Business Briefing: Assessing the geopolitical implications of EU AI regulation 17 September 2024 — 4:00PM TO 5:00PM Anonymous (not verified) 8 August 2024 Chatham House

Join us for this critical discussion of how the EU AI Act will shape the world’s approach to the technology.

Join us for this critical discussion of how the EU AI Act will shape the world’s approach to the technology

Governments, technology companies and civil society groups across the world are now advocating firmer AI regulation. Machine learning algorithms have changed the way we interact with technology and powered much of our online lives for decades: why has this pendulum swung back so far toward greater control, and why now?

In 2023 the UK government seized the initiative with its Bletchley AI Safety Summit. The event attempted to address the so called ‘frontier risks’ associated with AI development. Global competition on AI is reflected in AI governance efforts in China, US, the Gulf and beyond. But to date, it is the EU that has led the West in passing AI legislation. The EU AI Act, has separated AI systems into graded risk categories carrying different regulatory requirements, and it remains to be seen whether global AI will feel the Brussels effect.

This conversation will cover the following questions:

• Critics have painted regulation including the AI Act as anti-innovation. Is this a fair assessment?
• What lessons can we learn from the successes and shortcomings of GDPR?
• How do we tackle the challenge of low public trust in AI and low public trust in government technology projects, particularly in Western democracies?
• Does the proliferation of safety institutes, and the AI office, point to the emergence of a new type of technical governance institution? What is its future?

30 Years of Non-Maghreb: What next for Algeria-Morocco relations? 10 September 2024 — 2:00PM TO 3:15PM Anonymous (not verified) 13 August 2024 Online

Experts discuss Algeria-Morocco relations and implications for regional actors.

In 1989, the establishment of the Arab Maghreb Union (UMA) brought a promise of economic integration and strengthening of ties between Algeria, Libya, Mauritania, Morocco and Tunisia for the benefit and prosperity of their societies.

Decades on, very little has been accomplished in developing the Maghreb project, and the region remains one of the least integrated in the world, despite significant social and cultural similarities between member countries. The last time the full UMA leadership met was back in 1994, with August 2024 marking 30 years of closed borders between Algeria and Morocco.

Relations between the two largest Maghreb countries have deteriorated further since 2020 due to disagreements over issues of Western Sahara, and, most recently, the Abraham Accords, with Algeria cutting diplomatic ties with Morocco in 2021.

In this webinar, experts will discuss:

• Which primary obstacles are hindering Maghreb integration and Algeria-Morocco relations?
• What are the costs and implications for regional countries?
• What are the positions of Libya, Tunisia, and Mauritania?
• What is required for a rapprochement and how can external partners support this? 

Islamic radicalisation in Central Asia 18 September 2024 — 10:00AM TO 11:30AM Anonymous (not verified) 20 August 2024 Chatham House and Online

Experts analyse rising foreign recruitment, current counter-radicalisation efforts and challenge past Chatham House predictions made of the Central Asia region.

In 2014, Chatham House released a report titled The Myth of Post-Soviet Muslim Radicalisation in the Central Asian Republics. At that time, a significant, Western-funded counter-radicalisation industry was addressing what was believed to be a major issue of Islamic violent extremism in the region.

Over the past decade, two key developments have occurred. First, Western interest in the region has declined in favour of traditional geopolitical concerns. Second, while violent extremism incidents within Central Asia remain rare, there has been a notable recruitment of Central Asians by foreign groups, with several attacks carried out by Central Asians overseas.

In this event, the original report’s authors, John Heathershaw and David Montgomery, will discuss whether the report’s arguments are still valid and how we might answer these questions today.

This raises several questions:

• What did the report accurately predict, and where did it fall short?
• How can we explain the lack of violent extremist organisations (VEOs) within Central Asia but the presence of Central Asians in VEOs abroad?
• Could repression by Central Asian states both domestically and transnationally have contributed to this issue?
• What, if anything, can the counter-radicalisation industry do today to address this problem more effectively?

Please note that in-person places are limited. Please wait for confirmation before participating. 

Making the circular economy work for global development: how the UN Summit of the Future can deliver 23 September 2024 — 6:15PM TO 9:00PM Anonymous (not verified) 5 September 2024 Online

This policy roundtable focusses on how to advance implementation of a global approach and collaboration to an inclusive circular economy for an updated post-2030 SDG framework.

As the world looks beyond the Sustainable Development Goals (SDGs) towards the post-2030 era, integrating the principles of the circular economy into the future global development agenda becomes imperative.  

A new Chatham House research paper about the role of the circular economy for the SDGs and their possible extension into the post-2030 development agenda will be launched in September 2024 during the UN Summit of the Future and the New York Climate Week. The paper outlines the rationale for the integration of circular economy goals into for the next crucial phase of international development and how to meet net-zero 2050 targets. It provides actionable recommendations on international cooperation mechanisms for policymakers and stakeholders at the UN Summit for the Future in 2024 and beyond.

The aim of the roundtable is to bring together stakeholders and leaders from intergovernmental organisations, business, governments and civil society. The focus of the roundtable meeting is: 

• Reflections on the Summit of the Future and the role of circularity for an updated post-2030 SDG framework.
• Discussion on key aspects of the institutional arrangements and international coordination that are needed for a globally coordinated approach to achieve an inclusive circular economy that supports SDG implementation. 
• Development of joint strategies on how to advance implementation of a global approach and collaboration to an inclusive circular economy as a follow-up from the Summit of the Future.

The objective is to emerge from the roundtable with a clearer roadmap for translating the recommendations for international coordination into concrete actions, with a shared commitment to driving meaningful change on the international level.

The event is co-hosted by Chatham House and partners from the Global Circular Economy Roadmap initiative including the African Circular Economy Network, the African Development Bank, Circular Change, Circular Innovation Lab, Circle Economy, EU CE Stakeholder Platform, Hanns Seidel Foundation, Institute of Global Environmental Strategies, Sitra, UNIDO, World Business Council on Sustainable Development, World Economic Forum and the Wyss Academy for Nature.

Further background information is available on the initiative website.

More speakers to be announced.

Labour Party Conference – International affairs networking brunch 24 September 2024 — 11:00AM TO 12:00PM Anonymous (not verified) 16 September 2024 Labour – Grace 1 Suite, Hilton Hotel, Liverpool

Hosted by Sir Simon Fraser, Chairman of Chatham House.

This event is taking place at the Hilton Hotel, Grace 1 Suite, Liverpool.

You are warmly invited to join us for an exclusive networking brunch at the 2024 Labour Party Conference.

Sir Simon Fraser, Chairman of Chatham House, and Olivia O’Sullivan, Director of Chatham House’s UK in the World Programme, will deliver opening remarks, followed by an interactive networking session where you will have the chance to engage with a wide range of stakeholders. Join us to connect with key senior parliamentary, corporate and media attendees at the Labour Party Conference.

This event will be taking place outside of the secure zone.

US domestic polarization and implications for the presidential election 30 September 2024 — 5:00PM TO 6:00PM Anonymous (not verified) 19 September 2024 Online

This webinar explores the rise of polarization amongst the US public and implications for the upcoming election.

Domestic polarization has been on the rise in the US in recent years, with Democrats and Republicans moving further away from the centre on key policy issues. As polarization increases, so too do concerns about the state of US democracy and prospects of political violence surrounding the upcoming presidential election. 

This expert panel discusses key questions including:

• What are the driving forces of the growing political divide in the US?
• How far apart are voters on key election issues, from healthcare to immigration to national security?
• How is partisan polarisation altering the effectiveness of US foreign policy and influencing America’s role in the world?

Celebrating Black History Month at Chatham House 24 October 2024 — 6:00PM TO 8:00PM Anonymous (not verified) 2 October 2024 Chatham House

Join us for the ‘Beyond expectations: The impact and legacy of migration exhibition 2024’ exhibition and drinks reception.

About the Photographer  

Neil Kenlock, a photographer and media professional, has lived in London since arriving from Jamaica in 1963 to join his parents. He spent the early years of his career as a professional photographer, specialising in fashion, beauty, celebrities, and the cultural lifestyles of Black people in the UK. In the late 1960s and 1970s, he captured images of the UK Black Panther movement and documented demonstrations and anti-racism protests across the country.

“Neil Kenlock helps us to better understand the story of London’s Black communities and to appreciate the huge artistic and cultural impact they have had on all our lives. He is a significant photographer whose work documents a key chapter in London’s post-war history.” — Mike Seaborne, former curator of photographs at the Museum of London.

About the exhibition

This exhibition unveils a collection of photographs by Neil Kenlock, capturing Black British individuals who migrated from their homelands and settled in the UK. Curated by his daughter Emelia Kenlock, the series explores the theme of ‘expectations’ and its enduring legacy, featuring African and Caribbean subjects who brought their skills, passions, and dreams—contributions that have profoundly shaped British culture today.

Reflecting on the work, Kenlock stated: “Over 50 years since the concept of ‘black excellence’ first manifested, and more than 70 years since the Windrush, I truly hope this exhibition will add to the national cultural narrative and resonate with new audiences.” 

The human cardiovascular system has adapted to function optimally in Earth's 1G gravity, and microgravity conditions cause myocardial abnormalities, including atrophy and dysfunction. However, the underlying mechanisms linking microgravity and cardiac anomalies are incompletely understood. In this study, we investigated whether and how calpain activation promotes myocardial abnormalities under simulated microgravity conditions. Simulated microgravity was induced by tail suspension in mice with cardiomyocyte-specific deletion of Capns1, which disrupts activity and stability of calpain-1 and calpain-2, and their WT littermates. Tail suspension time-dependently reduced cardiomyocyte size, heart weight, and myocardial function in WT mice, and these changes were accompanied by calpain activation, NADPH oxidase activation, and oxidative stress in heart tissues. The effects of tail suspension were attenuated by deletion of Capns1. Notably, the protective effects of Capns1 deletion were associated with the prevention of phosphorylation of Ser-345 on p47phox and attenuation of ERK1/2 and p38 activation in hearts of tail-suspended mice. Using a rotary cell culture system, we simulated microgravity in cultured neonatal mouse cardiomyocytes and observed decreased total protein/DNA ratio and induced calpain activation, phosphorylation of Ser-345 on p47phox, and activation of ERK1/2 and p38, all of which were prevented by calpain inhibitor-III. Furthermore, inhibition of ERK1/2 or p38 attenuated phosphorylation of Ser-345 on p47phox in cardiomyocytes under simulated microgravity. This study demonstrates for the first time that calpain promotes NADPH oxidase activation and myocardial abnormalities under microgravity by facilitating p47phox phosphorylation via ERK1/2 and p38 pathways. Thus, calpain inhibition may be an effective therapeutic approach to reduce microgravity-induced myocardial abnormalities.

The cystic fibrosis transmembrane conductance regulator (CFTR) is a plasma membrane anion channel that plays a key role in controlling transepithelial fluid movement. Excessive activation results in intestinal fluid loss during secretory diarrheas, whereas CFTR mutations underlie cystic fibrosis (CF). Anion permeability depends both on how well CFTR channels work (permeation/gating) and on how many are present at the membrane. Recently, treatments with two drug classes targeting CFTR—one boosting ion-channel function (potentiators) and the other increasing plasma membrane density (correctors)—have provided significant health benefits to CF patients. Here, we present an image-based fluorescence assay that can rapidly and simultaneously estimate both CFTR ion-channel function and the protein's proximity to the membrane. We monitor F508del-CFTR, the most common CF-causing variant, and confirm rescue by low temperature, CFTR-targeting drugs and second-site revertant mutation R1070W. In addition, we characterize a panel of 62 CF-causing mutations. Our measurements correlate well with published data (electrophysiology and biochemistry), further confirming validity of the assay. Finally, we profile effects of acute treatment with approved potentiator drug VX-770 on the rare-mutation panel. Mapping the potentiation profile on CFTR structures raises mechanistic hypotheses on drug action, suggesting that VX-770 might allow an open-channel conformation with an alternative arrangement of domain interfaces. The assay is a valuable tool for investigation of CFTR molecular mechanisms, allowing accurate inferences on gating/permeation. In addition, by providing a two-dimensional characterization of the CFTR protein, it could better inform development of single-drug and precision therapies addressing the root cause of CF disease.

Dilated cardiomyopathy (DCM) is associated with mutations in cardiomyocyte sarcomeric proteins, including α-tropomyosin. In conjunction with troponin, tropomyosin shifts to regulate actomyosin interactions. Tropomyosin molecules overlap via tropomyosin–tropomyosin head-to-tail associations, forming a continuous strand along the thin filament. These associations are critical for propagation of tropomyosin's reconfiguration along the thin filament and key for the cooperative switching between heart muscle contraction and relaxation. Here, we tested perturbations in tropomyosin structure, biochemistry, and function caused by the DCM-linked mutation, M8R, which is located at the overlap junction. Localized and nonlocalized structural effects of the mutation were found in tropomyosin that ultimately perturb its thin filament regulatory function. Comparison of mutant and WT α-tropomyosin was carried out using in vitro motility assays, CD, actin co-sedimentation, and molecular dynamics simulations. Regulated thin filament velocity measurements showed that the presence of M8R tropomyosin decreased calcium sensitivity and thin filament cooperativity. The co-sedimentation of actin and tropomyosin showed weakening of actin-mutant tropomyosin binding. The binding of troponin T's N terminus to the actin-mutant tropomyosin complex was also weakened. CD and molecular dynamics indicate that the M8R mutation disrupts the four-helix bundle at the head-to-tail junction, leading to weaker tropomyosin–tropomyosin binding and weaker tropomyosin–actin binding. Molecular dynamics revealed that altered end-to-end bond formation has effects extending toward the central region of the tropomyosin molecule, which alter the azimuthal position of tropomyosin, likely disrupting the mutant thin filament response to calcium. These results demonstrate that mutation-induced alterations in tropomyosin–thin filament interactions underlie the altered regulatory phenotype and ultimately the pathogenesis of DCM.

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.

In their comment (1) on our publication (2), the authors make two points: (i) they raise concerns about the possible effect of residual NONOate in our study, and (ii) they promote nitrosylcobalamin (NOCbl) supplied by their own company. Both points lack merit for the following reasons. The authors make the astonishing claim that the spectra of nitric oxide (NO•) and cobalamins overlap. Unlike NO•, cobalamin absorbs in the visible region, permitting unequivocal spectral assignment of NOCbl as reported (3). We demonstrated that whereas NOCbl is highly unstable in solution, it is stabilized by the B12 trafficking protein CblC. So even if present, residual NONOate (which is unstable at neutral pH and is removed during the work-up (3)) could not account for the observed difference.The authors then misrepresent our synthetic method, claiming that anaerobic conditions were used to generate nitrocobalamin (NO2Cbl), which results in the transient formation of NOCbl. We synthesized NO2Cbl aerobically using nitrite as described (4); NOCbl is not an intermediate in this ligand exchange reaction. The aerobic instability of NOCbl has been rigorously described by inorganic chemists (3, 5) and raises obvious questions about its purported biological effects as exemplified by the authors' own 2003 JBC publication, which was later withdrawn.As to promoting NOCbl from their company, the authors refer to a synthetic route from a mixture of NO• gas and aquocobalamin. The authors' method (6) has been described as “dubious” by chemists (5). Whereas DEAE NONOate used in our method is widely known as an NO• donor,...

After a thorough read of this paper (1), we wish to clarify that the authors' anaerobic method of synthesis for the production of nitrocobalamin results in the transient formation of nitrosylcobalamin, an unstable intermediate upon exposure to air. We concur that the authors' method results in the production of nitrocobalamin based on the UV-visible data as shown. The authors' adapted anaerobic method consists of mixing hydroxocobalamin hydrochloride with diethylamine NONOate diethylammonium salt in aqueous solution. Of concern, the UV spectrum of nitric oxide overlaps that of all cobalamin species under anaerobic conditions, making any assignments of the binding of nitric oxide to hydroxocobalamin suspect (2). Additionally, the use of acetone to precipitate the authors' product causes precipitation of diethylamine NONOate, resulting in an impure product. As a result, its utility for drawing experimental conclusions is faulty.The product from the authors' anaerobic synthetic method has not been assessed for purity, and the synthetic method itself has not been validated using a stability-indicating method as required by the International Conference on Harmonization (ICH) (ICH Q2B, Validation of Analytical Procedures) methodology, which is a hallmark for analytical characterization. Our nitrosylcobalamin synthesis involves reacting nitric oxide gas with hydroxocobalamin acetate as a heterogeneous mixture in a non-electron-donating solvent followed by rotary evaporation. Our nitrosylcobalamin product is stable in air, releases nitric oxide gas in situ (3), and meets ICH stability guidelines (4). Additionally, our nitrosylcobalamin product demonstrates biological activity, which has not been observed for nitrocobalamin (3, 5).

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.

Hdac3 is a lysine deacetylase that removes acetyl groups from histones and additional proteins. Although Hdac3 functions within mesenchymal lineage skeletal cells are defined, little is known about Hdac3 activities in bone-resorbing osteoclasts. In this study we conditionally deleted Hdac3 within Ctsk-expressing cells and examined the effects on bone modeling and osteoclast differentiation in mice. Hdac3 deficiency reduced femur and tibia periosteal circumference and increased cortical periosteal osteoclast number. Trabecular bone was likewise reduced and was accompanied by increased osteoclast number per trabecular bone surface. We previously showed that Hdac3 deacetylates the p65 subunit of the NF-κB transcriptional complex to decrease DNA-binding and transcriptional activity. Hdac3-deficient osteoclasts demonstrate increased K310 NF-κB acetylation and NF-κB transcriptional activity. Hdac3-deficient osteoclast lineage cells were hyper-responsive to RANKL and showed elevated ex vivo osteoclast number and size and enhanced bone resorption in pit formation assays. Osteoclast-directed Hdac3 deficiency decreased cortical and trabecular bone mass parameters, suggesting that Hdac3 regulates coupling of bone resorption and bone formation. We surveyed a panel of osteoclast-derived coupling factors and found that Hdac3 suppression diminished sphingosine-1-phosphate production. Osteoclast-derived sphingosine-1-phosphate acts in paracrine to promote bone mineralization. Mineralization of WT bone marrow stromal cells cultured with conditioned medium from Hdac3-deficient osteoclasts was markedly reduced. Expression of alkaline phosphatase, type 1a1 collagen, and osteocalcin was also suppressed, but no change in Runx2 expression was observed. Our results demonstrate that Hdac3 controls bone modeling by suppressing osteoclast lineage cell responsiveness to RANKL and coupling to bone formation.

The amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD)–linked RNA-binding protein called FUS (fused in sarcoma) has been implicated in several aspects of RNA regulation, including mRNA translation. The mechanism by which FUS affects the translation of polyribosomes has not been established. Here we show that FUS can associate with stalled polyribosomes and that this association is sensitive to mTOR (mammalian target of rapamycin) kinase activity. Specifically, we show that FUS association with polyribosomes is increased by Torin1 treatment or when cells are cultured in nutrient-deficient media, but not when cells are treated with rapamycin, the allosteric inhibitor of mTORC1. Moreover, we report that FUS is necessary for efficient stalling of translation because deficient cells are refractory to the inhibition of mTOR-dependent signaling by Torin1. We also show that ALS-linked FUS mutants R521G and P525L associate abundantly with polyribosomes and decrease global protein synthesis. Importantly, the inhibitory effect on translation by FUS is impaired by mutations that reduce its RNA-binding affinity. These findings demonstrate that FUS is an important RNA-binding protein that mediates translational repression through mTOR-dependent signaling and that ALS-linked FUS mutants can cause a toxic gain of function in the cytoplasm by repressing the translation of mRNA at polyribosomes.

The inositol 1,4,5-trisphosphate (IP3) receptors (IP3Rs), which form tetrameric channels, play pivotal roles in regulating the spatiotemporal patterns of intracellular calcium signals. Mutations in IP3Rs have been increasingly associated with many debilitating human diseases such as ataxia, Gillespie syndrome, and generalized anhidrosis. However, how these mutations affect IP3R function, and how the perturbation of as-sociated calcium signals contribute to the pathogenesis and severity of these diseases remains largely uncharacterized. Moreover, many of these diseases occur as the result of autosomal dominant inheritance, suggesting that WT and mutant subunits associate in heterotetrameric channels. How the in-corporation of different numbers of mutant subunits within the tetrameric channels affects its activities and results in different disease phenotypes is also unclear. In this report, we investigated representative disease-associated missense mutations to determine their effects on IP3R channel activity. Additionally, we designed concatenated IP3R constructs to create tetrameric channels with a predefined subunit composition to explore the functionality of heteromeric channels. Using calcium imaging techniques to assess IP3R channel function, we observed that all the mutations studied resulted in severely attenuated Ca2+ release when expressed as homotetramers. However, some heterotetramers retained varied degrees of function dependent on the composition of the tetramer. Our findings suggest that the effect of mutations depends on the location of the mutation in the IP3R structure, as well as on the stoichiometry of mutant subunits assembled within the tetrameric channel. These studies provide insight into the pathogenesis and penetrance of these devastating human diseases.

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.

Water, Ecosystems and Energy in South Asia: Making Cross-Border Collaboration Work Research paper sysadmin 29 June 2016

A new paper sets out the factors that have made previous cross-border projects in South Asia successful, arguing that cooperation around water is feasible despite the region’s political differences and economic assymetries.

• The countries of South Asia share some of the world’s major river basins – the Ganga (or Ganges), the Brahmaputra and the Indus. These rivers and their tributaries flow through seven countries, support more than 1 billion people, irrigate millions of hectares of land and are of cultural importance to many of those who rely on them.
• River management presents common challenges across the region. These include physical factors such as droughts, flooding, cyclones and climate change, as well political and institutional factors impeding the development of solutions and policies to improve resource management and reduce vulnerability. Water is increasingly seen as a source of competition, with population growth, industrialization and urbanization exacerbating the pressures on supply.
• Although South Asian examples of regional cooperation in general are limited, there is a clear positive trend. In areas such as disaster response and cross-border power trading, regional and bilateral engagement is beginning to take place. Multilateral official arrangements exist for trade and other economic issues, but there is none on water or ecosystems. However, as the benefits from cooperation become proven, its desirability is likely to gradually enter mainstream policy thinking on water issues.
• This research paper sets out the factors that have enabled cooperation, and the processes adopted, in previous successful cross-border projects. It focuses on four categories of cooperation: development of early-warning systems for natural disasters, in particular floods; protection of cross-border ecosystems; sharing of learning, through the showcasing of innovative approaches in one country that can be adopted by others; and power trading, in particular the development of hydropower in Bhutan and its export to India.
• The paper argues that cooperation around water in South Asia is feasible despite political differences and economic asymmetries. Different forms of collective action, and common understanding of both the threats and the shared benefits from cooperation, are required to foster more partnerships within the river basin states.

Brexit: Implications for EU–China Relations Research paper sysadmin 10 May 2017

For Beijing, the EU–China relationship will take priority over UK–China ties – with China’s relative focus on Germany becoming even more significant.

Summary

• The extent of current UK relations with China means that Brexit will notably reduce the scale and diversity of overall EU–China economic and commercial interactions. But the impact will vary across different areas.
• In policy terms, liberal voices on economic policy towards China will be somewhat weaker among the post-Brexit EU27. Brexit will not be the most important factor determining the future level of strategic coherence in EU policy towards China.
• The impact on post-Brexit EU27 trade with China will be felt both in the volume of trade and its composition. Following Brexit the EU will no longer be China’s largest trading partner.
• There will be some relative shift in Chinese investment in Europe away from the UK, though over time the impact of Europe-wide policy approaches to Chinese investment will have more impact than Brexit per se.
• EU–China educational exchanges will be weakened after Brexit, but inbound Chinese tourism will be less affected by Brexit.
• By 2025, the EU will have compensated for Brexit’s impact in some areas, but much depends on the EU’s own trajectory over the next decade.
• For Beijing, the EU–China relationship will take priority over UK–China ties. Within the EU, China’s relative focus on Germany will be even more significant.

A Digital India Must Embrace the Circular Economy Expert comment sysadmin 15 January 2018

A growing amount of e-waste should draw attention to the broader sustainability of a digital society.

The latest Global E-Waste Monitor places India as one of the highest contributors to global e-waste, generating over 2 million metric tonnes in 2016. Posing serious health and environmental risks, growing e-waste represents the hidden cost of increasingly digital lives in an information society.

With just 33 per cent of the population owning a smart phone, India already has the second largest number of smart phone users in the world, nearly 4 times that of the United States. The amount of e-waste generated will exponentially increase in the coming decade as the cost of consumer electronics decline, middle-class incomes rise, and the frequency at which devices are discarded increases.

As governance instruments are increasingly digitized and industry re-repositions itself to leverage Industry 4.0 solutions, the generation of e-waste will become a byproduct of institutional choices rather than consumer consumption and behaviour alone.

India is already a leader in the management and recycling of e-waste. But over 90 per cent is managed in the unorganized sector by small businesses and individual entrepreneurs, typically from low-income marginalized communities, and often women. E-waste contains various toxic substances such as mercury and lead, prolonged exposure to which can lead to major health problems.

Almost 80 per cent of e-waste workers in India suffer from respiratory ailments due to improper standards and nearly 500,000 children are engaged in e-waste collection without adequate protection and safeguards. The bulk of the dirty and dangerous work supporting India’s march towards an increasingly digital society is done by those who have the least access to technology gains. Government regulations for the management of e-waste, on the other hand, are becoming more relaxed, presumably as a result of industry pressure. To streamline e-waste management, the government notified Electronic Waste Rules in 2011, based on the concept of extended producer responsibility (EPR).

EPR makes manufacturers of electronic products responsible for the end-of-life management of their products, including setting up collection centres. By shifting the burden to manufacturers, the EPR framework, in theory, creates incentives for more environmentally friendly design. But the impact of EPR rules on manufacturers has been minimal, at best. The recently released Draft Notification (2017) by the Ministry of Environment, Forest and Climate Change further relaxes the EPR rule by reducing the e-waste collection targets for industries.

While the efficiency and productivity gains of Digital India are to be welcomed, growing e-waste should draw attention to the broader sustainability of a digital society. Data centres, for example, are one the largest contributors to global warming, contributing a similar amount to global greenhouse emissions as the aviation industry.

This amount is expected to triple in the next decade. In many ways, the sustainability challenge is a ‘wicked problem’ – where possible solutions create a new set of additional challenges and the choice between available alternatives is largely about competing values.

For example, data centres powered by renewable sources of energy such as solar provide a greener alternative, but will also create new forms of e-waste in the form of photovoltaic cells and panels. An unverified estimate suggests that India’s projected solar capacity of 100 gigawatts by 2022 will create 7.76 million tonnes of e-waste. Without adequate and preemptive consideration of how this waste should be disposed and recycled, renewable energy solutions can create new negative externalities.

For Digital India to be sustainable, we need to develop anticipatory knowledge for preemptive solutions. It is an opportune moment to think of the broader architecture of a digital society, one that avoids getting locked into unsustainable models of production and consumption, as is the case with many industrialized economies.

The argument that such considerations are premature for India, given high levels of poverty and unemployment, are misplaced. Enquiries into the sustainability of Digital India are no less urgent than the need for sustained job-creating economic growth. These issues should not be addressed in a sequential or linear manner, but in parallel, or else we will be only partially aware of available choices and their consequences, creating new forms of technological and economic lock-ins.

The value-based choice demanded by the ‘wicked problem’ at hand is one that embraces the idea of a circular economy — one that departs from the linear economic growth model predicated on ‘take, make, dispose’ to embrace a growth model based on creating closed loops of production, consumption and re-use. A circular economy model is built on the idea of designing out waste and pollution; keeping products and materials in use; and regenerating natural systems. In many ways, India is already a leader in the circular economy.

Alongside, the management of e-waste and other forms of recycling, high levels of repair and reuse are distinctly observable. A number of reports note that the informal waste management sector in India works better than systems in many industrialized economies.

A circular economy vision for Digital India would include organizing informal waste management systems, including safety and social protection initiatives for workers; revising and tightening existent e-waste rules for increased accountability by manufacturers both in terms of durable design and responsible disposal; green data centres; and building future smart cities with a view towards energy and water efficiency, among others.

A recent report by the Ellen McArthur Foundation and the World Economic Forum also estimates that a circular economy path to development could bring India annual benefits of $624 billion by 2050. Greenhouse gas emissions could also be 44 per cent lower in 2050, compared with current development path.

Unsurprisingly, Nordic countries are leading the way in promoting the idea of a circular economy. Sweden recently announced tax breaks for repair related activities and Finland hosted the first global conference on the circular economy earlier this year. The circular economy provides an opportunity for India to capitalize and leverage an already existing culture of circular activities, and promote it as a policy agenda that will create new forms of employment while facilitating sustainable environmental management.

This article was originally published in the Indian Express.

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.

What are the lasting impacts of the AUKUS agreement? Interview LJefferson 15 August 2022

Drawing on their International Affairs article, Jamal Barnes and Samuel Makinda outline the effect of AUKUS on Australia-France relations and the liberal order.

Almost a year after the surprise announcement of the AUKUS treaty, its full diplomatic implications are still being understood. The security cooperation agreement between Australia, the US and the UK caused outrage in France and was a notable source of discord between states that see themselves as defenders of the liberal international order.

In this interview Jamal Barnes and Samuel Makinda discuss their recent article in International Affairs and assess the effect of the agreement on relationships between its signatories and France and the EU, the potential for reconciliation in the treaty’s aftermath, as well as the implications it has for trust in world politics.  

What was the AUKUS treaty and why did Australia sign it?

The AUKUS treaty is an agreement between Australia, the US and the UK. Signed in 2021, it facilitates cooperation on security issues in the Indo-Pacific between the three countries – specifically, it concerns the sharing of ‘military capabilities and critical technologies, such as cyber, artificial intelligence, quantum technologies, and undersea domains’.

A key aspect is that Australia will purchase nuclear-fuelled submarines from either the US or UK. Australia decided to purchase nuclear-powered submarines – and reneged on its 2016 agreement to purchase French-built diesel-propelled submarines – because it believed that the French-made submarines were no longer fit for purpose.

However, the agreement is about more than submarines. Although Australia, the UK and US argue that AUKUS is designed to defend the rules-based international order and help ‘preserve security and stability in the Indo-Pacific’, AUKUS has been largely seen as a response to the rise of China and its military activities in the region. The AUKUS agreement reflects the increased attention that the US, UK and Australia are paying to the Indo-Pacific and their commitment to constraining China’s exercise of power in the region.

What were the effects of the AUKUS treaty on relations between Australia and France?

It led to a serious diplomatic rift. Australian officials, including former Prime Minister Morrison, had visited President Macron in France and told him nothing about AUKUS. Morrison had assured Macron in June 2021 while former Australian foreign and defence ministers had assured their French counterparts that Australia was fully committed to the purchase of French submarines just two weeks before the announcement of AUKUS.

When French officials found out about AUKUS on the day it was announced on 15 September 2021, they declared publicly that they had been betrayed and stabbed in the back. Not only had France built its relationship with Australia on trust, but its relationship was more than just about submarines. It was designed to be central to France’s 50-year engagement strategy in the Indo-Pacific. However, France was not only left out of talks but was also betrayed by a country it considered a close ally.

France responded by temporarily recalling its ambassador and stated that it would ‘redefine’ its relationship with Australia. It did not say that it would not work with Australia, but rather downgraded its relationship to one where it would only do so on a case-by-case basis.

In your article you mention that the AUKUS treaty was seen as a betrayal of trust by France in particular. Why use the word ‘betrayal’?

The word betrayal is accurate because Australia’s actions went beyond simply cancelling a business contract. Australia breached France’s trust. Not all agreements involve trust. Some are driven by self-interest while others are simply legal contracts. When these agreements are broken, the usual response is feelings of disappointment and a belief that one party is unreliable and has not lived up to its end of the agreement.

However, when diplomatic partnerships involve trust, they often contain an emotional element. A key element of trust is that one party makes itself vulnerable to another in the expectation that neither party will take advantage. When that trust is breached, the response is different from a breach of contract.

It involves feelings of betrayal as deeper emotional factors are involved. This could be seen in President Macron’s anger, and his and other French officials’ willingness to publicly call Prime Minister Morrison a liar who had stabbed France in the back. If the previous France-Australia agreement was simply a legal contract, it would have been difficult to explain the emotional element of this diplomatic fallout.

How did the signing of the AUKUS treaty affect wider relations between members of AUKUS and EU member states?

The EU, like France, felt betrayed by the AUKUS announcement. Despite being a key ally of the US, Australia, and the UK, it was left out of AUKUS discussions, and was not aware of the agreement until it was announced in the media.

What made this worse was that the EU was in the process of announcing its Indo-Pacific strategy, which was characterized as ‘maybe one of the [EU’s] most important geopolitical documents’ by High Representative for Foreign and Security Affairs, Josep Borrell. For the EU, this was the latest in a long line of recent policy betrayals that had left it uncertain if it could trust key allies on important issues. The result was greater calls from within the EU to more forcefully pursue ‘strategic autonomy’, meaning a more assertive and independent EU foreign policy.

Do betrayals of trust affect the health of the liberal international order?

Yes, they can. While it is common for leaders in liberal democracies to lie to their own people, lying to the leaders of other countries can have serious repercussions for the norms, rules and institutions of international society. A key aspect of international society is the ‘presumption of trust’ that facilitates legal compliance and diplomatic cooperation.

Without this presumption it is difficult for states to engage in long term partnerships or have confidence that diplomatic agreements will be upheld. In our article, we highlight how Australia’s violation of a particular norm, that agreements must be kept, has undermined this presumption of trust. This norm not only helps build trust between states, but also contributes to the maintenance of international order by helping to support the presumption of trust in international society.

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.

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.

Transatlantic Cooperation in the Indo-Pacific

This project aims to recommend ways for the US, UK and EU member-states to work together more effectively to achieve shared aims in the Indo-Pacific.

This project is Phase II of a wider research collaboration with the Royal United Services Institute: “An Evolving Transatlantic Agenda to Meet the Challenge of China in the Indo-Pacific”. The work is funded by the Carnegie Corporation of New York.

Through interviews with policymakers and workshops, the project will:

• Identify specific areas of policy convergence and divergence;
• Establish practical recommendations for how the US, UK and EU member-states can better align and coordinate their activities in the Indo-Pacific.

The project is led at Chatham House by the Asia-Pacific Programme, working with the Global Economy and Finance Programme and the Europe Programme.

The researchers are Ben Bland (project lead), Dr Yu Jie, Dr Gareth Price, Marianne Schneider-Petsinger, and Alice Billon-Galland.

The project builds on research from Phase I, a Transatlantic Dialogue on China, which explored how transatlantic partners are responding to China’s rise and its effects in the Indo-Pacific.

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.

State of the Union has lessons for transatlantic unity Expert comment NCapeling 8 February 2023

Analysing key foreign policy aspects of President Joe Biden’s annual address, and what it means for the upcoming Munich Security Conference and the year ahead.

Trade and economics are key areas to watch

Daniel W. Drezner

Russia’s absence from the Munich Security Conference will allow US and European policymakers to brag about their flourishing partnership. The past year has seen repeated predictions of a fracturing transatlantic relationship – only to see repeated agreement on how to sanction Russia and which arms to ship to Ukraine.

Putin invaded because he thought the West was divided. Events have proven him wrong. When one takes a step back, however, and examines the Biden administration’s embrace of geoeconomics, Putin’s assumption becomes easier to comprehend.

The strongest throughline between the Trump and Biden administrations has been their shared mindset on weaponized interdependence. Both administrations have been wary of US interdependence with an increasingly autocratic China.

The primary difference has been that, while the Trump administration talked a good game, the Biden administration has passed laws and issued executive orders making the pivot away from trade liberalization a reality.

The passage of the CHIPS and Science Act, Bipartisan Infrastructure Law, and the Inflation Reduction Act (IRA) amount to the most ambitious US attempt at industrial policy in decades, accompanied by multiple executive orders examining US supply chain resilience and imposing unprecedented export controls targeting China.

The Biden administration’s restrictions on exchange with China’s semiconductors includes the use of the ‘foreign direct product rule’, essentially a means of applying US export controls in an extraterritorial manner.

The Biden administration’s angry response to the WTO panel ruling against US steel and aluminum tariffs makes it clear the US will apply an expanded definition of national security to restrict trade. In many ways, the sanctions on Russia are a continuation of a US foreign economic policy grounded in geoeconomics.

Several of these measures have rankled European officials. The IRA massively subsidizes the North American production of environmentally-friendly cars, discriminating against European producers. And continued US hostility to the WTO leaves European officials wondering if they are the last bastion of multilateralism left in the world. In Washington and Davos last month, European policymakers made their displeasure clear.

The sanctions against Russia and export controls against China threaten to be additional sore subjects. During the strategic embargo of the Soviet Union, US officials wanted to maximize restrictions while European allies wanted more trade opportunities. Since then, Europeans have suspected that the US uses multilateral export controls regimes to advance its commercial interests, while Americans worry Europe underestimates the risks of business-as-usual with China.

The Biden administration has tried to finesse these trade tensions, and was successful at persuading the Netherlands to join the US in the export controls on China. More generally, Biden officials talk about ‘friendshoring’ and propose mechanisms for greater policy coordination, such as the US-EU Trade and Technology Council. But even in these gestures, US officials have taken greater market access off the table.

In the State of the Union address, Biden bragged about how the US ‘came together to defend a stronger and safer Europe’ as well as defending his ‘buy American’ plans and pledging to make sure the ‘supply chain for America begins in America’. At the upcoming Munich Security Conference, attention should be on how much officials talk about trade and economic issues. The more that topic comes up, the clearer it will be that both sides are subtweeting each other about the future of the transatlantic economic relationship.

Division on China now would bring a high price

Dr Leslie Vinjamuri

President Biden has made unity his guiding principle and chief objective, but it is a tall order. His State of the Union address touted past bipartisan backing for investments in infrastructure, climate-friendly technologies, and semiconductor chips, along with a focus on creating jobs for working-class Americans, especially in manufacturing.

Little was said that was explicitly about China, but the Biden administration has said that China is its pacing challenge, and competing with China has shaped the ambition behind these legislative successes.

In fact, the hallmark of the address was its foreign policy minimalism. Biden hailed unity in the US defence of democracy in Ukraine in the face of Russia’s aggression. And in defending US sovereignty in the face of China’s violations, this time with a balloon.

But the presidents temporary minimalism on foreign policy will be short-lived. And unity with America’s partners and allies will continue to be at the centre of Biden’s strategy. In the past 12 months, it is the yardstick by which he has measured America’s success with respect to Ukraine.

Russia’s invasion of Ukraine has so far served as a lubricant for the NATO alliance, and for the US relationship with its non-NATO allies.

This has not automatically sprung from the well of Russia’s aggression. NATO’s success, and transatlantic unity, has been achieved through the sheer force of diplomatic effort, not least by the US.

Now Biden is looking for unity on China. His administration has identified China as its pacing threat. While Ukraine will continue to demand and deserve attention, the US will be looking beyond the urgent to focus on other less urgent but crucially important challenges. That means China.

China’s balloon helps ensure unity will be an easy victory at home. For several days, the balloon floated across the US, captivating the American public, seizing the headlines, and hardening US attitudes towards its only peer competitor.

Republican leaders in Congress are determined to scrutinize US policy to ensure it is tough on China, especially on technology and deterrence. This intense domestic focus on China could put Biden in a bind as he seeks to resume diplomacy. It also explains why he was careful not to inflate the China threat in his address. Secretary Blinken’s visit to Beijing has already been postponed.

As the Munich Security Conference approaches, the president’s unity agenda will turn to Europe, but the timing is difficult. China is opening and a charm offensive across Europe is likely. Europe is vulnerable as it seeks to recover its economies, continue to hold Russia back, and inhibit greater alignment between Russia and China.

The risk for the US is that domestic pressure to take a harder line on China escalates and Europe refuses to keep up. But dividing on China would come at a high price, both for Europe and the US, so to avoid this, they should take a pragmatic and sequenced approach to cooperation.

The goal for now should be policy coordination, as success is vital to momentum and managing expectations in the current environment is critical. Alignment may be possible with discrete partners on specific topics. But the perfect should not be the enemy of the good.

The US has postponed, not cancelled, Blinken’s trip while Europe is preparing to ramp up its diplomacy with China. A collective but temporary and shared transatlantic pause on diplomacy would offer low hanging fruit to give momentum to transatlantic cooperation.

It would also signal to China a unity that has a power of its own. A clear and coordinated signal, soon, that Europe and the US are moving forward with diplomacy is essential.

Munich can move the talk into action on Ukraine

James Nixey

Russia’s excommunication from this year’s Munich Security Conference is an opportunity. The principle of inclusivity may have pros and cons, but the cons have been evident since at least 2007 – its use as a platform for Russia’s leadership to launch broadsides about ‘western injustice’ and a reflexive default to increasingly inappropriate and harmful diplomatic courtesies and allowances.

Without the distraction of listening to Russian lies, there is at least now the remote possibility of a more unified West agreeing to specific action beyond the talk. As at the recent Ramstein talks, it is unlikely Munich will result in an agreement to send F-16 fighter jets to Ukraine. That may prove a step too far for the West or it will need further Russian atrocities inflicted upon Ukrainians on a scale horrendous enough to prick consciences once again.

However, although President Biden’s State of the Union address has promised nothing new or innovative regarding Ukraine or Russia, it did re-establish the fundamentals of US support and so can serve as a ‘pre-read’ for a newfound resolve.

Although some European countries are a lost cause, others – Germany for example – have proved able to be guilted into action. The key lesson for everyone to understand is that Ukraine is sovereign. Or at least ‘nothing about Ukraine, without Ukraine’. The difference is moot but, from these simple precepts, all else flows.

Ukrainians will be their impassioned selves at Munich. But although publicly gracious and thankful, privately they are distraught at the West’s collective failure to affirm these principles and back them with the necessary support, not just to force a stalemate or a ‘frozen conflict’ but to engineer victory.

Most Ukrainian officials would privately argue that the danger to their country comes more from the West and forums such as the Munich Security Conference than it does from Russia, which can be defeated with the requisite tangible assistance. In Munich, beyond fine words of support – watertight from some, ambiguous from others – there lurks the ever-present danger of the politician who simply wants it all to go away by offering Putin an off-ramp.

The irony of the host city of this forum is that many times over the past year compromise ‘solutions’ have been described as having ‘a whiff of Munich’ about them – a reference of course to appeasement in 1938, which still haunts.

As it should, because the failure to ensure Ukraine’s victory with an outcome the Ukrainian government and people are content with and which convinces Russia it was a disastrous mistake to escalate, will lead to a global security collapse too catastrophic to contemplate.

Middle East security challenges must be dealt with

Dr Sanam Vakil

A trifecta of security concerns – Iran’s advancing nuclear programme, the export of unmanned aerial vehicles (UAVs) to support Russia in the war in Ukraine, and a heavy-handed response towards protests in Iran – has raised alarm bells in Washington, Europe and the UK. These intersecting challenges lay bare the lack of a broader Iran strategy and the deprioritization of Middle East security among transatlantic partners.

This downgrading of the Middle East was evident in President Biden’s State of the Union speech as, for the first time in decades, the region was not even mentioned. The upcoming Munich Security conference provides a much needed opportunity for the transatlantic community to align on next steps and multilateral policy responses.

Transatlantic partners have long relied on the prism of the JCPOA negotiations as the pathway to both separate and manage nuclear tensions from broader regional challenges associated with Iran’s export of lethal aid and sponsorship of proxy groups.

Despite repeated negotiation efforts led by the Biden administration since April 2021, the JCPOA has languished due to Tehran’s fears over another US retreat. The promise of sanctions relief has also failed to incentivise Iran’s return to the deal. Tehran’s nuclear programme has accelerated without the consistent IAEA oversight which was part of the initial deal and is now at a level where it can produce enough uranium enrichment for four nuclear weapons.

Tehran’s decision to send drones to support Moscow’s war effort has further elevated transatlantic concerns, and reports have circulated that Tehran may also export its missile capabilities and build a drone factory in Russia. In tandem, the two sanctioned states have begun to strengthen their economic arrangements.

Europe's response to the US Inflation Reduction Act 27 March 2023 — 2:00PM TO 3:15PM Anonymous (not verified) 9 March 2023 Chatham House and Online

This event explores the implications of the US Inflation Reduction Act, how Europe can respond and what options the UK has.

While the US Inflation Reduction Act (IRA) has led to an outcry in the EU, member states have different concerns and preferences for how to respond. The European Commission’s proposed ‘Green Deal Industrial Plan’ includes the relaxation of state aid rules to drive funding. But will this lead to a ‘subsidies race’ between the US and EU and is a ‘green trade war’ brewing?  
 
The UK’s response to the IRA has been much more muted than the EU’s. But caught between US subsidies and EU subsidies, can the UK compete and create an independent response to the IRA? And what steps can be taken to facilitate global cooperation and to make trade work for the green transition?

Dr Martin Porter, Executive Chair at the Cambridge Institute for Sustainability Leadership, will kick off the discussion with short remarks followed by an interactive discussion among all participants

This discussion is part of the Chatham House Global Trade Policy Forum. We would like to take this opportunity to thank our founding partner and supporting partners for their generous support of the forum.  

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? 

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