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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

Reflections at 100: Women in international affairs Audio MVieira 19 December 2022

How have women contributed to international relations?

The last episode of Reflections at 100, marking the centenary of International Affairs, looks at women’s contributions to international thought.

Isabel and Krisztina speak to Dr Katharina Rietzler about women’s contributions to the journal and international relations, especially in the UK. Then, Krisztina speaks to Professor Barbara Savage about Black women’s contributions to international relations in the US. To wrap up this episode, Leah de Haan sheds light on Chatham House’s Equality, Diversity and Inclusion (EDI) initiative and Jo Hills shares their thoughts about putting together the archive collections.   

Reflections at 100 is a mini-series accompanying the journal’s centenary Archive Collections. The collections bring together articles from our archive which speak to the past, present and future of current affairs issues. In each podcast episode, we speak to contributors from a specific collection and explore what the research tells us about policy-making today. 

Explore the Archive Collection freely until the end of December 2022, including Katharina’s introduction: 100 years of women in International Affairs.

International Affairs was started at Chatham House in 1922 to communicate research to members who could not attend in person. Over the last 100 years it has transformed into a journal that publishes academically rigorous and policy relevant research. It is published for Chatham House by Oxford University Press. Read the latest issue here. 

The near death and uncertain future of the US National Security Council 27 January 2023 — 9:00AM TO 10:00AM Anonymous (not verified) 9 January 2023 Chatham House

What role should the US National Security Council play in an era of great power competition?

Please plan to arrive at Chatham House from 08:45 GMT as the event will begin promptly at 09:00 GMT

Over the last three years, the US National Security Council (NSC) has gone from being neglected to necessary again, in Washington.

After former US President Donald Trump ignored and then tried to dismantle the NSC, current US President Joe Biden has restored the body but chosen not to reform it.

Born in the days before the Cold War and empowered during the War on Terror, what role should the NSC play in an era of great power competition?

Plus, how must it, and the rest of Washington, evolve to meet the challenges and opportunities that remain in the 21st century?

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.

National security and transatlantic unity top Biden’s agenda Expert comment NCapeling 1 February 2023

The timing of the State of the Union address is significant as Joe Biden tries to maintain focus on Ukraine and China while navigating partisanship at home.

Although primarily a domestic affair, the president’s remarks in the annual State of the Union (SOTU) telegraph the US’s foreign policy priorities to the rest of the world. They reveal the prism through which the US understands its national security and its role in the world.

The 2023 address comes as the first anniversary of the Ukraine invasion rapidly approaches, and the US is also trying to build international support for tough economic measures towards China. Domestically, Republican control of the House of Representatives will exert new pressure on US foreign policy choices. Electoral pressures are also around the corner and Joe Biden should announce soon whether he plans to run for president in 2024.

Alliances and partnerships are a driving force for Biden. As pressure to end the war in Ukraine intensifies, maintaining transatlantic unity on Ukraine will be a key priority for the president. And as US electoral politics rise to the fore, ensuring the visibility of Europe’s role as a security provider in its own backyard will be essential.

For a US president who sees China and the Indo-Pacific as America’s most significant long-term geopolitical challenge – and the only peer competitor to the US – transatlantic unity on China will also come under pressure.

Ukraine, China, and controlling domestic division

Republican leaders who now chair key committees in the House of Representatives continue to signal support for Ukraine, and polling shows a majority of US public opinion (54 per cent) favours sending either weapons or air defence systems.

But recent polls also reveal a growing gap between Democrat and Republican supporters with a slight majority of Republicans (52 per cent) now opposing further support for Ukraine.

Biden’s ability to demonstrate that America and its European partners remain unified in their policy towards Ukraine and Russia will help him ward off partisanship at home. Congressional approval of $45 billion for Ukraine in its end of year spending budget will help the president remain above the fray of partisan politics for now. But if there is an absence of clear signs Ukraine is succeeding in its war aims, the challenge of maintaining domestic support could become more difficult.

A greater US focus on China, India, and on the Indo-Pacific in 2023 is also likely. Bipartisanship is strong on China, Republicans are more singular and hawkish in their approach to China than the US president, and the public support tough measures. At a time of war in Europe, the president will place great emphasis on the need to maintain transatlantic unity and to work with a broader coalition of partners in the Indo-Pacific.

The groundwork for focus on China has already been laid. Throughout 2022, the Biden administration worked steadily, but quietly, to set out its China policy. Just before Russia’s invasion of Ukraine in February 2022, the US released its new US-Indo Pacific Strategy stressing regional partnerships – especially the Quad and ASEAN – and it’s determination to shape essential norms for the region.

It stated boldly – albeit in a document which was largely unnoticed – that the objective is not to change China but to ‘shape the strategic environment in which it operates’, a policy which signifies a clear departure from the more ideological approach pursued by the US during Donald Trump’s final year in office. And in May, the US announced its economic strategy for the region, the Indo-Pacific Economic Framework.

Now the terrain for competition with China and alignment with US partners and allies is heavily focused on technology and the daylight between national security and economic strategy in US China policy is rapidly disappearing. Biden’s policy focus of ‘invest (at home), align (with allies and partners), and compete (with China)’ has overshadowed earlier talk of cooperation between the US and China.

But as China opens its doors and Europe looks to bolster its economies, the US will have to work far harder to maintain transatlantic unity. Japan and the Netherlands embracing the US adoption of export controls on semiconductor chips is a positive sign, but the US’s economic strategy towards China may present harder choices to come for Europe. If China leans into its diplomacy, the pressure on transatlantic unity will also grow.

The new US Congress will only sharpen the president’s tough stance on China. Some Republican leaders still deny climate change and have demonstrated little interest in cooperating with China on debt relief for developing countries. The prospects for addressing critical global challenges appear dim without China’s collaboration, and the UK and Europe should work with the US president and Congress to correct this.

President Biden has clearly recognized that diplomacy will be critical in the months ahead. At a time of growing tensions, the potential for misperceptions or misunderstandings to create conflict will also increase, and so a US – and also European – commitment to broadening and deepening diplomacy with China is urgent but it also needs to be patient and sustained.

A new American industrial policy?

Those listening carefully to the State of the Union and who have followed US policy will also note the unchallenged hegemony of neoliberalism is rapidly vanishing. The American state appeared to be disturbingly absent in the early months of the US pandemic response – but now it is back and, in a surprising turn of events, is being cast as a solution not a problem.

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.

Offsetting the North Korean strategic challenge 16 March 2023 — 9:30AM TO 10:30AM Anonymous (not verified) 8 March 2023 Online

This event explores what balance between pressure and dialogue is most likely to incentivise North Korea to limit its provocations.

With North Korea having steadily increased its nuclear and conventional security capabilities over the course of recent months, the speakers explore practical options for lowering tensions on the Korean peninsula.

They consider how best to re-engage diplomatically with North Korea, including the role of key actors such as the US, South Korea, Japan, and European states, in advancing a constructive resolution of current tensions.

The discussion explores finding a balance between pressure and dialogue which is most likely to incentivise North Korea to limit its provocations, assess the risks of a possible seventh nuclear test, and consider the viability of multilateral cooperation in enhancing regional security in north-east Asia.

This event forms part of the Korea Foundation Korea Fellowship, funded by the Korea Foundation and Taejae Academy.

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?

Alfred C. O. Vertegaal
Dec 1, 2006; 5:2298-2310
Research

Boris Macek
Feb 1, 2008; 7:299-307
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Yue Chen
May 1, 2007; 6:812-819
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Michal Bassani-Sternberg
Mar 1, 2015; 14:658-673
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Ilka Wittig
Jul 1, 2007; 6:1215-1225
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Ivan Matic
Jan 1, 2008; 7:132-144
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Jonathan C. Trinidad
Aug 1, 2012; 11:215-229
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M. Wang
Aug 1, 2012; 11:492-500
Technological Innovation and Resources

Mitsunori Fukuda
Jun 1, 2008; 7:1031-1042
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Tamar Geiger
Mar 1, 2012; 11:M111.014050-M111.014050
Special Issue: Prospects in Space and Time

Yi Zhang
Sep 1, 2005; 4:1240-1250
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Amelia C. Peterson
Nov 1, 2012; 11:1475-1488
Technological Innovation and Resources

Sean R. Collins
Mar 1, 2007; 6:439-450
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Lawrence E. Ostrowski
Jun 1, 2002; 1:451-465
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Roland Bruderer
May 1, 2015; 14:1400-1410
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Sebastian A. Wagner
Oct 1, 2011; 10:M111.013284-M111.013284
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Joris J. Benschop
Jul 1, 2007; 6:1198-1214
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Qiang Tian
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Jesper V. Olsen
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Mathias Uhlén
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Claudio P. Albuquerque
Jul 1, 2008; 7:1389-1396
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Ludovic C. Gillet
Jun 1, 2012; 11:O111.016717-O111.016717
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Ignat V. Shilov
Sep 1, 2007; 6:1638-1655
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Albrecht Gruhler
Mar 1, 2005; 4:310-327
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Jeffrey C. Silva
Jan 1, 2006; 5:144-156
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Ulrich Rothbauer
Feb 1, 2008; 7:282-289
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Yasushi Ishihama
Sep 1, 2005; 4:1265-1272
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Linn Fagerberg
Feb 1, 2014; 13:397-406
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Eiji Kinoshita
Apr 1, 2006; 5:749-757
Technology

Jürgen Cox
Sep 1, 2014; 13:2513-2526
Technological Innovation and Resources

Staphylococcus aureus adhesion to the host's skin and mucosae enables asymptomatic colonization and the establishment of infection. This process is facilitated by cell wall-anchored adhesins that bind to host ligands. Therapeutics targeting this process could provide significant clinical benefits; however, the development of anti-adhesives requires an in-depth knowledge of adhesion-associated factors and an assay amenable to high-throughput applications. Here, we describe the development of a sensitive and robust whole cell assay to enable the large-scale profiling of S. aureus adhesion to host ligands. To validate the assay, and to gain insight into cellular factors contributing to adhesion, we profiled a sequence-defined S. aureus transposon mutant library, identifying mutants with attenuated adhesion to human-derived fibronectin, keratin, and fibrinogen. Our screening approach was validated by the identification of known adhesion-related proteins, such as the housekeeping sortase responsible for covalently linking adhesins to the cell wall. In addition, we also identified genetic loci that could represent undescribed anti-adhesive targets. To compare and contrast the genetic requirements of adhesion to each host ligand, we generated a S. aureus Genetic Adhesion Network, which identified a core gene set involved in adhesion to all three host ligands, and unique genetic signatures. In summary, this assay will enable high-throughput chemical screens to identify anti-adhesives and our findings provide insight into the target space of such an approach.

Despite its major importance in human health, the metabolic potential of the human gut microbiota is still poorly understood. We have recently shown that biosynthesis of Ruminococcin C (RumC), a novel ribosomally synthesized and posttranslationally modified peptide (RiPP) produced by the commensal bacterium Ruminococcus gnavus, requires two radical SAM enzymes (RumMC1 and RumMC2) catalyzing the formation of four Cα-thioether bridges. These bridges, which are essential for RumC's antibiotic properties against human pathogens such as Clostridium perfringens, define two hairpin domains giving this sactipeptide (sulfur-to-α-carbon thioether–containing peptide) an unusual architecture among natural products. We report here the biochemical and spectroscopic characterizations of RumMC2. EPR spectroscopy and mutagenesis data support that RumMC2 is a member of the large family of SPASM domain radical SAM enzymes characterized by the presence of three [4Fe-4S] clusters. We also demonstrate that this enzyme initiates its reaction by Cα H-atom abstraction and is able to catalyze the formation of nonnatural thioether bonds in engineered peptide substrates. Unexpectedly, our data support the formation of a ketoimine rather than an α,β-dehydro-amino acid intermediate during Cα-thioether bridge LC–MS/MS fragmentation. Finally, we explored the roles of the leader peptide and of the RiPP precursor peptide recognition element, present in myriad RiPP-modifying enzymes. Collectively, our data support a more complex role for the peptide recognition element and the core peptide for the installation of posttranslational modifications in RiPPs than previously anticipated and suggest a possible reaction intermediate for thioether bond formation.

Leukocidin ED (LukED) is a pore-forming toxin produced by Staphylococcus aureus, which lyses host cells and promotes virulence of the bacteria. LukED enables S. aureus to acquire iron by lysing erythrocytes, which depends on targeting the host receptor Duffy antigen receptor for chemokines (DARC). The toxin also targets DARC on the endothelium, contributing to the lethality observed during bloodstream infection in mice. LukED is comprised of two monomers: LukE and LukD. LukE binds to DARC and facilitates hemolysis, but the closely related Panton–Valentine leukocidin S (LukS-PV) does not bind to DARC and is not hemolytic. The interaction of LukE with DARC and the role this plays in hemolysis are incompletely characterized. To determine the domain(s) of LukE that are critical for DARC binding, we studied the hemolytic function of LukE–LukS-PV chimeras, in which areas of sequence divergence (divergence regions, or DRs) were swapped between the toxins. We found that two regions of LukE's rim domain contribute to hemolysis, namely residues 57–75 (DR1) and residues 182–196 (DR4). Interestingly, LukE DR1 is sufficient to render LukS-PV capable of DARC binding and hemolysis. Further, LukE, by binding DARC through DR1, promotes the recruitment of LukD to erythrocytes, likely by facilitating LukED oligomer formation. Finally, we show that LukE targets murine Darc through DR1 in vivo to cause host lethality. These findings expand our biochemical understanding of the LukE–DARC interaction and the role that this toxin-receptor pair plays in S. aureus pathophysiology.

HIV Type 1 (HIV-1) and simian immunodeficiency virus (SIV) display differential replication kinetics in macrophages. This is because high expression levels of the active host deoxynucleotide triphosphohydrolase sterile α motif domain and histidine-aspartate domain–containing protein 1 (SAMHD1) deplete intracellular dNTPs, which restrict HIV-1 reverse transcription, and result in a restrictive infection in this myeloid cell type. Some SIVs overcome SAMHD1 restriction using viral protein X (Vpx), a viral accessory protein that induces proteasomal degradation of SAMHD1, increasing cellular dNTP concentrations and enabling efficient proviral DNA synthesis. We previously reported that SAMHD1-noncounteracting lentiviruses may have evolved to harbor RT proteins that efficiently polymerize DNA, even at low dNTP concentrations, to circumvent SAMHD1 restriction. Here we investigated whether RTs from SIVmac239 virus lacking a Vpx protein evolve during in vivo infection to more efficiently synthesize DNA at the low dNTP concentrations found in macrophages. Sequence analysis of RTs cloned from Vpx (+) and Vpx (−) SIVmac239–infected animals revealed that Vpx (−) RTs contained more extensive mutations than Vpx (+) RTs. Although the amino acid substitutions were dispersed indiscriminately across the protein, steady-state and pre-steady-state analysis demonstrated that selected SIVmac239 Vpx (−) RTs are characterized by higher catalytic efficiency and incorporation efficiency values than RTs cloned from SIVmac239 Vpx (+) infections. Overall, this study supports the possibility that the loss of Vpx may generate in vivo SIVmac239 RT variants that can counteract the limited availability of dNTP substrate in macrophages.