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Economic Challenges and Policy Directions in the Biden Era

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The incoming U.S. presidential election is an issue of major global concern; this is because the winner will not only affect domestic affairs in the United States, but will also determine the relationship between the U.S. and the rest of the world. A follow-up study of the ANBOUND 100+ Team shows that six key states, including Florida and Pennsylvania, will decide the fate of Donald Trump in this election as Donald Trump’s polls are at a disadvantage. The statistics indicate that unless some black swan event completely reverses the trend, it is unlikely for Trump to be reelected, while Joe Biden has a higher probability of becoming the 46th President of the United States.

In the event that the Biden era does come, it will undoubtedly bring about a host of changes in the U.S. foreign policy, geopolitical competition, the participation of the U.S. in global multilateral issues, and U.S.-China relations. In a previous analysis concerning U.S.-China relations in the Biden era, ANBOUND points out that the Biden administration will adjust the Trump administration’s extreme policies in multiple ways. During the presidentship of Trump, U.S.-China relations were basically determined by Trump alone. Should Biden become the next POTUS, even if the tough and antagonistic nature of the U.S. against China remains unchanged, it will still lead to a more regular and predictable framework, and we might see the slowdown or even the halt of the U.S.-China trade war.

For the global market, what matters the most is the economic policies that would be implemented in the Biden era and their impact on the world economy, hence the emergence of what is touted as “Bidenomics”. What economic challenges will the Biden era face? What are his priorities in the economy? To answer these, The Economist has recently listed several important issues that Biden needs to pay attention to in one of its feature articles.

First of all, Biden needs to pass a huge “recovery” bill in Congress. Some market analysts estimate that the United States needs US$ 2 trillion to US$ 3 trillion, which includes short-term stimulus funds to support unemployment insurance and help state governments and other local governments to cope with the budget hole. Biden also needs to provide grants or loans to small businesses that have not received as much aid as large firms. Other than that, it would also be necessary for Biden to ease tensions with China to appease the market. If vaccines for the novel coronavirus are out, Biden will need to adopt a co-operative attitude rather than a transactional approach in diplomatic relations. This will make it easier to share vaccines globally while facilitating the reopening of borders and the restoration of trade.

Biden’s economic recovery bill also needs to target those “build back better” projects, such as the United States’ underinvestment in large-scale infrastructure projects (the average American bridge’s age is 43 years). These are not only long-term issues that the United States needs to resolve, but they should also be Biden’s priorities. Scientific research investment is also an important aspect. The U.S. government’s investment in research and development (R&D) needs to be increased. R&D in the United States accounted for more than 1.5% of GDP in 1960 and has now fallen to a mere 0.7%. The Biden administration will need more R&D investment in technology and renewable energy. Biden would also want to undo Trump’s immigration policy that hurts the competitiveness of the United States, and to improve the living standards and social mobility of the middle class. This means that the United States must invest more in education, health, and housing. In addition, the United States needs to raise the minimum hourly wage to US$ 15. Currently, 17 million Americans earn less than the minimum wage.

In order to support the above-mentioned spending plans, Biden may need to increase taxes and reform fiscal policies. Assuming that the aforementioned spending plans can been acted, the combined annual public expenditure growth is equivalent to 3% of GDP. To this end, Biden needs to raise taxes to cover about half of the approved expenditures and impose higher taxes on businesses and the wealthy. Studies have shown that Biden’s tax increase policy may reduce the after-tax profits of companies by as much as 12%, while the income of the top 1% of the rich may drop by as much as 14%. In order to maintain financial sustainability, Biden will also be unable to escape the practice of expanding the deficit. Research by the Congressional Budget Office shows that public debt will reach nearly 200% of GDP by 2050. There seems to be no reason to worry in the short term, because interest rates in the United States are close to zero and the Fed is buying government debt. However, in the long run, the U.S.’ ever-expanding debt will eventually damage America’s national strength.

Some analysts believe that if the next POTUS can overcome this long-term challenge, the United States will greatly benefit from it. This means that the United States will begin to establish a consensus on stronger fiscal constraints based on welfare spending and sustainable taxation. However, researchers at ANBOUND believe that with the current U.S. economic model, it may be difficult to get rid of the expansion of debt issuance and the increase of deficits.

If Biden wins the election, a guaranteed change would be the adjustments in trade policies. The smooth operation of international trade is the most profound and typical manifestation of globalization, and Trump has alienated the U.S., causing the country to be criticized by the world. Biden on the other hand, has a record of supporting free trade. Although he will not immediately abolish the tariffs imposed by the United States, he needs to reduce U.S. trade protectionism, as well as establish and manage a new framework for economic relations with China.

Biden will also need to return to multilateral co-operation on issues such as global climate change. He has previously demonstrated his strong will in this regard, saying that he would return to the Paris Agreement on the first day after taking office. The global climate issue is a rare multilateral issue that transcends ideological and geopolitical disputes, and China is beginning to play an increasingly important role in it, whereas the European allies of the United States attach greater importance to multilateral cooperation on global climate issues. If the Biden administration wants to reverse the Trump administration’s extreme practices, it would need to be take a cooperative stance regarding global climate change as soon as possible.

Final analysis conclusion:

The results for the U.S. election will soon be announced. Judging from the polls so far, it is most likely that Biden will emerge victoriously. If Biden is to be in charge of the White House, we will witness the emergence of “Bidenomics”. The main problems and key challenges “Bidenomics” faces will determine the direction of Biden’s future policies to a considerable extent, which will also go on to affect the rest of the world.

Mr. He Jun takes the roles as Partner, Director of China Macro-Economic Research Team and Senior Researcher. His research field covers China’s macro-economy, energy industry and public policy

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Americas

New US Administration Approach to Syria: How Different Could It Be?

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With the new US administration in the White House, there are rather lofty expectations about a change in the American Middle East policy in general and towards Syria in particular. Some argue that the US Middle East policy will remain somewhat in line with that of Trump’s presidency, while others believe that Biden’s team will try to reverse many of the previous foreign policy steps. The rest say that we should expect an Obama-style Middle East policy, which means more diplomatic engagement with less military involvement and a heavier focus on the human rights issues.

The truth, as usual, lies somewhere in the middle. The new US administration will certainly attempt to undo some of the predecessor’s moves: withdrawing from the Iran nuclear deal, putting the Houthis on the terror list, suspending aid to the Palestinians, etc. However, this will require considerable effort on the part of the new White House.

First, the new Administration will spend much more time dealing with the domestic issues they have inherited from Trump: polarized domestic politics, economic issues, consequences of the COVID-19 pandemic and response to it, etc. Biden’s administration will have to devote much of its time to all of this, so it is safe to say that the Middle East will not stand in the forefront of the US foreign policy focus.

Second, in the realm of foreign policy, US relations with Europe, China and Russia are of far greater importance to Washington than those with the Middle East which will remain on the margins of the US foreign policy, being a concern only through the lens of strategic threats, such as combatting terrorism (anti-ISIS coalition efforts), nuclear non-proliferation (revival of the JCPOA), and interacting with actors involved in those issues.

Third, Biden will face certain domestic opposition to some of the Middle East policy issues, e.g. Iran nuclear deal, the Israeli–Palestinian conflict, sanctioned entities and so on.

Finally, having different views, approaches and rationale, US allies in the region (Saudi Arabia, the UAE, Turkey and Israel) could possibly frustrate some of the plans devised by the new administration.

Therefore, we should not expect the Middle East to figure high on the US foreign policy agenda, as well as keep our expectations low as concerns possible breakthroughs on the profiles which will get certain US attention: the Iran nuclear deal, Syrian Kurds issue, reconciliation with Turkey, dealing with Libya, cultivating relations with Israel and Palestine.

Syria Is Not a Priority

Syria has never been a priority for the US foreign policy and will likely remain a second-tier issue for Biden and his team. In fact, some analysis of the US Middle East policy over the last decade shows consistency of approach. Although Obama started his presidency with his 2009 Cairo speech, intended as a signal of support to the region and increased attention from the US, his administration responded to the Arab Uprising with certain discretion and was reluctant to increase American involvement in the regional conflicts—Iraq, Syria, Yemen, Libya—rather opting for a low profile, proceeding with its fight against terrorism and focusing on diplomacy to a greater extent. Trump administration, by and large, continued this approach avoiding military involvement and shifting more of the responsibility for security and regional problems onto its regional allies—Israel, Saudi Arabia, the UAE, etc. While Trump withdrew from the Iran nuclear deal and increased sanction pressure on Tehran, this never translated into a significant change in the American approach to the region. Even in Syria, which suffered several US missile attacks, the moves of the previous administration did not lead to a drastic change of the situation on the ground. Moreover, US “betrayal” of the Kurds and a partial withdrawal of its military from Syria had little serious impact on the course of the conflict. Therefore, over the last decade, the US regional policy has, by and large, been going along the similar lines of limited engagement, fight against terrorism, support of its regional allies.

Today, Biden administration’s plans do not provide for a change in the established approach and deal only with a limited number of policy issues, those coming in for heavy criticism under Trump, e.g. the Iran deal, extending support to the Syrian Kurds, suspending dialogue and aid to the Palestinians, etc.

It is worth noting that the new US administration does not regard the Syrian conflict as a separate problem, important in its own right. It, rather, treats it as a secondary issue linked to other, more important policy issues, such as dealings with Iran and the nuclear deal, relations with Turkey, which happens to brand US-backed Syrian Kurdish militias (YPG) as terrorists, as well as dealings with Russia who, in recent years, has become more active in Syria and in the region at large, or ensuring security of US allies in the region (Israel, Saudi Arabia, the UAE, Iraq, etc.) who feel threatened by increased Iranian military presence in Syria. Therefore, the Syrian profile is largely viewed in the context of US policies towards Iran, Russia and Turkey, rather than as a separate foreign policy concern.

Interestingly, though, the new Administration refused to send its representative to the 15th round of the Astana Syria talks held in Sochi on Feb. 16–17, despite an invitation being sent, as is argued by Alexander Lavrentiev, Russia’s special envoy on Syria. The US ceased to participate in the Astana meetings in mid-2018. Mr Lavrentiev went on to suggest that the new administration has yet to formulate its Syria policy, despite being officially in office for over a month now. “There are signals [coming from the US] that they will be ready to work with us, but so far no conclusive proposals have been made,” concluded the Russian envoy. Thus far, Washington has not devised its Syria policy, having other actors involved guess its possible approach and future steps.

Moscow Concerns with US Syria Policy

US military presence in Syria is among major concerns for Russia. American soldiers are deployed in northeastern and eastern provinces of Syria as well as in the south, around al-Tanf settlement, on the border with Jordan and Iraq. Moscow perceives American presence in the country as illegal and among the key obstacles to its reunification. US support to the Kurdish-dominated Syrian Democratic Forces (SDF) prevents them from striking a deal with Damascus, something that is needed to restore the country’s territorial integrity and to assume control over those areas, as the majority of oil fields, water resources (Euphrates river), and some 40% of all agricultural lands are located in Kurdish-held regions. When the US is going to leave Syria is thus one of the most important questions for Russia.

A short answer would be that Washington will not pull out its forces from Syria, at least in the mid-term. Regardless of who occupies the White House, there are certain interests and goals that the US has in Syria, and it will hardly abandon them.

First and foremost, American military presence in Syria serves as a deterrent for the Syrian government forces and loyal militias, as well as for Russia, Iran, pro-Iranian units and Turkey. American troops prevent the Syrian Arab Army (SAA) and the Russian forces from asserting control over the oil fields and extending it to the economically-needed, 3-million strong northeast and east provinces of Syria. They also keep an eye on Iranian activities in east Syria, on the border with Iraq (border-crossing in Al-Bukamal), and keep Iran from further entrenchment. Finally, American troops keep the Turkish forces and the Ankara-backed armed Syrian opposition from the offensive against the Syrian Kurds. In addition, American military surveilles Russian activities and moves in the region. Being no heavy burden for Washington, the mere presence of several hundred US soldiers in the country kills many birds with one stone. That is why we can hardly expect the new US leadership to abandon such a position.

Second, the fact that the US is capable of significantly increasing its military presence in Syria at any given moment and within a short span of time puts it in a position of being a potential spoiler of any military or political/diplomatic initiative or deal that Russia, Iran, the Syrian government or Turkey may undertake. Besides, recent reports indicate that the US is constructing a new military base with airfield facilities near al-Omar oil field in Deir ez-Zor. Its runways are 2.5 km-long, which allows it to host heavy military planes (Lockheed C-130 Hercules, Lockheed C-5 Galaxy, or В-52). Once finished, the base will let the US easily send several thousands of soldiers or PMC fighters to Syria overnight, handing it an opportunity to rapidly build up its military presence and capabilities in the area. This makes Washington an indispensable participant of any settlement in Syria and forces Moscow, Ankara, Tehran and Damascus to take American interests and concerns into account. It is unlikely that Washington is ready to lose such leverage.

Third, being the leader of the anti-ISIS coalition, the US maintains its presence on the ground, which enables it to fight the remnants of terrorists. US officials have recently called attention to the fact that the main focus of US military in Syria is to fight the Islamic State which has become more active over the past six months. This reason serves as an official excuse to justify US presence in the country.

Finally, the US wants to maintain its ability to influence the political process in Syria. As of now, Washington has several instruments at its disposal. Its unilateral sanctions coupled with the Caesar Act, created serious additional problems not only for the Syrian economy but for the socio-economic, humanitarian and medical situation affecting millions of ordinary civilians as well. Such sanctions are politically motivated, pursuing a change in the regime’ behavior, something that was never achieved. Essentially, this results in making the socio-economic and humanitarian conditions in the country only worse and obstructing any attempts to reconstruct critical infrastructure. Many humanitarian organizations report severe impediments in delivering humanitarian aid to Syria and rebuilding the country, with many INGOs being simply afraid to work in Damascus-controlled areas because of their fear to be sanctioned. According to the UN Special Rapporteur Prof. Alena Douhan, “secondary sanctions and over-compliance with unilateral sanctions result in fear for all interlocutors and drastically affect all population groups in targeted societies impeding people, private business, workers, scholars and doctors to do their job and to enjoy human rights.” As a result, US sanctions on Syria allow Washington to exert serious influence on the political settlement of the conflict as well as on Syria’s economic reconstruction, along with letting the United States remain a key actor in the conflict resolution.

Another leverage the US has in terms of shaping the political process in Syria is its support to SDF. Today, while backing the Syrian Kurds, Washington also obstructs any serious talks between them and the Syrian authorities in Damascus aimed at reaching reintegration of the northeast and eastern provinces of Syria back under control of the central government. Even though the most recent round of talks between the Syrian Democratic Forces (SDF) and Damascus activated by Moscow ended up with reaching an important preliminary agreement on major controversial issues, this does not prevent the Kurds from backtracking once the Americans decide to sustain or increase their support to them and reaffirm their commitments. Such moves can substantially affect the ongoing intra-Syrian political processes and prevent the country from restoring its territorial integrity. As long as the Syrian Kurds enjoy support and commitments from the US, it is extremely hard to expect them to reach any viable deal with Damascus.

By the same token, the US can influence Turkey and its Syria policy—either through increasing pressure on Ankara or trying to co-opt it by addressing its concerns and moderating the Turkish-Kurdish agreement. Such steps can potentially change the course of the conflict, thus profoundly affecting Russian positions in Syria.

Similar logic applies to the US policy towards Iran and to the revival of the JCPOA. Washington would very much like to tie the nuclear deal to other issues of concern, such as Iran’s ballistic missile program and/or its “malign activities in the region”, including those in Syria. Such an approach aspires to change Iran’s behavior, for instance, in Syria in exchange for the nuclear deal revival and lifting US sanctions. In the US line of reasoning, the White House has an upper hand in the talks with Iran to be able to force it to follow its preferred path. That can, in turn, affect Iran’s behavior not only apropos the return to the JCPOA but concerning its Syrian policy as well. The risks, if this approach fails, are high, as this will have counter-productive results. If the nuclear deal is not revived and sanctions remain at place, Iran will most likely persist in its “malign activities” in Syria and throughout the region, while reserving the option to escalate them. Even the most recent US attack on pro-Iranian targets in Syria had more to do with Iran and its activities in Iraq and Syria rather than with the Syrian conflict itself.

This is to say that the US policy towards Iran and the revival of the nuclear deal, or towards the Syrian Kurds, or the way how Biden’s administration will deal with Turkey, or Russia on the track of the Syrian conflict will have a serious impact on the situation in Syria. So far, there is no indication that it is going to be among the priorities of the new administration. Syria, though, will most likely remain part of US regional policies and subordinate to US dealings with Iran, Turkey and Russia. Outcomes of US-Iran, US-Turkey and US-Russia dialogue can potentially have a profound effect on the situation in Syria. Although it is hard to expect the new US administration to drastically change its approach to the Syrian conflict, there may be new promising avenues for diplomacy which will, hopefully, yield more positive results than negative ones.

From our partner RIAC

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Washington Ill-Prepared to Set Human Rights Agenda

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It is evident that US Democratic President Joe Biden and his team will pay more attention to the human rights agenda in foreign policy than their Republican predecessors did. It is also clear that Washington will actively use this agenda in dealing with its main geopolitical adversaries—above all, China and Russia. Finally, it is obvious that the United States will try to put together a consolidated Western front to shoulder American human rights initiatives. Human rights will become one of the tools to keep liberal democracies together confronting what is perceived to be the global rise of illiberal authoritarianism. We are likely to hear strong rhetoric on human rights coming out of the White House and the State Department. We will observe multiple human rights-focused US initiatives in international organizations. And we will also see new American human rights-related sanctions against Moscow and Beijing.

Still, at the end of the day, this strategy might turn out to be less successful than the new US leaders anticipate. No matter how Russian or Chinese governments are planning to handle, respectively, the Alexey Navalny case or political protests in Hong Kong, it is very unlikely that either Moscow or Beijing will yield under US pressure. Moscow and Beijing will continue going hand in hand with each other in blocking US-proposed international resolutions, in containing US foundations and NGOs operating in sensitive areas, and in countering the coming American information offensive on the human rights front. The growing pressure from the White House will only further cement the China-Russia partnership.

Moreover, the reality is that Washington is ill-prepared to make a convincing case on human rights and broader democracy issues.

First, America itself has not fully recovered from a deep and protracted political crisis. Many inside the US still question the standards of November’s presidential elections as well as the legitimacy of information restrictions imposed on Donald Trump and his supporters by major social networks and the US mainstream liberal media. The 2020 large-scale violent racial riots also question the assumption that the United States can serve today as a universal model of human rights observance. Until President Biden fixes related problems at home, his international human rights crusade will not look too credible even for his fellow citizens.

Second, it is easy for Biden to raise human rights issues against Russia and China—or against North Korea and Iran. This is a light and unburdensome task—in any case, these countries are not and will not be US allies or partners anytime soon. However, what about other potential targets—like Turkey and Saudi Arabia? On the one hand, both Ankara and Riyadh are perceived in Washington as gross violators of basic human rights. On the other hand, Washington badly needs partnerships with both of them. If the Biden administration heads down a slippery slope of double standards and selective use of the human rights agenda in foreign policy, this will not make this agenda more convincing for anyone. If Biden chooses to go against traditional US clients and friends, the political price for such integrity might turn out to be prohibitively high.

Third, though the international human rights agenda remains important, it seems that today, in most societies, the public puts fairness before freedom. 20 or 30 years ago, the quest for freedom was the driving force behind the majority of street protests, political upheavals and revolutions. Today people revolt mostly against what they believe to be unfair and unjust. The widely shared sentiment of unfairness and injustice rather than human rights or political democracy is the main source of various populist movements in all parts of the world.

The balance between the quest for freedom and the quest for fairness has always been moving from one side to the other, forming long political and social cycles in human history. In the first half of the 20th century, fairness and egalitarianism were perceived as more important than freedom and human rights, while in the second half of the century, the balance shifted away from the former and toward the latter. Today we observe the global social pendulum once again swinging in the opposite direction.

In this context, the recent statement of Chinese President Xi Jinping about the ultimate victory over absolute poverty in China may well outweigh all the eloquent human rights rhetoric coming from US President Joe Biden.

From our partner RIAC

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Witnessing Social Racism And Domestic Terrorism In Democratic America

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With just less than two weeks away from President-elect taking the office, the United States of America witnessed the worst of the worst it could ever do, since its discovery. Anti-democracy moves and violence is what American leadership stood against around the world and in particular in recent times since the Arab Spring, but the same ‘Mini Arab Spring’ was faced by America itself. The brave soldiers of America who took arms and enjoyed Saddam’s palace could not protect its own legislative branch, details about which make the very beginning of the American Constitution. The savior of democracy is struggling democracy at home as white supremacists and Trump supporter militias stormed at the US Capitol. Before having a critical outlook through the lens of Johan Galtung’s triangle of violence, it is potent to dig into what exactly is causing this situation in America. This started as protests at the National Mall which soon after Trump’s incitement turned into riots at the Capitol Building by masses without masks, painted with Republican colors and wrapped in MAGA merchandise. This storm over Congress seats came after months long instigation of Donald Trump’s claims about rigging in elections and his refusal to accept the results and especially when on Wednesday the Congressmen gathered to count the electoral votes and officially declared Biden as the next President of America. Amidst this siege over Capitol, arrests and vandalism of state property; Joe Biden was officially validated as the 46th President of the United States of America.

Apart from what became highlight of that week about Capitol Hill being invaded by pro-Trump supporters, critically analyzing the situation, it is evident enough that MAGA riots and Black Life Matters riots were quite evidently, differently handled by the state forces. This discrepancy in response to BLM can be better explained through Galtung’s 3 sides of violence. Galtung’s triangle shapes around three joints of connections: direct, cultural and structural violence, while the former has its roots in the latter two. Structural violence is defined as the unequal access and advantages to one racial, political, ethnic or religious group than the other in social and political orientations of systems that govern the state. Structural violence or social racism is evident in the varying responses that despite warnings about possible attacks during the electoral vote counts, Police did not seek advance help to prevent it, rather National Guard was deployed an hour after the protestors had already breached the first barricade. While in the case of BLM, the aggression of the Police and National Guard was evident in their gestures. While the anti-racism protests in June last year faced militarized response, none was done with anti-democratic riots.

While social racism is evident in America, it is yet to be witnessed what is to come next. Speaker of the House of Senate, Nancy Pelosi has already indicated removing President Trump from his office through the 25th Constitutional Amendment. Along with this, Joe Biden’s remarks about the situation also have long-term repercussions as well as expectations. Repercussions might come in terms of him calling the protestors as “domestic terrorists”. The FBI defines domestic terrorism as: “Violent, criminal acts committed by individuals and/or groups to further ideological goals stemming from domestic influences, such as those of a political, religious, social, racial, or environmental nature.” America, since more than 2 decades is already fighting its war against terrorism in various segments of the world, the use of this word at home, although might bring support for Biden’s sympathies for BLM and democracy, yet it might have long-term impacts. Mentioning of expectations, Americans at home and abroad, both desire to see actual reforms followed by on ground implementations to counter structural violence. Along with this, Biden shall have to re-construct the de-constructed notion that political violence and threat to democracy is far away from America and is for third world countries. The states upon which America used to show serious concern and used to send arms for their national interests are showing their worry over the situation in America which is even termed as ‘coup’. Having pin-pointed all this, Biden’s era needs a lot of reconstruction before it opts to enter any third world country or show its presence in any new Spring for democracy outside America.

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