The main protease (3CL Mpro) from SARS–CoV-2, the etiological agent of COVID-19, is an essential enzyme for viral replication. 3CL Mpro possesses an unusual catalytic dyad composed of Cys145 and His41 residues. A critical question in the field has been what the protonation states of the ionizable residues in the substrate-binding active-site cavity are; resolving this point would help understand the catalytic details of the enzyme and inform rational drug development against this pernicious virus. Here, we present the room-temperature neutron structure of 3CL Mpro, which allowed direct determination of hydrogen atom positions and, hence, protonation states in the protease. We observe that the catalytic site natively adopts a zwitterionic reactive form in which Cys145 is in the negatively charged thiolate state and His41 is doubly protonated and positively charged, instead of the neutral unreactive state usually envisaged. The neutron structure also identified the protonation states, and thus electrical charges, of all other amino acid residues and revealed intricate hydrogen-bonding networks in the active-site cavity and at the dimer interface. The fine atomic details present in this structure were made possible by the unique scattering properties of the neutron, which is an ideal probe for locating hydrogen positions and experimentally determining protonation states at near-physiological temperature. Our observations provide critical information for structure-assisted and computational drug design, allowing precise tailoring of inhibitors to the enzyme's electrostatic environment.

The novel severe acute respiratory syndrome coronavirus (SARS-CoV-2) has emerged to a pandemic and caused global public health crisis. Human angiotensin-converting enzyme 2(ACE2) was identified as the entry receptor for SARS-CoV-2. As a carboxypeptidase, ACE2 cleaves many biological substrates besides angiotensin II to control vasodilatation and vascular permeability. Given the nanomolar high affinity between ACE2 and SARS-CoV-2 spike protein, we investigated how this interaction would affect the enzymatic activity of ACE2. Surprisingly, SARS-CoV-2 trimeric spike protein increased ACE2 proteolytic activity ∼3-10 fold against model peptide substrates, such as caspase-1 substrate and Bradykinin-analog. The enhancement in ACE2 enzymatic function was mediated by the binding of SARS-CoV-2 spike RBD domain. These results highlighted the potential for SARS-CoV-2 infection to enhance ACE2 activity, which may be relevant to the cardiovascular symptoms associated with COVID-19.

Heterotrimeric G-proteins are signaling switches broadly divided into four families based on the sequence and functional similarity of their Gα subunits: Gs, Gi/o, Gq/11, and G12/13. Artificial mutations that activate Gα subunits of each of these families have long been known to induce oncogenic transformation in experimental systems. With the advent of next-generation sequencing, activating hotspot mutations in Gs, Gi/o, or Gq/11 proteins have also been identified in patient tumor samples. In contrast, patient tumor-associated G12/13 mutations characterized to date lead to inactivation rather than activation. By using bioinformatic pathway analysis and signaling assays, here we identified cancer-associated hotspot mutations in Arg-200 of Gα13 (encoded by GNA13) as potent activators of oncogenic signaling. First, we found that components of a G12/13-dependent signaling cascade that culminates in activation of the Hippo pathway effectors YAP and TAZ is frequently altered in bladder cancer. Up-regulation of this signaling cascade correlates with increased YAP/TAZ activation transcriptional signatures in this cancer type. Among the G12/13 pathway alterations were mutations in Arg-200 of Gα13, which we validated to promote YAP/TAZ-dependent (TEAD) and MRTF-A/B-dependent (SRE.L) transcriptional activity. We further showed that this mechanism relies on the same RhoGEF-RhoGTPase cascade components that are up-regulated in bladder cancers. Moreover, Gα13 Arg-200 mutants induced oncogenic transformation in vitro as determined by focus formation assays. In summary, our findings on Gα13 mutants establish that naturally occurring hotspot mutations in Gα subunits of any of the four families of heterotrimeric G-proteins are putative cancer drivers.

G protein–coupled receptors (GPCRs) initiate signaling cascades via G-proteins and beta-arrestins (βarr). βarr-dependent actions begin with recruitment of βarr to the phosphorylated receptor tail and are followed by engagement with the receptor core. βarrs are known to act as adaptor proteins binding receptors and various effectors, but it is unclear whether in addition to the scaffolding role βarrs can allosterically activate their downstream targets. Here we demonstrate the direct allosteric activation of proto-oncogene kinase Src by GPCR–βarr complexes in vitro and establish the conformational basis of the activation. Whereas free βarr1 had no effect on Src activity, βarr1 in complex with M2 muscarinic or β2-adrenergic receptors reconstituted in lipid nanodiscs activate Src by reducing the lag phase in Src autophosphorylation. Interestingly, receptor–βarr1 complexes formed with a βarr1 mutant, in which the finger-loop, required to interact with the receptor core, has been deleted, fully retain the ability to activate Src. Similarly, βarr1 in complex with only a phosphorylated C-terminal tail of the vasopressin 2 receptor activates Src as efficiently as GPCR–βarr complexes. In contrast, βarr1 and chimeric M2 receptor with nonphosphorylated C-terminal tail failed to activate Src. Taken together, these data demonstrate that the phosphorylated GPCR tail interaction with βarr1 is necessary and sufficient to empower it to allosterically activate Src. Our findings may have implications for understanding more broadly the mechanisms of allosteric activation of downstream targets by βarrs.

IQGAP1 is a key scaffold protein that regulates numerous cellular processes and signaling pathways. Analogous to many other cellular proteins, IQGAP1 undergoes post-translational modifications, including phosphorylation. Nevertheless, very little is known about the specific sites of phosphorylation or the effects on IQGAP1 function. Here, using several approaches, including MS, site-directed mutagenesis, siRNA-mediated gene silencing, and chemical inhibitors, we identified the specific tyrosine residues that are phosphorylated on IQGAP1 and evaluated the effect on function. Tyr-172, Tyr-654, Tyr-855, and Tyr-1510 were phosphorylated on IQGAP1 when phosphotyrosine phosphatase activity was inhibited in cells. IQGAP1 was phosphorylated exclusively on Tyr-1510 under conditions with enhanced MET or c-Src signaling, including in human lung cancer cell lines. This phosphorylation was significantly reduced by chemical inhibitors of MET or c-Src or by siRNA-mediated knockdown of MET. To investigate the biological sequelae of phosphorylation, we generated a nonphosphorylatable IQGAP1 construct by replacing Tyr-1510 with alanine. The ability of hepatocyte growth factor, the ligand for MET, to promote AKT activation and cell migration was significantly greater when IQGAP1-null cells were reconstituted with IQGAP1 Y1510A than when cells were reconstituted with WT IQGAP1. Collectively, our data suggest that phosphorylation of Tyr-1510 of IQGAP1 alters cell function. Because increased MET signaling is implicated in the development and progression of several types of carcinoma, IQGAP1 may be a potential therapeutic target in selected malignancies.

Belt and Road Is Not a (Completely) Closed Shop Expert comment sysadmin 22 March 2018

Though the infrastructure initiative will continue to be led in many places by Chinese investment, where there are benefits of scale, effectiveness and risk management, outside participation will be welcome.

First announced in 2013, President Xi Jinping’s Belt and Road Initiative promises, at a minimum, to improve infrastructure and connectivity between China and the rest of Eurasia. Any bold plan to finance infrastructure on a large-scale across so many low-income economies deserves a sympathetic ear and a positive reception. But many wonder how large the role can be for non-Chinese players in what is clearly an initiative of the Chinese government.

So far, Chinese state and policy banks account for the overwhelming majority of the financing – and this money then flows to Chinese enterprises, mainly state-owned. One study found that 89% of the work went to Chinese contractors on China-funded projects.

Yet, recently in Paris, Chinese Foreign Minister Wang Yi said the Belt and Road was a ‘sunshine initiative’ that was open and for all to benefit from. He declared that there were to be ‘no backroom deals. There is openness and transparency.’ The Belt and Road Initiative will ‘respect international rules’ and ‘will run according to market rules’.

There are some notable instances of Belt and Road projects changing to conform more to international rules as they develop. For example, work on the Belgrade–Budapest high speed rail link originally ran into problems. Contracts were allegedly awarded to Chinese companies without following the EU-mandated competitive procurement processes. Now, the most recent round of contracts is to be awarded by tender.

Such a switch perhaps does not herald the unrestricted ‘market rules’ that Wang speaks of, but it does highlight that China is willing to turn Belt and Road towards openness in certain instances. These will be cases where it clearly brings benefits for China – but also where private sector players can be convinced of good commercial returns. These benefits are most likely to lie in three areas: scale and access, effectiveness and risk management.

Mutual benefits

Firstly, scale and access. Belt and Road can achieve greater scale if additional financing comes in alongside the current Chinese state and policy bank lending. This can come both by working together with multilateral institutions and with private sector institutions. This will in turn require defining projects or structuring financing with attractive risk-return trade-offs. In some cases, this will be feasible – in others not.

Getting bigger also necessitates initiating meaningful Belt and Road activity in more countries. As the Belgrade–Budapest rail experience has shown, approaches vary in terms of competitive tendering requirements and consideration of non-Chinese bidders. An approach that works in, say, Tajikistan, may not be effective in Poland. This is a pragmatic recognition of context that is quite separate from debates on what the ‘right’ approach to these standards should be. Both these elements suggest that a more open Belt and Road will be a larger and more far-reaching one.

Secondly, effectiveness. Despite extensive experience building infrastructure within China, many Chinese companies are much less familiar operating outside of China. Western, Japanese and Korean companies can bring their own experience to the table and help the success of these projects. By doing so, they also put competitive pressure on Chinese companies to improve and upgrade, while providing opportunities to learn. This in turn creates a stronger, more productive Chinese economy.

Beyond physical hardware, the ‘software’ is also critical to success. Again foreign companies have much to contribute. Areas such as maintenance, training, legal and accounting services are all in demand. Indeed, many such British and other companies are already actively engaged in working on projects with Chinese companies to help in these areas.

Finally, risk management. Beyond the usual project management risk of large projects, Belt and Road brings additional challenges. Many countries have weak governance, internal divisions and security issues, all within distinctively different cultures and traditions. Chinese companies with little experience of local conditions will struggle. Going it alone may provide what is an illusion of control, but exposure to social and political dynamics can rebound on China in unexpected ways.

Cooperating with others who have a history of in-country experience is a way to manage these risks. Examples would include British and Chinese cooperation both at company and governmental level in engaging in particular African countries, in partnership with the relevant country government.

Mixed system

Mechanisms that encourage competitive choices and restrain corruption are positive, but mechanisms that slow decision-making to a crawl also prevent countries from getting benefits of infrastructure projects. Conversely, continuing along the current path of Chinese-led investment does have some clear attractions in certain settings, at least to those directly involved. It combines the ability of Chinese policy banks to provide large-scale funding in even high-risk environments with the relevant experience and production capacity of Chinese state-owned businesses. It allows for government-to-government deals, pragmatic negotiations and all-encompassing accords, at times out of the public eye. In many cases, it is hard to make a commercial case for the investments.

But in cases where there is mutual benefit, engagement and will, there will be a role for international partnerships.

International Arbitration: Exploring India’s Potential 15 November 2019 — 9:30AM TO 5:30PM Anonymous (not verified) 17 October 2019 Chatham House | 10 St James's Square | London | SW1Y 4LE

As India’s economic clout grows, so does its aspiration to become a favoured arbitration destination in a globalized world dominated by foreign investments flows and cross border transactions. India’s bid to enhance its status as an arbitration destination depends largely on the suitability of its legal environment in meeting the demands of an increasingly sophisticated approach to disputed resolution. This conference will assess these, and other related, issues.

To register your interest in attending this event, please contact Nisha Ramdas by phone +91 9650977833 or by e-mail nisha@globaldialoguereview.com.

International relations: The ‘how not to’ guide Expert comment NCapeling 11 October 2022

A centenary special issue of International Affairs explores past foreign policy failures to help policymakers avoid future catastrophes.

Policy decisions in international relations frequently have a long-lasting effect on the world order, shaping the lives of millions. Often acting under pressure and severe time constraints, decision-makers must rely on their own experience and the best expertise available. And so, despite many striving for a more peaceful and prosperous world, policy failures are all too common.

The second of International Affairs’ centenary special issues – devised and guest-edited by Amrita Narlikar and Daniel W. Drezner – is a ‘how not to guide’ for international relations. Focusing on historic failures, 14 experts examine what went wrong, and how policy practitioners and researchers can get it right together.

Between theory and outcome fall two ‘shadows’: one of decision-makers not taking advantage of sound academic policy advice – in some cases ignoring it because they think they already know best – and a second of bias in academic analyses and researchers simply erring, or erring on the side of their own self-importance. Between these two, there lies a joint path toward better policies.

The special issue provides policymakers with cautionary lessons, transforming well-known cases into a guide of what not to do in international politics. Building on that, the collection also suggests ways forward, including borrowing the medical Hippocratic Oath of ‘do no harm’, which in international relations serves as a cautionary warning against action merely for action’s sake, and then going decidedly beyond this minimum requirement.

A series of comics also accompanies the articles, produced in collaboration with Sequential Potential comics.

In their introduction, Drezner and Narlikar draw out four overarching factors which increase the likelihood of foreign policy failure – these are a focus on short-term successes, underestimating the power of narratives, hubris, and technocratic bubbles. If academics and policymakers can work together with these careful considerations, perhaps mistakes can avoid being repeated.

Richard Toye examines three pivotal moments in the UK’s history – the Munich crisis of 1938, the Suez crisis and war of 1956, and the Iraq war of 2003. He finds that in these cases the failures were over-determined, a consequence of Britain’s relative decline rather than its cause.

Daniel W. Drezner reviews two high profile failures of sanction use – United Nations (UN) sanctions on Iraq during the two Gulf wars, and the US re-imposition of sanctions on Iran in 2018. In both cases the main goals were not achieved and the costs were great. Drezner highlights ten ‘do’s and don’ts’ for sanctions as a result.

Amrita Narlikar shows how the World Trade Organization (WTO) has become an almost perfect example of how not to negotiate, even when taking into account recent limited successes. She identifies three broad categories of bargaining failures and explores the impact of narratives on the course of events, giving a clear list of do’s and don’ts for international negotiation.

Harold James also looks at three historic moments, the financial crises in 1931, 1997, and 2008. While responses to the crises initially looked successful, ironically in each case the drive to avoid past mistakes opened the door for the next crisis.

Cecilia Emma Sottilotta considers recent disasters in the European Union (EU) – the eurozone crisis and COVID-19 pandemic – and recommends for policymakers to find a middle ground between supranationalism and intergovernmentalism in crisis situations.

The growth of Chinese influence is a key issue in international relations today. Various articles in the special issue explain how not to deal with a rising China, coming from different angles. Exploring the US-China relationship, Janice Gross Stein is critical of the narrative around US decline and Chinese growth. The world should look beyond GDP as an indicator of a country’s growth and pay attention to strategic choices made by leaders in both states.

Joseph S. Nye Jr also provides a US perspective, arguing that while some historic analogies are misleading, the US should contemplate the cautionary narrative of sleepwalking into World War One when thinking about its relationship with China.

Amitabh Mattoo gives a south Asian view, asserting there is a need to understand Chinese policies in the region. Through examining China’s relations with India, Pakistan, and Sri Lanka he concludes that because China is adopting aggressive policies in the region, states must start cooperating with like-minded allies.

Yuen Foong Khong answers two questions in his paper tackling which ‘how not to’s’ are relevant when learning from history, and whether policymakers are aware of them. His research points to four things to avoid, which he then applies to how the Cold War analogy is used to understand contemporary US-China relations.

On the theme of foreign interference, Igor Istomin looks at the Soviet support for Mao Zedong’s Communist Party in the 1920s to 1940s. He argues strongly against interfering with major powers, as short-term gains cannot last.

From Iraq and Afghanistan to Somalia and the Balkans, there have been many failed interventions by the West since the end of the Cold War. Stephanie Carvin asserts the overreliance on automated weaponry has allowed supposedly ‘easy wars’ to turn into ‘forever wars’ – and this is not likely to stop.

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.

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.

Why technology does not make easy wars Interview LJefferson 28 November 2022

Stephanie Carvin explains why technology does not overcome the challenges of war.

The invasion of Ukraine has demonstrated that many of the assumptions held about the role of technology in contemporary warfare are flawed. The lesson that technology cannot overcome the challenges of warfare is one that the West has also yet to learn, despite a series of failed interventions since the end of the Cold War.

In a wide-ranging conversation, Isabel Muttreja sat down with Stephanie Carvin to talk about her contribution to the September 2022 issue of International Affairs on ‘how not to war’. They discuss the US’ over-reliance on technology and why ‘easy wars’ become ‘forever wars.’

You argue in your article that the US overly relies on technology in war. When did this start?

I don’t necessarily think the US is exceptional. I think all states have tried in some ways to use technologies. One of the key arguments in the article is that the US is an enlightenment country, and part of the enlightenment is a belief in rationality and science and that you can better things through the application of science.

I think that there is this particular scientific approach or embracing of technology, in the American and in fact larger Western tradition on technology as a way to save lives. There is a strange humanitarian impulse that often underlies this use of technology.

We are seeing a quest to try and get perfect information. The idea is that if you have perfect information, you are going to be able to dominate the battlefield, and that’s proven itself to be false. I’m not even sure you can ever get perfect information.

But it underlines this modern approach, that if you can have all the information that’s out there, crunch it into some kind of algorithm, that you can then target discriminately, proportionately, reduce the level of casualties, and reduce the level of unnecessary damage. And that’s a kind of liberal tradition. You are trying to have your cake and eat it too.

You talk about the US being an ultimately liberal state, but they have been involved in a lot of wars over the last 10–20 years. Is that a contradiction?

I hope it is. But I think it goes back to the enlightenment nature of the United States, which is that the US sees itself as a shining city on a hill that has to protect itself at all costs. Liberals abhor tyranny, and they abhor unnecessary deaths. But I think that the idea is that if you threaten us, we see ourselves as embodying these values, therefore, we have to protect ourselves.

There’s a tendency to not really recognize the kind of insurgencies that we’ve seen in Iraq and Afghanistan, or even Vietnam, as war. We don’t really see that as a kind of armed conflict, even though, arguably, that has been the dominant mode of conflict for some time. They even used to call it ‘military operations other than warfare’. We tend to still think of war as great power competition or as the Second World War.

My first book was on prisoners of war in the American tradition. What often determined the treatment of people as prisoners of war was if the United States recognized their form of warfare. There’s a racial element here too that I don’t want to dismiss.

So, for example, the US war in the Philippines at the start of the 20th century: They went in, won a very quick victory over the Spanish and effectively took over the Philippines. And then they had a long insurgency for two years with the native Filipinos who didn’t want US domination. While they gave the Spanish all the prisoner of war rights, they didn’t give them to the Filipinos.

This is because they recognized the form of conflict that the Spanish engaged in, but the Indigenous way of warfare was not recognized. The West has struggled to culturally understand the way other people fight. And that’s when the laws of war conventions have broken down between, say, the United States, the West, and other states.

You talk in your article about the US entering ‘easy wars’ and ending up with ‘forever wars’ – what does this mean?

There’s an allure to this high-tech version of warfare, that it can solve a lot of problems, but it’s an illusion. It is ultimately a bit of a false promise.

The idea that machines are going to replace humans is fundamentally untrue. We are seeing this to a certain extent right now, even in the Russia/Ukraine war. This is very much a battle of machines and soldiers. One of the themes of this issue of International Affairs is hubris. The idea that things that appear to be quick wins often tend to be long-term losses. And that’s exactly what this article is talking about.

‘Forever wars’ is not my favourite term, but it’s this concept that what was promised to be an easy war, a high technology-driven conflict, where you can go in, use some surgically precise weapons, take care of the problem, eliminate your opponent and then extract yourself from a situation, has actually turned into a quagmire.

The limits of technology become apparent within a few months as well as the fact of the messy business of state-building, or the fact that insurgencies and political movements don’t just disintegrate at the show of some high-tech, sophisticated weaponry. It just tends to mean that these wars do go on for a long time, and you have to eventually extricate yourself, but there’s no clean way to do this. We saw this of course with Afghanistan, and to a large extent Iraq.

We get distracted by the shiny object. We see this promise, we see this vision of a kind of warfare that for some may have great appeal.  There are new super weapons, whether it be cyber information warfare or artificial intelligence. Everyone wants to be ahead of the curve, right?

Are these lessons on technology and ‘easy wars’ applicable to other countries?

I think what we’ve learned about the Russian military is that there’s a lot more at the heart of it. Part of the problem Russia is experiencing is that its capabilities were not what it thought they were. It’s clear that Vladimir Putin was enamoured with a lot of the ideas, like that the Russian military was increasingly high-tech and that they had these hypersonic missiles.

They also had very powerful cyber weapons amongst other things. Putin, too, seems to have been caught up in this idea that he could have had a 72-hour special military operation, which would have taken Kyiv. Clearly, that hasn’t happened. Once again, we see the underestimation of the human factor.

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. 

Divided US support shows time is not on Ukraine’s side Expert comment LJefferson 17 February 2023

Growing public opinion evidence and uncertainty about the future of the war suggests that continued American support for aiding Ukraine should not be assumed.

One year into Russia’s war on Ukraine, fears that American support for Kyiv would rapidly wane have proven demonstrably wrong. Western financial and military backing has been robust thanks to allied unity and an unexpectedly mild winter. But, as financial analysts constantly remind us, past performance is no guarantee of future results.

People like to back winners. If the anticipated Russian spring offensive looks successful or the counterpart Ukrainian offensive is uninspiring, expect louder US voices calling for a negotiated settlement. The warning signs are already here.

American officials privately express growing apprehension that there will be an early resolution of the conflict. As one White House official recently observed to me, by the end of the year the war could well be about where it is today. And a plurality of Americans intuitively grasp this: 46 per cent believe neither Russia nor Ukraine currently has the advantage in the conflict.

Momentum matters  

In public opinion, perception of momentum matters. Americans’ support for the Vietnam War waned as the conflict persisted, falling from six-in-ten Americans in 1965 to four-in-ten in 1973.

Similarly, backing for the Iraq war fell from more than seven-in-ten in 2003 to barely four-in-ten in 2008. And with Afghanistan, as the war dragged on, support for US involvement fell from more than nine-in-ten in 2002 to less than five-in-ten in 2021. Notably, once the American public turned on these wars, support never returned.

Of course, Americans were fighting and dying in those wars, which is not the case in the Ukraine conflict. But initially the Vietnam, Iraq, and Afghanistan war support was buoyed by the belief that continued US engagement was justified, otherwise American sons and daughters had died in vain. With no American lives at stake in Ukraine, only financial and military resources, there is a growing wariness of throwing good money after bad.

In the last year, the share of Americans who say the United States is doing too much for Ukraine has nearly quadrupled, from seven to 26 per cent. And the portion that believe Washington has not done enough has halved, from 49 per cent to 17 per cent.

Sentiment about Ukraine support has become increasingly partisan. In March 2022, nine per cent of Republicans and five per cent of Democrats said the US was doing too much for Ukraine. By January 2023, 40 per cent of Republicans but just 15 per cent of Democrats complained Washington was doing too much.

This erosion of Americans’ support for Ukraine does not bode well for the future. Less than half (48 per cent) of the public in November, compared to 58 per cent in July, believed Washington should support Ukraine for as long as it takes, even if it means American households have to pay higher gas and food prices as a consequence.

A similar share, 47 per cent – up from 38 per cent in July – said the United States should urge Ukraine to settle for peace as soon as possible so the costs aren’t so great for American households, even if that means Ukraine will lose some territory.

A partisan divide

The partisan divide over Ukraine is largely driven by Republican political rhetoric during and after the 2022 midterm elections. Current Republican Speaker of the House Kevin McCarthy observed last October: ‘I think people are going to be sitting in a recession and they’re not going to write a blank cheque to Ukraine.’

More recently, in the wake of Ukrainian president Zelenskyy’s December speech to Congress, Florida Republican Representative Matt Gaetz, whose vote was pivotal in making McCarthy Speaker, tweeted: ‘Hemorrhaging billions in taxpayer dollars for Ukraine while our country is in crisis is the definition of America last.’

In January, newly-elected Ohio Republican Senator J.D. Vance told a Cleveland radio station that it was ‘ultimately not in our national security interest’ to send M1 Abrams tanks to Ukraine, despite the fact that they will be built by his constituents in Ohio.

In addition, ten Republican members of the House of Representatives have introduced legislation asserting ‘that the United States must end its military and financial aid to Ukraine, and urges all combatants to reach a peace agreement.’ 

And this month former President Donald Trump said: ‘That war has to stop, and it has to stop now, and it’s easy to do’ and it ‘can be negotiated within 24 hours’. Why worry about continued support for the war if it’s about to be over?

The road to 2024

With the 2024 US presidential election already revving up, Americans’ appetite for continued backing for Ukraine may hinge on how voters judge the Biden administration’s handling of the conflict.

Democrats are more than twice as likely as Republicans (61 per cent versus 27 per cent) to approve of the Biden administration’s response to the Russia invasion, suggesting Ukraine will be yet another partisan talking point as the campaign heats up. Notably, men are much more likely than women to approve of Biden’s efforts, as are older Americans compared with younger Americans.

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