Japanese counterpart to a G7 meeting held during the Munich Security Conference earlier this year.

Kishida committed $600 million in financial support to Ukraine and his government may well announce the provision of further non-lethal assistance to Zelenskyy at the summit. The country’s constitution effectively outlaws the export of deadly weapons to foreign forces. On his visit to Kyiv, Kishida promised a further $30 million to Ukraine.

‘Kishida has revised key defence documents and is pursuing a radical and controversial expansion of Japan’s defence budget and capabilities,’ said Hugo Dobson, Professor of Japan’s International Relations at the University of Sheffield.

‘He and his G7 partners have signed historic defence agreements, pledged to strengthen ties or declared the inseparability of their security in light of actual conflict in Ukraine and potential conflict in East Asia. Kishida has linked the two by emphasizing that Ukraine today may be East Asia tomorrow,’ said Dobson.

Aside from security matters, Kishida will at the summit address issues on clean energy, climate change, global health and boosting multilateral cooperation to drive post-pandemic economic recovery.

Invitation to Nagasaki

He is understood to have invited President Joe Biden to visit Nagasaki, where the second of America’s two atomic bombs is estimated to have killed 60,000 people in August 1945. No sitting US president has ever visited the city, and Kishida, who grew up in Hiroshima, may see the visit as an opportunity to boost his flagging domestic approval ratings. It may also serve as a timely reminder to Russia and others that the G7 opposes any future nuclear weapon use.

Alfred C. O. Vertegaal
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Boris Macek
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Lars Jønson
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Dongmei Cheng
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Datasets

Yue Chen
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Steven A. Carr
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Michal Bassani-Sternberg
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Ileana M. Cristea
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Ilka Wittig
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Ivan Matic
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Jonathan C. Trinidad
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M. Wang
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Jacek R. Wiśniewski
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Tamar Geiger
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Philip L. Ross
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Staphylococcus aureus adhesion to the host's skin and mucosae enables asymptomatic colonization and the establishment of infection. This process is facilitated by cell wall-anchored adhesins that bind to host ligands. Therapeutics targeting this process could provide significant clinical benefits; however, the development of anti-adhesives requires an in-depth knowledge of adhesion-associated factors and an assay amenable to high-throughput applications. Here, we describe the development of a sensitive and robust whole cell assay to enable the large-scale profiling of S. aureus adhesion to host ligands. To validate the assay, and to gain insight into cellular factors contributing to adhesion, we profiled a sequence-defined S. aureus transposon mutant library, identifying mutants with attenuated adhesion to human-derived fibronectin, keratin, and fibrinogen. Our screening approach was validated by the identification of known adhesion-related proteins, such as the housekeeping sortase responsible for covalently linking adhesins to the cell wall. In addition, we also identified genetic loci that could represent undescribed anti-adhesive targets. To compare and contrast the genetic requirements of adhesion to each host ligand, we generated a S. aureus Genetic Adhesion Network, which identified a core gene set involved in adhesion to all three host ligands, and unique genetic signatures. In summary, this assay will enable high-throughput chemical screens to identify anti-adhesives and our findings provide insight into the target space of such an approach.

Despite its major importance in human health, the metabolic potential of the human gut microbiota is still poorly understood. We have recently shown that biosynthesis of Ruminococcin C (RumC), a novel ribosomally synthesized and posttranslationally modified peptide (RiPP) produced by the commensal bacterium Ruminococcus gnavus, requires two radical SAM enzymes (RumMC1 and RumMC2) catalyzing the formation of four Cα-thioether bridges. These bridges, which are essential for RumC's antibiotic properties against human pathogens such as Clostridium perfringens, define two hairpin domains giving this sactipeptide (sulfur-to-α-carbon thioether–containing peptide) an unusual architecture among natural products. We report here the biochemical and spectroscopic characterizations of RumMC2. EPR spectroscopy and mutagenesis data support that RumMC2 is a member of the large family of SPASM domain radical SAM enzymes characterized by the presence of three [4Fe-4S] clusters. We also demonstrate that this enzyme initiates its reaction by Cα H-atom abstraction and is able to catalyze the formation of nonnatural thioether bonds in engineered peptide substrates. Unexpectedly, our data support the formation of a ketoimine rather than an α,β-dehydro-amino acid intermediate during Cα-thioether bridge LC–MS/MS fragmentation. Finally, we explored the roles of the leader peptide and of the RiPP precursor peptide recognition element, present in myriad RiPP-modifying enzymes. Collectively, our data support a more complex role for the peptide recognition element and the core peptide for the installation of posttranslational modifications in RiPPs than previously anticipated and suggest a possible reaction intermediate for thioether bond formation.