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from Ian Bremmer:

Obama isn’t the only one with a passive-aggressive foreign policy

 China's President Xi speaks during his meeting with U.S. President Obama, on the sidelines of a nuclear security summit, in The Hague

America and China are the world’s two major powers, with the largest economies and militaries. The stakes are high for them to practice what they preach on foreign policy: their words and actions influence the global economy, as well as the behavior of allies and enemies.

The problem: Xi Jinping and Barack Obama want to have their foreign policy cake and eat it, too. For both leaders, international engagement isn’t top of mind: they want to downplay their global leadership roles in order to focus on more pressing concerns at home.

But at the same time, they have certain priorities that they’re willing to pursue unilaterally and aggressively abroad. This inconsistency gets them both in hot water. It leaves other countries guessing, it undermines global collaboration, and it allows crises like Ukraine and Iraq to burn hotter, for longer, more often.

The closest thing that Obama has to a foreign policy doctrine is the consistent lack thereof. In his recent speech at West Point, he argued against engaging in conflicts that are not core interests. He emphasized buy-in from a coalition of other partners and the use of the military option only as a last resort. “Just because we have the best hammer does not mean that every problem is a nail,” he said.

from MacroScope:

Erdogan unfettered

Investors have spent months looking askance at Turkey’s corruption scandal and Prime Minister Tayyip Erdogan’s response to it – purging the police and judiciary of people he believes are acolytes of his enemy, U.S.-based cleric Fethullah Gulen. But it appears to have made little difference to his electorate.

Erdogan declared victory after Sunday’s local elections and told his enemies they would now pay the price. His AK Party was well ahead overall but the opposition Republican People's Party (CHP) appeared close to seizing the capital Ankara. 

from MacroScope:

ECB uncertainty

For European markets, Germany’s March inflation figure is likely to dominate today. It is forecast to hold at just 1.0 percent. The European Central Bank insists there is no threat of deflation in the currency area although the euro zone number has been in its “danger zone” below 1 percent for five months now.

Having appeared to set a rather high bar to policy action at its last meeting, this week the tone changed. Most notable was Bundesbank chief Jens Weidmann, normally a hardliner, who said printing money was not out of the question although he would prefer negative deposit rates as the means to tackle an overly strong euro.

from MacroScope:

IMF verdict on Ukraine due

G7 leaders didn’t move the dial far last night, telling Russia it faced more damaging sanctions if it took any further action to destabilize Ukraine.
They will also shun Russia’s G8 summit in June and meet ”à sept” in Brussels, marking the first time since Moscow joined the group in 1998 that it will have been shut out of the annual summit.

There were some other interesting pointers. For one, the G7 agreed their energy ministers would work together to reduce dependence on Russian oil and gas. Could this lead to the United States exporting shale gas to Europe? A committee of U.S. lawmakers will hear testimony on Tuesday from those who favour loosening restrictions on gas exports.

from MacroScope:

G7 test of mettle

Another crunch week in the East-West standoff over Ukraine kicks off today with Barack Obama in the Netherlands for a meeting of more than 50 world leaders at a nuclear security summit in the Netherlands. There, he and his fellow G7 leaders will hold separate talks on Ukraine.

Obama upped the ante on Vladimir Putin last week with sanctions that hit some of his most powerful allies and strayed firmly into Russia’s banking and corporate world. The EU acted more cautiously but is looking at how financial and trade measures would work, getting ready in case Putin escalates the crisis further.

from Ian Bremmer:

Chinese reform is coming, but not the political kind

In a western democracy like the United States, we assume that the best time for a leader to accomplish something is in the first year of his first term. The election has just ended, the opposition is still scattered, and the legislative mandate is intact. Everybody still talks about Franklin Delano Roosevelt’s first 100 Days for a reason.

In authoritarian governments, like China’s, it’s supposed to be different. Steering such a large bureaucracy takes time, as all the moving pieces catch up with one another. What matters is minimizing risk surrounding the transfer of power, and then engaging in a slow buildup of consensus. And yet, Xi Jinping is proving the conventional wisdom wrong. After just six months at the helm, Xi is already clearly on track to accomplish far more than his predecessor Hu Jintao.

from Ian Bremmer:

The world leaders who are actually leading

Earlier this summer, as I watched the Pope attract millions as he toured Brazil, I noticed how rare the scene was. Here was a man in control of an embattled institution, and he had somehow rallied his troops. By going back to the basics of Catholic belief—embracing humility, supporting the downtrodden, asking for sacrifice— as well as pushing the envelope (with his more progressive stance on homosexuality, for example), Pope Francis had begun to rehabilitate the church. It was viable leadership: the kind that motivates, inspires, and unites.

This is becoming increasingly rare. We live in a world where no single country or group of countries can provide dominant, sustainable global leadership—G-Zero, as I call it—and that’s in large part because so many countries lack solid leadership at home. As I look around the world, I see only three leaders of major countries that, like the pope, are managing to squelch opposition, carve out a more impactful role for themselves, and undertake difficult reforms, all while leveraging their popularity and consolidating their strength.

from Ian Bremmer:

The countries not letting a crisis go to waste

In 2008, before the financial crisis had even reached its nadir, Rahm Emanuel famously said: “You never want a serious crisis to go to waste.” Emanuel’s quote became the conventional wisdom for crisis management, even if the idea is age-old: John F. Kennedy Jr. famously pointed out that the Chinese word for “crisis” is composed of two characters, one for “danger” and one for “opportunity. 

Nearly five years after the global economic meltdown, we can now look at the world’s major powers and assess how well they’ve responded to their various crises. Three categories emerge. Who took advantage of crisis? Who never really had a true crisis? And who is letting crisis go to waste?

from Ian Bremmer:

Will China’s slowing growth lead to unrest?

Recently, it seems no developing country is safe from sudden, unexpected protests. In Brazil and Turkey, empowered middle classes pushed back against perceived governmental injustice; protests erupted, and leaders’ approval ratings dropped precipitously. In Egypt, the economic picture was as ugly as the political one, and the military’s ouster of President Mursi has fomented conflict and instability.

China may look like a candidate for the type of protests currently sweeping the developing world. Not only is a newly empowered middle class demanding better services and more accountability from government -- growth has also tapered off in recent quarters. Don’t hold your breath. At least for the time being, China is well-positioned to navigate such challenges far better than its emerging market competitors.

from Ian Bremmer:

China and America’s related, but inverse, dilemmas

As protests sweep the developing world and Europe struggles through an austerity hangover, China and the U.S., relative to their peers, look like the best in class. They are both comfortable with their modest growth rates (compared to their norms of the past decade), and insulated from the kind of social unrest we are seeing in Egypt, Turkey or Brazil. But both countries have a deeper intractable challenge that will, in the longer-term, get worse. What’s interesting is that they’re the inverse of each other: in the U.S., wealth and private sector interests capture the political system. In China, politicians capture the private sector and the wealth that comes with it.

The U.S.’s struggles with lobbying, pork-barrel spending, and the corporate sector’s general overlord status in Washington are well documented. Campaign finance reform is long past. Corporate personhood is well-entrenched. Super PACs are ascendant. A representative democracy is being crowded out by a capitalist one.

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