14 November 2024
This Week:
Key Questions on Trump’s China Policy
China Issues Controversial Geographic Baseline
DOJ Acknowledges Iranian Assassination Plot
TSA Considers Regulations on Cybersecurity
Europe Attempts to Challenge US Search Engines
Germany to Hold Snap Elections
Starlink Seeks Access to India
COP29 Issues New Finance Target
New Report: Extreme Weather Costs for Global Economy
#1
Key Questions on Trump’s China Policy
As US President-elect Donald Trump prepares for his second term, a tougher China policy is anticipated, but its exact form remains uncertain. Key questions arise around whether Trump’s approach can balance domestic economic needs, with a likely increase in tariffs and potential shifts to other manufacturing countries like Indonesia and Vietnam. This shift would involve steep tariffs—potentially as high as 60%—on Chinese imports, which could lead to higher inflation in the US as the economy searches for alternative sources of goods. Trump’s plan for widespread tariffs (10-20%) on all imports, including those from allies, could further raise costs for American consumers. Total economic decoupling from China is also a possibility some advisors are pushing. Trump’s long-standing business connections with China, along with those of key allies like Elon Musk and Steve Wynn, could influence policy decisions. Trump has shown willingness to reverse stances on Chinese companies, such as ZTE and Huawei, after interactions with Chinese leaders and allies with vested interests. A central question is whether the US views China as a strategic competitor for dominance or as an ideological adversary. This distinction affects policy toward Taiwan, where Trump has criticized Taipei as a “security freeloader,” raising doubts about US defense commitments to the island. Staffing choices will be crucial: prospective picks like Senator Marco Rubio and Representative Mike Waltz are strong China hawks with human rights concerns. However, Trump himself has praised Xi’s authoritarian leadership, suggesting democracy-versus-autocracy concerns may take a backseat to strategic interests. If Trump seeks total economic decoupling or high tariffs, it could strain both US-China relations and the American economy. Moreover, his flexibility on business-driven policy reversals could create unpredictability in foreign policy.
#2
China Issues Controversial Geographic Baseline
China recently established geographic baselines for the disputed Scarborough Shoal in the South China Sea, intensifying tensions with the Philippines. Both nations claim the shoal, which China seized in 2012 and has since restricted access to Filipino fishermen. The 2016 international arbitration ruling invalidated most of China’s claims in the region, but China has disregarded the ruling. The situation has led to multiple clashes, including incidents where Chinese coast guard vessels used water cannons on Philippine ships. China’s announcement came shortly after Philippine President Ferdinand Marcos Jr. signed two laws delineating Philippine claims in these contested waters. China condemned these laws, arguing they infringe on its sovereignty. The Chinese Foreign Ministry defended its actions as aligning with international law, while reaffirming its claim over nearly all of the South China Sea, a vital shipping corridor contested by other Southeast Asian countries like Vietnam. As US-China tensions and potential for conflict will increase over the medium term, the Philippines will likely become an important ally in balancing the Indo-Pacific. China is alienating many countries in the region, and this increases the probability of a hot war occurring over territorial claims.
#3
DOJ Acknowledges Iranian Assassination Plot
The US Justice Department revealed an Iranian plot to assassinate President-elect Donald Trump, led by Farhad Shakeri, an Iranian government asset linked to Iran’s Revolutionary Guard. Shakeri was allegedly instructed by a Revolutionary Guard official in September to plan the assassination and set aside other tasks to execute the plot. The official indicated that Iran had already invested heavily in the operation, intending to pause if Trump lost, assuming it would be easier to act afterward. Shakeri, currently in Iran, recruited others to target prominent Iranian-American journalist Masih Alinejad, who has survived multiple assassination attempts. In a statement, Iran’s Foreign Ministry denied the accusations, labeling them a plot by anti-Iran factions. Attorney General Merrick Garland emphasized the serious threat posed by Iran, while FBI Director Christopher Wray noted Iran’s continued attempts to target U.S. leaders and dissidents. Iran’s past hostility toward Trump stems from his withdrawal from the nuclear deal, imposition of sanctions, and the killing of General Qassem Soleimani. Insight Forward has included assassinations and attempted assassinations as a Top 10 Geopolitical Risk for 2025, and the number of attempts on former President Trump highlights this issue.
#4
TSA Considers Regulations on Cybersecurity
The Transportation Security Administration (TSA) in the United States proposed new regulations to formalize cybersecurity requirements for pipeline and railroad operators, building on temporary directives issued since the 2021 Colonial Pipeline ransomware attack. The rules mandate cyber risk management (CRM) plans for critical transportation infrastructure, requiring annual cybersecurity evaluations, vulnerability assessments by independent officials, and operational plans detailing cyber protections, detection, and response measures. The proposed rule affects about 300 transportation operators, including 73 freight railroads, 34 passenger rail agencies, and 115 pipeline facilities. It also mandates that operators report cyber incidents to the Cybersecurity and Infrastructure Security Agency (CISA). TSA estimates that implementing these rules will cost the industry $2.1 billion over ten years. If the TSA follows through with the rule, then it will be a major step towards regulating corporations and cybersecurity. The federal government has attempted such regulations before without being successful, but doing the regulations through the TSA will likely be more successful.
#5
Europe Attempts to Challenge US Search Engines
Ecosia and Qwant, two European search engines, are collaborating to build an independent web index, dubbed the European Search Perspective (EUSP), to reduce their reliance on Google and Bing for search results. Based in Paris, this for-profit venture aims to allow Ecosia and Qwant to prioritize “eco-friendly” and “ethically-minded” content, aligning with their values and European preferences. This initiative follows Microsoft’s increased licensing fees and aims to address gaps in search services, such as supporting regional languages and reflecting societal values. EUSP will initially launch in France in 2024 and Germany by 2025, leveraging OVHcloud for technical infrastructure. The companies envision their tailored approach as an alternative to Google, potentially achieving relevance similar to South Korea’s Naver. Additionally, they aim to support underserved regions, such as Ethiopia, where Google’s services have failed to adequately meet local language and cultural needs. The initiative, supported by the EU’s stricter tech regulations, indicates further balkanization of technology as more regions attempt to challenge US tech dominance. It is critical that this is occurring in Europe, which has less technical expertise than the US and Asia and a generally weak tech sector.
#6
Germany to Hold Snap Elections
Germany will hold snap elections on February 23, following the collapse of Chancellor Olaf Scholz's coalition government. Currently leading a minority government with the Greens, Scholz plans to seek opposition support for policies like protecting the Constitutional Court from the far-right and boosting Ukraine aid before leaving office. Tensions within Scholz's former coalition arose over fiscal policies, with the Free Democrats pushing for budget cuts that Scholz’s left-wing allies resisted. Friedrich Merz, head of the opposition Christian Democrats and the favorite for chancellor, has resisted proposals to eliminate the debt brake, focusing instead on potential tax reforms. The government’s collapse leaves the 2025 budget and key policies unresolved, as economic challenges, including inflation, competition from China, and the return of U.S. President-elect Donald Trump, strain Germany. There is also a risk of the far right gaining in the election as AfD is currently polling at 16% (the same as the SPD). If the Christian Democrats return to power and fail to implement effective policies, then it is increasingly likely that the AfD will gain over the longer term, significantly disrupting political stability.
#7
Starlink Seeks Access to India
Elon Musk's Starlink is seeking security clearance to offer satellite broadband services in India, which will be granted if it meets all requirements set by the Indian government. This move is facilitated by New Delhi’s recent decision to administratively allocate spectrum for satellite broadband, avoiding an auction process, which favored Musk’s approach over Indian telecom giant Mukesh Ambani's preference for an auction. Indian telecom minister Jyotiraditya Scindia confirmed Starlink's progress in securing clearance, emphasizing the need for Starlink to ensure local data storage and secure satellite signals. If approved, Starlink would compete in a market currently led by Ambani's Reliance Jio, which has over 14 million broadband subscribers and dominates with over 479 million telecom users. Ambani’s Reliance already has security clearance for satellite broadband, and he is concerned Starlink’s entry could erode his market share, especially given Musk’s competitive pricing strategies abroad, such as offering Starlink for $10 per month in Kenya. If Starlink is successful, then it will indicate the increasing power of US technology companies to penetrate new markets, especially during the competition with China. Companies like Google, Microsoft, and Meta have struggled to gain sufficient market access in developing countries, but Starlink could demonstrate the appropriate mechanism to do so.
#8
COP29 Issues New Finance Target
The ongoing UN COP29 climate summit in Baku, Azerbaijan, aims to set a new annual climate finance target, potentially reaching $1 trillion, to support developing countries in addressing climate change. This new target, the New Collective Quantified Goal (NCQG), follows the previous $100 billion annual target agreed upon in 2009. Discussions will address funding types (grants, loans, investments) and allocations among mitigation, adaptation, and loss and damage. The conference has notable absences, including leaders from the US, France, Germany, China, and Russia, though delegations will still represent these nations. The US election, with Donald Trump’s victory, raises concerns over his potential withdrawal from international climate commitments, as he did in 2016 with the Paris Agreement. The EU and China are expected to play leading roles in pushing for global climate action, as doubts arise over US engagement under Trump’s presidency.
#9
New Report: Extreme Weather Costs for Global Economy
A new report, commissioned by the International Chamber of Commerce, estimates that climate-related extreme weather events have cost the global economy more than $2 trillion over the past decade. The research – conducted by the specialist economics consultancy Oxera – pinpoints almost 4,000 events which impacted a total 1.6 billion people between 2014 and 2023. In the last two full years alone, global economic damages reached $451 billion – representing a 19% increase compared to the previous eight years of the decade. The analysis by Oxera also highlights the acute impact on many developing economies –with single extreme weather events often imposing economic costs more than a country’s annual GDP.
"There are people in every time and every land who want to stop history in its tracks. They fear the future, mistrust the present, and invoke the security of a comfortable past which, in fact, never existed."
- Robert Kennedy
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