Xi Jinping prepares the Communist party for new reality Expert comment NCapeling 20 October 2022

Political report reflects a worsened economic and diplomatic position as Xi knows his unprecedented third term as leader will be judged on results.

In stark contrast to the aura of triumphant glory that greeted Xi Jinping at the last National Congress of the Chinese Communist Party in 2017, this week’s convocation opened with an air of sobriety.

Amid a domestic economic downturn and a return to enmity with Western liberal democracies, Xi offered his own recipe for party legitimacy and the country’s economic survival in the lengthy executive summary of his political report to the CCP congress. The prime keyword was security, with some 73 mentions, underscored with a message of self-reliance.

The periodic report acts as a summary of the party’s achievements and of its future plans, with both expressed as the lowest common denominator of consensus between competing voices in the CCP. It thus typically sheds some light on relationships among senior party members and insights into the political fortunes of important intraparty groups.

Most portions of the new report combined Xi’s personal preferences with concessions to the reality of what is necessary for China’s economic survival. Both ends point to an urgent prioritization of economic and political self-reliance for Xi’s third term as party general secretary.

Holistic concept of security

On the domestic front, much emphasis was given to enhancing national security and promoting equitable growth.

Since even before COVID-19, Xi has advocated a holistic conceptualization of security that includes food, the internet, energy and manpower. Reflecting Beijing’s deep anxieties about high-tech development and its frustrations with dependence on overseas suppliers vulnerable to the vagaries of geopolitical tensions, the political report noted the need for China’s supply chains to become more “self-determined and self-controlled.”

Xi, though, went further to stress the importance of improving scientific education and grooming and attracting the necessary talent to accelerate China’s quest to achieve breakthroughs in semiconductor production and overcome development choke points created by Western technological monopolies.

As China has traditionally relied on connectivity with the rest of the world to support innovation and attract talent, a turn toward autarky is not a viable option, given Xi’s technological priorities. Yet the renewed mention of his ‘dual circulation’ strategy in the report signals that Beijing is indeed turning to domestic consumption and homegrown technological prowess as the means to provide the rising wealth that the Chinese people have come to expect from the Communist Party.

Worsening Sino-US relations and tightening access to overseas markets for Chinese companies have prompted party leaders not only to reconsider the country’s sources of economic growth but have also forced them to reconfigure their approach to foreign affairs.

Judging by his report summary, Xi has completely abandoned the ‘new type of great power relations’ concept used repeatedly in the last two editions of his congressional update to refer to his preferred approach to relations with the US-led West.

The omission shows that Beijing has concluded that its fraught relationship with advanced developed nations is here to stay, with little prospect of improvement soon. To this end, China needs to prepare for the worst of decoupling and become more self-reliant in terms of markets and technologies.

In place of the discarded concept, Xi stressed that China should further develop its ties with the global South through the Global Development Initiative and the Global Security Initiative he announced earlier this year. These efforts aim to reshape the global governance agenda in multilateral forums and to project Beijing’s influence on the developing world.

Meanwhile, the party’s latest official rhetoric about the Belt and Road Initiative shows it is no longer a one-size-fits-all slogan but on its way to becoming a genuine tool of trade and investment promotion with China’s near neighbors but with provincial governments taking the lead rather than Beijing.

With the central government grappling with the country’s domestic economic woes, its spending spree on development assistance has had to come to an end. The new political report clearly signals this change.

A modern socialist society is still the aim

The current economic downturn and dangerous geopolitical tensions have not dented the CCP’s ambitions to build a modern socialist society by 2035 and thus join the world’s club of upper middle-income countries, but this is easier said than done.

Climate justice with Chinese characteristics? Expert comment NCapeling 7 November 2022

China’s latest grand concept, the Global Development Initiative (GDI), claims to be making sustainability a key feature of the programme.

Since joining the World Trade Organization (WTO) in 2001, China has regularly unveiled a grand new strategic concept every four years or so.

Each has been deeply rooted in the Chinese political system and communicated via ambitious slogans, such as A Harmonious World, or New Types of Great Power Relations. And all have reliably generated both excitement and confusion abroad and within China.

China’s latest grand concept, the Global Development Initiative (GDI), is no exception. When Chinese president Xi Jinping introduced it at the United Nations General Assembly (UNGA) in September 2021, it made hardly any splash in the West, perhaps because China has already signalled its determination to shape international development in the post-COVID era.

But the GDI is more than just a new label for an ongoing project. One of its core political functions is to deflect some of the fierce criticism directed at its older sibling, the gigantic Belt and Road Initiative (BRI), which has a tarnished reputation for being neither transparent nor sufficiently ‘green’.

Focus on grants and capacity-building

According to the Chinese government’s initial description of the GDI, sustainability is a key feature of the programme. Unlike the BRI, the GDI will focus less on physical infrastructure projects – such as roads, bridges, digital networks, and coal-fired power plants – and more on sustainable-development grants and capacity-building.

In his remarks about GDI in 2021, Xi placed special emphasis on advancing the UN Sustainable Development Goals (SDGs) and helping developing countries manage the transition to a low-carbon economy.

On paper, then, the GDI appears a laudable initiative. While ongoing geopolitical tensions have deepened divisions between China and the US, derailing collaboration on combatting climate change, China at least is adjusting its diplomacy and aid programmes to position itself as a more attractive partner for those seeking climate security.

Since launching the GDI, it has already created the China-Pacific Island Countries Climate Action Cooperation Centre to help some of the world’s most vulnerable countries mitigate the damage from climate change.

But the GDI is still very much in line with China’s past grand initiatives. Its implementation is opaque and there is considerable flexibility in how it will deliver projects and offer grants. This approach is well understood and frequently practiced by Chinese political elites, following Deng Xiaoping’s famous reform ethos of ‘crossing the river by feeling the stones’.

Xi has clearly adopted this approach in introducing the GDI. But whereas Deng was steering China’s domestic economy during a period of isolation after the Cultural Revolution, Xi needs to involve many other countries in his vision. That will not be easy now that Russia’s war in Ukraine and other recent developments have complicated many of China’s international relationships.

China’s leaders recognize the BRI was not warmly received in global development circles, owing partly to its role in increasing both climate and financial risks. In implementing the GDI, they need to rethink some basic assumptions. Although gigantic infrastructure investments drove China’s own economic miracle, the same approach is not necessarily applicable everywhere.

Nor should China’s development aid be relentlessly used to seek diplomatic endorsement from other countries. Instead, producing a clear, concrete action plan with specific regional and thematic points of focus would enhance the GDI’s clarity and credibility.

Consider Xi’s recent pledge to add $1 billion to the $3.1 billion South-South Cooperation Assistance Fund, which will be renamed the Global Development and South-South Cooperation Fund. If China is serious about the GDI’s green credentials, this money should go towards supporting the clean-energy transition in response to the current oil and gas price crunch.

But the GDI’s success ultimately depends on how China deploys not just financial but political capital. It needs to show it can cooperate constructively with countries in the ‘GDI Friends Group’ launched at the UN in January 2022.

For many group members, the pandemic showed that existing development assistance programs urgently need to be updated to account for their recipients’ specific interests and priorities. After years of hollow diplomatic rhetoric, there is a craving for more meaningful assistance to help countries build resilience against climate-driven natural disasters and other growing threats.

China could help meet this demand, but it also will need to manage expectations. Many in the Global South assume a grand-concept policy such as the GDI will be meticulously planned from within Xi’s cabinet and thus executed to deliver large-scale, rapid results. But the GDI will require broad coordination across a wide range of ministries, agencies, and state-owned banks.

One party but not one voice

China may be ruled by one party, but that doesn’t mean its central administration system can always speak with one voice in supporting sustainable development abroad.

Since launching the BRI in 2013, China has showered the Global South with hundreds of billions of dollars in physical infrastructure investment. With the global climate debate increasingly focusing on the need to mobilize international financing for climate mitigation and adaptation in low and middle-income countries, many will be looking to both China and the advanced economies to provide the necessary support.

Russia and China in Antarctica: Implications for the Five Eyes 15 December 2022 — 11:00AM TO 12:00PM Anonymous (not verified) 2 December 2022 Online

This event explores Russia’s and China’s postions on the Antarctic and offers a critical assessment of their actions in the region.

Ever since the 1959 Antarctic Treaty System (ATS), signed at the height of Cold War, Antarctica has remained a demilitarized continent.

Today, even though the ATS is not in immediate danger of collapse, Antarctica and the Southern Ocean are no longer insulated from wider geopolitical tension, with China and Russia posing challenges to regional governance. 
 
This event also discusses key recommendations for the Five Eyes regarding Russian and Chinese current and future efforts at undermining the ATS and Antarctic governance. 

The discussion is informed by Mathieu Boulègue’s paper ‘Russia and China in Antarctica and the Southern Ocean: Implications for the Five Eyes’ published by the Sea Power Centre of the Royal Australian Navy.

Beijing briefing: China aims for tech self-reliance The World Today mhiggins.drupal 28 March 2023

Xi Jinping’s new appointments are tasked with a technology led recovery, but they face a daunting task to restore growth, writes Yu Jie.

The three-day state visit to Moscow by President Xi Jinping in March may have eclipsed the National People’s Congress in Beijing a fortnight earlier, but as Xi seeks to establish a new global order with China at its centre, the political events in the Great Hall of People provide an important insight into the country’s longer-term economic plans.

While a new cohort of cabinet members was appointed to sit on the State Council for the next five years, much of the attention remains on China’s economic stimulus plan to enable a rapid post-Covid recovery, as well as proposals to restructure central government.

Mountainous task

Three aspects of this year’s Congress deserve deeper scrutiny: Li Qiang’s confirmation as premier to succeed Li Keqiang’s decade-long subdued tenure under Xi; the extent to which Xi’s new cabinet sheds light on China’s economic and scientific self-reliance; and the unveiling of a major restructuring of central government administration in sectors such as finance and science.

China’s new premier initially faces the mountainous task of restoring growth and market confidence. During a press conference much shorter than his predecessor would hold, Li Qiang praised China’s private business sector and repeated the words ‘China remains open to foreign business’ to address the growing anxieties among foreigners and Chinese private entrepreneurs.

Beside the daunting task of economic recovery, Li Qiang faces another big challenge. Unlike his predecessors, he has never worked as a vice premier and overseen ministries under the State Council. The test for him will be to pursue a sound economic recovery plan while coordinating numerous central government agencies. He will also need to regulate relations among provincial heads who have a tendency to argue endlessly over the distribution of public finances.

Even though Xi is secure in his third term, his involvement in shaping and implementing macro-economic policies is keenly felt. Li Qiang made explicit the State Council under his leadership will be the chief implementor of all policies approved by the president. This is a less equal working partnership with Xi than his predecessors on the State Council enjoyed in the past.

Beijing published its official plan to restructure its central government administration announcing planned cuts of 5 per cent of its civil service. The newly established Central Commission on Finance intends to deal with systemic financial risks and to coordinate the financial regulatory bodies, central bank and Ministry of Finance. This is seen to reflect the Chinese leadership’s growing concern with the poor performance of local government loans and debt as well of the volatility of the property market, all of which threaten huge uncertainty for the economy.

As well as reorganizing the financial sector, Xi’s intention to pursue an integrated national strategy combining economic and scientific self-reliance has led to significant appointments following the Congress. As a starter, a new Central Commission for Science under the party leadership has been established. This commission will focus on providing a renewed impetus to accelerate China’s drive to achieve ‘scientific reliance’ and to ease the choke points in the economy, such as the supply chain for semiconductors.

It remains unclear who will head this new commission or who will be on it, however, as scant detail has been made public. It is seen as a direct response to the tough measures adopted by the United States designed to dent China’s ambitions of technology supremacy.

Departure from the past

New appointees to the Politburo come with substantial backgrounds in science as well as a solid track record of running state-owned enterprises. This is a departure from the past.

Instead of inserting financial specialists, Xi appointed two scientists, Liu Guozhong and Zhang Guoqing, as the vice premiers overseeing science, education and industrial policies. This signals that Xi intends to prioritize science and innovation during his third term. The appointment of technocrats to the State Council is seen as a move to strengthen innovation and prepare the Chinese economy, political system and society for potential external shocks.

An important mechanism of resistance to β-lactam antibiotics is via their β-lactamase–catalyzed hydrolysis. Recent work has shown that, in addition to the established hydrolysis products, the reaction of the class D nucleophilic serine β-lactamases (SBLs) with carbapenems also produces β-lactones. We report studies on the factors determining β-lactone formation by class D SBLs. We show that variations in hydrophobic residues at the active site of class D SBLs (i.e. Trp105, Val120, and Leu158, using OXA-48 numbering) impact on the relative levels of β-lactones and hydrolysis products formed. Some variants, i.e. the OXA-48 V120L and OXA-23 V128L variants, catalyze increased β-lactone formation compared with the WT enzymes. The results of kinetic and product studies reveal that variations of residues other than those directly involved in catalysis, including those arising from clinically observed mutations, can alter the reaction outcome of class D SBL catalysis. NMR studies show that some class D SBL variants catalyze formation of β-lactones from all clinically relevant carbapenems regardless of the presence or absence of a 1β-methyl substituent. Analysis of reported crystal structures for carbapenem-derived acyl-enzyme complexes reveals preferred conformations for hydrolysis and β-lactone formation. The observation of increased β-lactone formation by class D SBL variants, including the clinically observed carbapenemase OXA-48 V120L, supports the proposal that class D SBL-catalyzed rearrangement of β-lactams to β-lactones is important as a resistance mechanism.

The QT interval is a recording of cardiac electrical activity. Previous genome-wide association studies identified genetic variants that modify the QT interval upstream of LITAF (lipopolysaccharide-induced tumor necrosis factor-α factor), a protein encoding a regulator of endosomal trafficking. However, it was not clear how LITAF might impact cardiac excitation. We investigated the effect of LITAF on the voltage-gated sodium channel Nav1.5, which is critical for cardiac depolarization. We show that overexpressed LITAF resulted in a significant increase in the density of Nav1.5-generated voltage-gated sodium current INa and Nav1.5 surface protein levels in rabbit cardiomyocytes and in HEK cells stably expressing Nav1.5. Proximity ligation assays showed co-localization of endogenous LITAF and Nav1.5 in cardiomyocytes, whereas co-immunoprecipitations confirmed they are in the same complex when overexpressed in HEK cells. In vitro data suggest that LITAF interacts with the ubiquitin ligase NEDD4-2, a regulator of Nav1.5. LITAF overexpression down-regulated NEDD4-2 in cardiomyocytes and HEK cells. In HEK cells, LITAF increased ubiquitination and proteasomal degradation of co-expressed NEDD4-2 and significantly blunted the negative effect of NEDD4-2 on INa. We conclude that LITAF controls cardiac excitability by promoting degradation of NEDD4-2, which is essential for removal of surface Nav1.5. LITAF-knockout zebrafish showed increased variation in and a nonsignificant 15% prolongation of action potential duration. Computer simulations using a rabbit-cardiomyocyte model demonstrated that changes in Ca2+ and Na+ homeostasis are responsible for the surprisingly modest action potential duration shortening. These computational data thus corroborate findings from several genome-wide association studies that associated LITAF with QT interval variation.

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?

In conversation with David Miliband: Finding a new approach to tackle conflict, climate and extreme poverty 11 September 2024 — 5:00PM TO 5:45PM Anonymous (not verified) 15 August 2024 Chatham House and Online

David Miliband discusses how the climate crisis, extreme poverty and conflict are becoming inextricably linked and how the global community must respond.

Combatting the climate crisis, ending protracted conflicts, and alleviating poverty are three of the greatest priorities for international action. However, these three challenges become increasingly concentrated in a handful of countries. The subsequent feedback loop makes addressing these challenges even more complex.

The International Rescue Committee’s (IRC’s) work in crisis-affected communities highlights this new geography of crisis. Just 16 countries, which are both climate-vulnerable and conflict-affected. This represents 43% of all people living in extreme poverty, 44% of all people affected by natural disasters and 79% of all people in humanitarian need. This trend towards the concentration of crisis is only deepening. In three decades, the number of conflict-affected, climate-vulnerable states has increased from 44% to more than two-thirds.

Affected countries - like Sudan, Myanmar, and Syria - are also among the least supported financially. Debt burdens are siphoning away critical resources needed for adaptation and resilience. Humanitarian aid budgets are being slashed by donor governments. The private sector refuses to invest in these communities they view as too risky. And the international financial institutions meant to alleviate poverty and spur climate action are not well-designed to work with crisis-affected states or local communities. With the upcoming COP29 Summit in Azerbaijan focused on the New Collective Quantified Goal for climate finance, vulnerable communities will be watching closely whether they will get support in their fight against the worst impacts of the climate crisis.

Conflict, the climate crisis, and extreme poverty are taking their toll. But how can the world best respond?

Key questions to be discussed during the session include:

• At a time of political disruption, how does the West engage with vulnerable countries? What actions should be prioritised in providing support to such countries?
• Can global institutions evolve to better protect vulnerable and displaced people from conflict and climate-risk, particularly as geopolitical rivalries reduce space for cooperation?
• What is the UK’s role in supporting climate action in fragile states and how does this align with its agenda on the Sustainable Development Goals and extreme poverty?

Sustainability Accelerator Summer Drinks 2024 6 September 2024 — 5:30PM TO 7:30PM Anonymous (not verified) 19 August 2024 Chatham House

Join us for the Sustainability Accelerator’s annual summer drinks reception.

This event brings together a diverse group of thinkers and changemakers from our network, as well as our collaboration partners, to reflect on our successes over the past year and give an opportunity to meet new people.

The reception will follow the Sustainability Accelerator’s annual UnConference, but is a separate event. Unless you have received confirmation of your place at UnConference, you must register for the summer drinks reception via this webpage to secure your place.

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. 

Director’s Briefing: Assessing foreign policy challenges for the next US president 5 September 2024 — 2:00PM TO 3:00PM Anonymous (not verified) 27 August 2024 Chatham House and Online

This briefing will explore what challenges might await the winner of 2024 US presidential election.

As the 2024 US Presidential election draws closer, the future direction of American foreign policy seems ever more uncertain. Kamala Harris, the Democratic presidential candidate, appears to be embracing many of Biden’s policies, but she brings a different background, and most likely a different team, so change is likely.  Donald Trump has more well-known views on foreign policy, but the context for a second Trump administration would be very different than the first.

The next U.S. President will be confronted a world in need of leadership with two major wars, a more assertive and capable China, a climate crisis, ungoverned technological change, emerging powers that demand a seat at the table, and debt distress across much of the developing world.

Please join us for this critical conversation covering:

• How will US-China strategic competition and the threat of conflict over Taiwan challenge US policy makers?
• What are the risks and challenges posed by Russia’s illegal full-scale invasion of Ukraine?
• How does war in the Middle East and the threat of regional escalation shape US foreign policy?

How can young people in MENA thrive despite economic and political insecurity? 24 September 2024 — 2:00PM TO 3:00PM Anonymous (not verified) 30 August 2024 Online

Experts share insights on how young people navigate challenges and find opportunities in a changing domestic and regional landscape.

Across the Middle East and North Africa young people between the ages of 15 and 29 comprise around 24 per cent of the population in the region. As the complex regional geopolitical developments unfold, the majority of these young people are living in a time of economic and political insecurity, with many, such as Iraqis and Libyans, also growing up during conflict and uncertainty.

Enhanced education and employment programs are key opportunities for development and stability in the region. Despite this, limited resources and competing priorities have meant that governments often struggle to deliver competitive educational and employment opportunities and lack the capacity and funding for education reform and active labour market policy development. Key tensions that pit modernity and autonomy against tradition and control continue to frame the education and skills development landscape.

This webinar will address:

• The challenges young people within the MENA region face in different contexts;
• The role education and employment play in developing skills for 21st century challenges;
• Spaces for young people to practice citizenship and participate in political processes;
• Youth’s economic prospects while navigating the tumultuous backdrop of enduring conflict and authoritarianism. 

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.

Fostering inclusive health systems amidst geopolitical instability 13 October 2024 — 9:00AM TO 10:00AM Anonymous (not verified) 11 September 2024 Sheraton Berlin Grand Hotel Esplanade

How can we build trust and inclusivity in the health sector in a fractured geopolitical environment?

Building trust in government, service provision and delivery are crucial considerations for policymakers who aim to make local, national and international health systems more inclusive. In the health space, trust can be a matter of life and death. Understanding and modulating policies that account for the trust factor, alongside the geopolitical determinants of health, can lead to more inclusive decision making and thus better health outcomes for larger proportions of a population.

International unity is key to addressing the challenges posed by geopolitical instability, which include disinformation campaigns, rising nationalism and growing divisions between states. If countries can find common ground through an inclusive approach to health, the effects could be transformative in achieving global health and equity targets.

This discussion, held in partnership with Haleon, will examine what it takes to foster trust and resilience in the health sector, achieve global inclusivity aims and chart a path for the public and private spheres to come together to navigate a fractured geopolitical environment.

• In what ways can localised health inclusivity data help policymakers to alleviate gaps in healthcare provision and why is this an essential element in instilling trust across the system?
• What role should multilateral organizations play in setting precedents for health inclusivity around the world?
• How do health inclusivity policies empower the service user and help reduce the burden placed on public healthcare systems?
• How can the health sector come together to ensure individuals are included within their own health decisions, are able to access services regardless of demographics and geography and trust their healthcare providers?

This event will be held at the Sheraton Hotel, Grand Esplanade, Berlin in the margins of the World Health Summit. You do not need a ticket for the World Health Summit to attend this event.

In conversation with Martin Griffiths: How can a divided world address conflict? 1 October 2024 — 10:00AM TO 11:00AM Anonymous (not verified) 16 September 2024 Chatham House and Online

The former United Nations Under-Secretary-General describes how a weakening multilateralism system and dysfunctional political diplomacy can be revitalized by a humanitarian approach.

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?

Business Briefing: US election geopolitical and economic risk scenarios 10 October 2024 — 11:45AM TO 1:00PM Anonymous (not verified) 23 September 2024 Chatham House

Please join us for this critical discussion of the US Election related global business risks.

The outcome of the US presidential election will have significant, intersecting implications for global as well as American business. At stake will be the degree of continuity and stability on both the domestic and international fronts, with a Harris presidency pursuing policies building broadly on the Biden Administration and a second Trump Administration departing sharply from them—with both shaped and limited by control of Congress.

An already volatile geopolitical environment and global economy may become even more unpredictable in the face of potential American political instability and uncertain leadership in the international community.

Please join us for this critical session to discuss:

• How might trade policy differ between a Harris and Trump presidency? Will national security pressures, especially over China, lead to greater policy commonalities than expected?

• What might differing approaches to decarbonization and the energy transition mean for the future of policy toward EVs, critical mineral supply chains, and ‘green’ industrial subsidy?

• How might each Administration approach fiscal policy? Will either push for a tightening to the current loose policy—and what may be implications for US debt and the dollar?

• What economic effects can we expect in the case of a disputed election result or non-peaceful transfer of power—and will Corporate America be compelled to make public statements?

What are MENA countries’ priorities for climate action and COP? 24 October 2024 — 1:00PM TO 2:00PM Anonymous (not verified) 2 October 2024 Online

Experts discuss the impacts of COP27 and 28 on the region and priorities for COP29.

In November this year, all eyes will be on Azerbaijan as Baku hosts the 29th UN Climate Conference (COP). Hosting COP offers an opportunity to push for climate action that reflects the host country’s unique circumstances, as well as regional interests. COP28 in the United Arab Emirates and COP27 in Egypt highlighted the climate priorities for the Middle East and North Africa (MENA), one of the world’s most vulnerable regions to the impacts of climate change.

From rising temperatures and deadly heatwaves, to extreme weather events such as heavy rainstorms, sandstorms, and cyclones, climate change exacerbates existing vulnerabilities. These vulnerabilities include water scarcity, food security, and the preservation of livelihoods increasingly threatening the region’s social and economic stability.

While there has been some progress in advancing formal negotiations on key issues, the gap between COP agreements and tangible actions to address the increasingly severe effects of climate change in the MENA region remains vast. 

This webinar aims to assess:

• What are the key tangible impacts of COP27 and COP28 in Egypt and the UAE respectively on driving climate action in the region?
• How do MENA countries balance COP28’s landmark agreement to transition away from fossil fuels with their unique national circumstances?
• How will the region benefit from COP28 breakthrough in integrating the issues of climate, peace and security in climate action through the ‘Declaration of Climate, Relief, Recovery and Peace’?
• What are the priorities for COP29 and how do they align with the climate agenda in the MENA region?

Civilian priorities for ending the war in Sudan 31 October 2024 — 12:30PM TO 1:30PM Anonymous (not verified) 8 October 2024 Chatham House and Online

Dr Abdalla Hamdok, former prime minister of Sudan and chairperson of the Coordination of Civil Democratic Forces (Tagadum), will discuss the prospects for conflict resolution in Sudan.

The intensification of fighting across Sudan demonstrates that both warring parties and their allies are continuing to pursue an outright military victory in the war, with little regard for the human cost. Diplomatic efforts, including the US-led Geneva talks in August, have produced little progress towards a ceasefire.  Meanwhile, the conflict has resulted in widespread devastation, mass displacement, and an escalating hunger crisis.

Civilian perspectives on ending the war, their vital efforts in providing lifesaving humanitarian assistance, and the aspiration of many Sudanese for a more inclusive and democratic Sudan, have been sidelined by the interests and actions of the belligerent parties.

At this event, Dr Abdalla Hamdok will discuss options for reaching a ceasefire and seeking a peaceful political resolution to the conflict. He will also address the urgent need for an international response to what has become the world’s largest humanitarian crisis.

Please note that in-person attendance for this event will be balloted. Guests looking to join in-person must ‘register interest’ in joining. Full confirmations to successful applicants will be sent on Monday 28 October at 15:00.

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.

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.

Ligand bias is the ability of ligands to differentially activate certain receptor signaling responses compared with others. It reflects differences in the responses of a receptor to specific ligands and has implications for the development of highly specific therapeutics. Whereas ligand bias has been studied primarily for G protein–coupled receptors (GPCRs), there are also reports of ligand bias for receptor tyrosine kinases (RTKs). However, the understanding of RTK ligand bias is lagging behind the knowledge of GPCR ligand bias. In this review, we highlight how protocols that were developed to study GPCR signaling can be used to identify and quantify RTK ligand bias. We also introduce an operational model that can provide insights into the biophysical basis of RTK activation and ligand bias. Finally, we discuss possible mechanisms underpinning RTK ligand bias. Thus, this review serves as a primer for researchers interested in investigating ligand bias in RTK signaling.

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.

Network Power in the Asia-Pacific: Making Sense of the New Regionalism and Opportunities for Cooperation 7 February 2020 — 9:45AM TO 5:30PM Anonymous (not verified) 17 January 2020 Chatham House | 10 St James's Square | London | SW1Y 4LE

The Asia-Pacific region continues to increase in geopolitical and geoeconomic importance. The rise of China and tensions with the US are affecting bilateral relationships and traditional alliances in the region. Whether seen from the perspective of the Quad – Australia, India, Japan and the US – or the Indo-Pacific concept embraced by a wide range of countries but with no shared consensus on scope and objectives or with ASEAN who insists on the importance of its own centrality, the region is redefining and reconceptualising itself.

With a diverse range of initiatives – including the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – there are a plethora of regional agreements and institutional groupings that add further complexity.

As the Bretton Woods architecture continues to be dominated by Western powers, China is also spearheading parallel governance initiatives such as the Asian Infrastructure Investment Bank (AIIB), the Belt and Road Initiative and the Shanghai Cooperation Organization (SCO) as a means of enhancing its geopolitical and geoeconomic influence.

This one-day conference will focus on how such networks and alliances have been built, and sustained, in the Asia-Pacific region. In order to understand how new regional initiatives might open up opportunities for new forms of international cooperation, the conference will focus on the themes of cyber-technology and innovation, sustainable development and mitigating the impacts of climate change and new infrastructure initiatives. It will assess whether there is a zero-sum conflict between competing networks and agendas or whether a common approach can be developed.

Virtual Roundtable: The Economic Implications of COVID-19 on Asia 2 April 2020 — 11:00AM TO 12:00PM Anonymous (not verified) 27 March 2020 Chatham House | 10 St James's Square | London | SW1Y 4LE

The COVID-19 pandemic is likely to have a damaging economic impact on Asia, potentially the most serious since the financial crisis two decades ago. While early estimates suggest that a recession is inevitable, differing countries in Asia are generally deploying modest fiscal and monetary measures. This is true even in China, compared with the ‘whatever it takes’ approach pursued by Europe and America.

How effective will these measures be in reviving growth and in easing the pain, particularly on the poor in developing countries in Asia? Is Asia witnessing a sudden but temporary halt in economic activity rather than a prolonged slowdown? At this virtual roundtable, the speakers will consider the likelihood of a recovery for trade in the region and will explore what lessons can be learned from countries like Singapore, who seem to be successfully managing the health and economic aspects of COVID-19.

This event is online only. After registering, you will receive a follow-up confirmation email with details of how to join the webinar.

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

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

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

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

Policy for Recovery in Africa: Rethinking Energy Solutions for Universal Electricity Access 10 December 2020 — 5:00PM TO 6:00PM Anonymous (not verified) 20 November 2020 Online

Approximately three quarters of Africa’s population do not have access to clean cooking fuel and face costs to their health. Speakers explore policy opportunities to bridge this gap, the key barriers that remain and the transformative potential of energy transition in delivering sustainable access for all.

Speakers explore policy opportunities to bridge the energy access gap, the key barriers that remain and the transformative potential of energy transition in delivering sustainable access for all.

African countries face an uphill battle as they confront the shocks of the coronavirus pandemic, seeking recovery in the context of global socio-economic difficulty and fragmented geopolitics.

With deficits in terms of governance, public health systems, social protection, and basic service delivery presenting challenges even before the outbreak, careful analysis and creative evidence-based policy solutions, as well as emphasis on implementation, will be crucial if Africa is to progress towards the SDGs and Agenda 2063.

The Policy for Recovery in Africa series brings together expert speakers and decision makers to examine and exchange on key challenges, potential solutions, and approaches for implementation.

The energy access gap in Africa presents one of the most serious obstacles to the long-term pandemic recovery effort, with almost half of the continent’s population estimated to still lack access to electricity, creating a negative annual GDP impact estimated to be over 25 billion USD.

Nancy Pelosi in Taiwan: What lies ahead for China and the US? Expert comment GBhardwaj 3 August 2022

Chatham House experts examine the implications for Taiwan, China and the United States of Nancy Pelosi’s visit to the island.

China’s fading ties with Washington?

Dr Yu Jie

US House Speaker, Nancy Pelosi’s, visit to Taiwan has plunged China-US relations into a new low as the reservoir of trust forged between the two sides over the last 40 years appears to be almost exhausted.

However, her move will likely not result in the full-scale crisis across the Taiwan strait that some hawkish voices in both Beijing and Washington believe. Instead, Beijing will most likely offer a combination of military posturing toward the US navy and economic sanctions on Taiwanese agricultural and manufacturing products in order to send a clear bellwether to any future potential visits by high-level Western political figures.

Neither Beijing nor Washington has declared a willingness to change the current status quo as the present impasse benefits both governments – but for different reasons. For China, the best approach is to reach a military and economic capability that prevents US engagement with Taiwan without the use of force. For the US, the strategic ambiguity under the Taiwan Relations Act remains an effective card to counter China’s growing military influence in the Indo-Pacific and keep itself relevant within the region as a security guarantor. Yet, both sides have decided to kick the issue of Taiwan’s status down the road, believing that time is ultimately on their side.

Despite a chorus of nationalistic rhetoric, China will be careful not to stumble into an accidental conflict which risks colossal damage on all fronts. Chinese President, Xi Jinping, must weigh all of the options before him as Beijing cannot afford to be perceived as unilaterally seeking to change what it agreed with the US back in 1979 when ties were re-established. If that happens, it will provoke the US political establishment to reach a unanimous agreement to change its ‘One China Policy’ and, ahead of the 20th Communist Party Congress where Xi is expected to be crowned for a historic third term, the last thing he wants is an unnecessary conflict with Taiwan.

The road to escalation?

Dr Bill Hayton

Beijing has chosen to take issue over Nancy Pelosi’s visit to Taiwan in a way that it did not do for other recent US Congressional visits to the island. Several high-ranking US senators visited in April and May this year yet none of these visits triggered the prospect of a cross-strait crisis. So why has Beijing chosen to turn Pelosi’s visit into a stand-off?

Pelosi’s visit is part of a performance in which both actors – the US and China – are playing primarily for their domestic audiences. This comes at a time when ruling circles in Beijing are preparing for the five-yearly Communist Party Congress. Amid a slowing economy and successive COVID-19 variants, Xi Jinping cannot afford to look weak as he prepares the ground for his third term of office. Meanwhile, the US, represented either by President Joe Biden or House Speaker Pelosi, cannot back down at this point without looking weak itself.

Both sides have moved military assets into strategic positions near Taiwan to demonstrate their resolve. Neither side wants confrontation yet neither wishes to be humiliated. Currently, Pelosi’s visit, amid posturing by China, will make the US appear strong, but the consequences are likely to play out over a longer period. Xi Jinping will need to appear to have recaptured the initiative between now and the congress in the autumn when the risk of an incident will be at its greatest.

Taiwan controls several isolated islands that could be pressured by Chinese forces in the event of a future crisis. The Kinmen and Matsu archipelagos lie just a few miles off the coast of the mainland and have been at the centre of previous confrontations. There are also two other points of concern. Pratas Island – known as Dongsha – sits halfway between Taiwan and Hong Kong. Itu Aba – known as Taiping – is the largest of the Spratly Islands in the centre of the South China Sea. All would be vulnerable to an attack by the People’s Liberation Army, the principal military force of China, and the armed wing of the Chinese Communist Party.

A military confrontation between China and the US over Taiwan, or further south in the South China Sea, would have major impacts on regional and global trade. An estimated $300 billion worth of trade passes through the area every month. Japan and South Korea depend heavily on flows of oil and gas through the sea. Exports from Vietnam, Malaysia, Indonesia and the Philippines would also be heavily affected by disruptions to shipping, increased insurance costs and interruptions in inflows of raw materials. The impact on a world economy already suffering major disruption because of the Russian invasion of Ukraine and the lingering effects of COVID-19 would indeed be stark.

Is a shift in US policy on the cards?

Dr Leslie Vinjamuri

Nancy Pelosi’s visit to Taiwan will undoubtedly be seen as a provocation by Beijing – even if it should not be. Pelosi’s trip to the Indo-Pacific, which also includes visits to Singapore, Malaysia, South Korea and Japan, comes at a time of growing tension between the US and China in the region.

It also comes at a time when the divide among Washington’s foreign policy elite is growing, with some arguing that it is time to abandon the country’s policy of ‘strategic ambiguity’, where it refrains from stating how it would react were China to openly and deliberately attack Taiwan. Indeed, recent statements by President Joe Biden have raised questions about whether the US is set to make a policy change. But, since both its ‘One China Policy’ and policy of strategic ambiguity have been largely successful, it would be wise for the US to maintain them.

During her visit, Pelosi is likely to reaffirm the US’ high regard for Taiwan’s democracy and embrace the language of shared values. She has embraced Biden’s framing of international relations as a contest between democracies and autocracies. This alone will continue to exacerbate tensions. It would be a mistake, though, to signal a major policy change away from strategic ambiguity and towards strategic clarity on Taiwan’s status. Even if the US decides later to embrace a policy shift of this size, such a message should be carefully considered and communicated clearly, and not by chance.

Congress has an important role to play but President Joe Biden and his national security team should make the final decision on US policy towards Taiwan. Getting the signals right in international politics is a key part of deterrence and, especially in East Asia, deterring both China and Taiwan’s ambitions is essential. 

Increasing insecurity in the region?

Dr John Nilsson-Wright and Ben Bland

Nancy Pelosi’s visit to Taiwan has provoked mixed responses from US allies across Asia.

For Japanese policymakers, the Taiwan issue is connected to the wider issue of regional security. Fears that a military conflict over the island will inevitably draw Japanese self-defense forces into a shooting war with China – a development that is neither formally mandated under the terms of the US-Japan Mutual Security Treaty nor necessarily constitutionally sanctioned – explains the concerns in Tokyo.

While the Japanese government of Prime Minister Fumio Kishida is increasingly worried about China’s growing military presence in the East and South China Seas, Japan’s heavy trade dependence on China and the country’s economic and security vulnerabilities make it imperative to avoid any further escalation of tensions.

Given Tokyo’s non-recognition policy towards Taiwan, Japanese ties with Taipei are handled informally by politicians of the governing Liberal Democratic Party (LDP), rather than at cabinet or foreign ministry level, and in recent weeks and months there has been an increase in visits by cross party delegations from Japan.

The death of former Prime Minister Shinzo Abe as removed from public life a vocal advocate in support of enhanced ties between Tokyo and Taipei, but with public opinion in Japan increasingly tilting in an anti-Chinese direction, and with younger politicians favouring a more combative approach towards Beijing, there is a risk that the government will face pressure at home to toughen its language on Taiwan. Bolstering deterrence through increased military cooperation among allies, along with a graduated increase in defence spending, is the best way of limiting risk over Taiwan.

Nevertheless, privately, many officials in Tokyo are likely to have viewed the Pelosi visit as an unhelpful intervention and will be puzzled and perhaps frustrated by the apparent inability of the Biden administration to persuade the US Speaker of the House of Representatives to cancel her visit.

In South Korea, the government of President Yoon Suk-yeol, faces similar pressures to Japan, given the heavy dependence of the South Korean economy on China for trade and investment opportunities.

Pelosi’s visit to the region will strikingly not include meetings with either the president or Foreign Minister Park Jin. With Yoon on vacation and Park attending the ASEAN Regional Forum meeting in Cambodia, the absence of high profile engagements for Pelosi might seem to be a purely practical matter, but Seoul may also be seeking to avoid antagonizing Beijing at a time when the Chinese government is seeking to pressure South Korea not to enhance alliance coordination with the United States and Japan or to expand its commitment to the controversial Terminal High Altitude Area Defence (THAAD) missile defence system.

As in Japan, public opinion in South Korea is increasingly anti-Chinese, but the logic of regional economic and security uncertainty, requires the Yoon government to avoid getting trapped in a worsening stand-off with Beijing.

Nuclear proliferation in a fragmenting world 13 September 2022 — 1:00PM TO 2:00PM Anonymous (not verified) 5 September 2022 Online

Where does the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) stand in 2022?

With the war in Ukraine and China–US tensions rising, the threat of a nuclear arms race has never been as high since the Cold War.

Global efforts to control the appropriation and use of nuclear weapons are strained with the war in Ukraine, US–Russia and US–China tension, Iran on the nuclear threshold, instability in Pakistan and the ongoing threat from North Korea.

The Review Conference of the NPT that took place in New York this August sought to deal with the multiple nuclear threats, but new missile technology such as hypersonic glide vehicles and torpedoes are not covered by a treaty.

Russia and the US are in a development phase for a host of new technologies and delivery systems, especially after both withdrew from various arms-control treaties in the 2000s and 2010s. Now the nuclear stockpile is growing again and major superpowers are adopting confrontational geostrategic positions.

As the world’s established orders and system fragment, there is a possibility the nine countries with confirmed nuclear weapons could grow. Events in Ukraine highlight the need for a new, modern agreement on nuclear weapons control, needed today more than ever.

The panel of experts discuss key questions including:

• What did ‘RevCon’ in New York tell us about the adoption or update to the NPT?

• Will the war in Ukraine deter or prevent any agreement between nations or does nuclear weapons control represent an area of potential multilateral harmony?

• Are we likely to see a new arms race akin to the Cold War? Where does China fit into this race?

• How has technology changed the arms control landscape?

 As with all Chatham House member events, questions from members drive the conversation.

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

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

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

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

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

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

Trump’s influence is on the wane

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

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

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

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

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

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

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

Inflation and the economy proved key factors

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

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

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

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

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

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

Critical elections and the future of American politics 14 December 2022 — 9:00AM TO 10:15AM Anonymous (not verified) 8 December 2022 Chatham House

This event explores whether the United States is undergoing a critical change in the composition of the Republican and Democratic parties.

Drawing on current and historical events, Paul E. Peterson joins us to examine whether the United States is undergoing a critical change in the composition of the Republican and Democratic parties.

Key questions to consider include:

• What factors might be driving such an evolution within both parties?

• How could these dynamics affect the balance of power in Washington and in states?

This event is co-hosted with the Centre on US Politics at UCL, and the US and Americas programme at Chatham House would like to thank the British Association for American Studies for their generous support of this event.

Digital politics threatens democracy and must change Expert comment NCapeling 13 January 2023

Violence in Brazil has again brought into focus the need for technology platforms to prioritize social responsibility to help prevent anti-democratic action.

Immediately following the violent storming of Brazil’s congressional building, supreme court, and presidential palace, comparisons to the infamous events of 6 January 2021 in the US came quickly and easily – and with good reason.

Both Donald Trump and Jair Bolsonaro built a fervent – albeit inchoate – political base of grievance which included Christian evangelicals, gun enthusiasts, and the disenfranchised. Both cynically spread doubts about the election victories of their successors without evidence. And it has been claimed both incited their supporters to overturn these results.

But this list of similarities extend beyond mere politics. The attack on democracy in Brazil was recorded, amplified, coordinated, and funded by exactly the same technologies used by the protesters in the US on 6 January.

In Brazil, the main engines of misinformation and insurrection planning were Telegram, Facebook, and WhatsApp, although some election-denying diehards also shifted to Twitter.

Tactical use of social media to mobilize and fundraise

When Bolsonaro was originally elected in 2018, these platforms were already a medium for promoting disinformation, conspiracy, and fear. But in the lead-up to the violence of 8 January, they became a means by which ‘Bolsonaristas’ raised funding for an attack and mobilized supporters to come to Brasilia – advertising the availability of buses and even free food for marchers – using the Festa da Selma hashtag.

To avoid detection by authorities, organizers used a simple switch of the letter ‘v’ to ‘m’ so that Selva, meaning ‘jungle’, became Selma – which means ‘party in the jungle’ to those in the know. But the authorities in the Brasilia state of Distrito Federal appeared to care little about preventing the attack anyway.

Civil society organizations have warned for decades that policies made in a Silicon Valley boardroom fit poorly to the realities of countries such as Brazil, Somalia, or Myanmar. Content moderation is a near-impossible task at the scale demanded by platforms as vast as those operated by big tech, and automated solutions are far from being a silver bullet as they create as many problems as they solve.

Extremism has found an unfettered enabler on mainstream platforms, and an increasingly sprawling network of alternative tech has made such voices resilient to challenge. Platforms such as Gettr, Gab, and Telegram have become go-to platforms for extremist networks when fringe voices find themselves blocked by mainstream platforms.

Telegram has come under significant scrutiny for the role it played in the storming of Congress in Brasilia but any number of tools and platforms – each with millions of users – could have achieved similar results.

The sordid events in Brasilia are just the latest chapter in digital extremism and conspiracy- mongering which often erupts into anti-democratic violence, and should serve as a reminder of the urgent risks of disinformation and the role digital technology plays in inciting, coordinating, fundraising, and amplifying such events.

But the checks on the power of private social media companies are still few and splintered. In Brazil, Supreme Court Justice Alexandre de Moraes, head of the elections tribunal, attempted to crack down on social media, banning users for spreading misinformation in a move which sparked complaints of censorship from Bolsonaro supporters.

Following the elections, Moraes has advocated for greater judicial authority to regulate social media – but the justice is only one person and his impartiality is already being challenged given his aggressive pursuit of Bolsonaro supporters posting inflammatory messages.

And one justice doing it alone only inflames an already volatile situation. Effective regulation of social media requires an independent body vested with multiparty support and operating under clearly-defined rules and authority.

A global movement to find solutions

Brazil is not alone in an increasingly frantic search for checks on digital power as dozens of regulatory regimes are springing up around the world. All are premised on platforms being responsible for their own fiefdoms, but few tackle the threat posed to democracy by unchecked corporate power over digital commons.

Well-intentioned regulation will fall short so long as it is narrowly focused on a never-ending game of ‘content whack-a-mole’ and is hamstrung by powerful voices who see any rules as an attack on freedoms of expression or corporate decision-making.

Democracies are traditionally cautious in managing speech, in separating good information from bad information, or in defining acceptable politics. The steady watering down of the UK’s Online Safety Bill, now so thin on disinformation as to be essentially homeopathic, shows that democratic regulation is willing to go only so far in tackling challenges posed by digital politics.

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

In conversation with Dr Richard Haass.

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

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

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

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

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

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

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

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

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

The effects of fracturing

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

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

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

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

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

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

Finances of global fracturing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Why is New START important?

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

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

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

What is Russia able to do next after suspending participation?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What led to SVB’s collapse?

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

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

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

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

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

Four key questions

SVB’s rapid collapse raises four central questions:

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

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

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

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

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

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

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

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

Ethics of dealing with authoritarians 28 March 2023 — 12:00PM TO 1:00PM Anonymous (not verified) 20 March 2023 Chatham House

How can democracies simultaneously defend human rights and promote open societies while still engaging with leaders from non-democratic states as strategic allies?

In 2022, the Biden administration called upon the world’s democracies to unite against a rising tide of autocracy. Through its messaging, conferences, and op-eds, the US and its allies presented the public with a binary choice: democracy or autocracy.

But in today’s world, and in the practice of international relations, the choice is rarely this simple.  

Joel Rosenthal, president of Carnegie Council, joins Chatham House to discuss how democracies and multilateral institutions can leverage ethics as a tool to assess concerns and trade-offs when engaging with illiberal actors.

Can democracies afford to be adversarial with certain countries or overly selective in cooperation when facing global-scale challenges such as climate change and the emergence of AI?

How can democracies simultaneously defend human rights and promote open societies while still engaging with leaders from non-democratic states as strategic allies?

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

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

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

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

‘Absolutely unacceptable’

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

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

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

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

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

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

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

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

Invitation to Nagasaki

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

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