Global Street Smarts.
Happy Monday.
Here’s today’s ITK Daily.
To be ITK, know this:
AP: US, China remain at odds on numerous issues as Blinken finishes first day of meetings in Beijing
BBC: Antony Blinken hails 'candid' talks on high stakes China trip
WP: Blinken, Chinese senior officials pledge to continue talking, signaling a slight thaw
Bloomberg: Blinken has ‘candid’ talks with China’s Qin on trip to mend ties
After months of cold shoulder, China welcomes Blinken: Chinese officials have painted the US as most eager to meet ahead of Secretary of State Antony Blinken’s arrival in Beijing but have their own reasons for detente. WSJ
Three key priorities in crucial US-China talks BBC
Will visit by US' top diplomat help avoid potential war? US Secretary of State Antony Blinken is in China today as increasing tensions over Taiwan make the lack of communication between Washington and Beijing more dangerous than ever. DW
Tuesday: Chinese Premier meets German Chancellor: Chinese Premier Li Qiang remains in Germany and France on his first overseas trip since becoming the country's No. 2 leader in March. The six-day tour, which started Sunday, aims to restore ties amid China's souring relations with the West
Biden: We won’t ‘make it easy’ for Ukraine to join NATO: Politico reports the president added that the US has “done a lot” to make sure Ukraine has the “ability to coordinate militarily.”
Who will win the war in Ukraine? The 4 counteroffensive scenarios: The US and its allies know Kyiv’s counteroffensive is unlikely to crush Russia, but hope enough pain can be inflicted to rattle the Kremlin. The Times
+ Misha Glenny is the Rector of the Institute for Human Sciences, Vienna
+ If Ukraine wins, Putin is unlikely to survive, resulting in chaos in Russia and possibly a string of civil wars in a country that possesses more nuclear warheads than any other.
+ A victory for Russia would represent not just a disaster for Ukraine but a massive setback for the West.
+ ff. The third outcome — stalemate — looks like the favourite. This would resemble a defeat for the West but Biden would be quietly relieved: his preferred option is for the fighting to stop and talks to begin.
Tuesday: Yoon meets Macron in Paris: South Korean President Yoon Suk Yeol lunches with French leader Emmanuel Macron at Elysee Palace as Seoul tilts more toward European issues, including support for Ukraine.
Wednesday: Modi visits US: Indian Prime Minister Narendra Modi undertakes his state visit to the US at the invitation of President Joe Biden. During his four-day stay, he and Biden are expected to seal key defense deals, including on joint production of fighter jet engines in India and the purchase of armed drones by New Delhi, as they seek to boost military ties amid growing Chinese assertiveness in Indo-Pacific.
Wednesday: Italian warship makes first Yokosuka port call: The Italian Navy's Francesco Morosini pays a port call in Japan, part of a five-month deployment to the Indo-Pacific region.
AP: Netanyahu says he’s opposed to any interim US-Iran deal on nuclear program
Economic diplomacy: Who wants to invest in Syria now? Recent events may indicate the world wants to start doing business with Syria again, despite its government being accused of war crimes. But how likely is it China, the EU, and Gulf states will start spending big there? DW
+ Syria reestablishing international trade ties — has only grown.
+ In early May, Syria was allowed back into regional cooperation body, the Arab League. It had been suspended from the body for more than a decade.
+ Last week, on the sidelines of the Arab-China Business Conference in Riyadh, the heads of the Saudi and Syrian chambers of commerce agreed to resume bilateral trade. Iraqi officials have also previously expressed enthusiasm about doing the same.
Macron envoy heads to Lebanon in bid to end crisis: AFP reports President Emmanuel Macron's new special envoy for Lebanon heads to Beirut in the coming week as France seeks a new push to end a political crisis that has left the country without a president for over half a year, a diplomatic source said Sunday.
UN steps up criticism of IMF and World Bank, the other pillars of the post-World War II global order AP
+ From the ashes of World War II, three institutions were created as linchpins of a new global order. Now, in an unusual move, the top official in one — the secretary-general of the United Nations — is pressing for major changes in the other two.
+ Antonio Guterres says the International Monetary Fund has benefited rich countries instead of poor ones. And he describes the IMF and World Bank ’s response to the COVID-19 pandemic as a “glaring failure” that left dozens of countries deeply indebted.
+ Guterres’ criticism, in a recent paper, isn’t the first time he’s called for overhauling global financial institutions. But it is his most in-depth analysis of their problems, cast in light of their response to the pandemic, which he called a “stress test” for the organizations.
+ Maurice Kugler, a professor of public policy at George Mason University, told The Associated Press that the institutions’ failure to help the neediest countries “reflects the persistence of a top-down approach in which the World Bank president is a US national appointed by the US president and the IMF managing director is a European Union national appointed by the European Commission.”
Why it seems everything we knew about the global economy Is no longer true: While the world’s eyes were on the pandemic, the war in Ukraine and China, the paths to prosperity and shared interests have grown murkier. NYT
+ Patricia Cohen covers the global economy and is based in London.
+ When the world’s business and political leaders gathered in 2018 at the annual economic forum in Davos, the mood was jubilant. Growth in every major country was on an upswing. The global economy, declared Christine Lagarde, then the managing director of the International Monetary Fund, “is in a very sweet spot.”
+ Five years later, the outlook has decidedly soured.
+ “Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the World Bank warned in a recent analysis. “The result could be a lost decade in the making — not just for some countries or regions as has occurred in the past — but for the whole world.”
+ A lot has happened between then and now: A global pandemic hit; war erupted in Europe; tensions between the United States and China boiled. And inflation, thought to be safely stored away with disco album collections, returned with a vengeance.
+ The economic conventions that policymakers had relied on since the Berlin Wall fell more than 30 years ago — the unfailing superiority of open markets, liberalized trade and maximum efficiency — look to be running off the rails.
+ Globalization, seen in recent decades as unstoppable a force as gravity, is clearly evolving in unpredictable ways. The move away from an integrated world economy is accelerating. And the best way to respond is a subject of fierce debate.
+ As the consulting firm EY concluded in its 2023 Geostrategic Outlook, the trends behind the shift away from ever-increasing globalization “were accelerated by the COVID-19 pandemic — and then they have been supercharged by the war in Ukraine.”
+ The World Trade Organization was established in 1995 to enforce the rules. China’s entry six years later was seen as transformative. And linking a huge market with 142 countries would irresistibly draw the Asian giant toward democracy.
+ The story of the international economy today, said Henry Farrell, a professor at the Johns Hopkins School of Advanced International Studies, is about “how geopolitics is gobbling up hyperglobalization.”
CBC: Donnie Creek wildfire in northeast BC now the largest recorded in province's history
+ Blaze southeast of Fort Nelson covers nearly 5,344 square kilometres and remains out of control
CBC: To keep its air clean, US is sending wildfire-detection data to Canada
+ Satellite data will help Canada more quickly identify and suppress new fires, US says
Firefighters boost use of prescribed burns in bid to prevent massive wildfires: WSJ reports officials in the US West to take advantage of wet conditions to set controlled fires in hopes of reducing the risk of destructive blazes.
Mexican hopefuls kick off presidential race: WSJ reports early polls show that Claudia Sheinbaum, a protégé of Mexican President Andrés Manuel López Obrador, is in the lead.
As Biden holds a flurry of events, his campaign slowly takes shape: The Biden campaign collects endorsements and holds a rally — but there is no headquarters, staffing is minimal, and fundraising is slow. WP
+ The Biden campaign has fewer than a dozen full-time staffers, while the DNC has about 300.
+ The campaign is still working out of the DNC’s headquarters in Washington, though staffers have started scouting office space in Wilmington, Del., and one official said they expect to open an office later this summer.
+ Among them are Michael Tyler as communications director and TJ Ducklo as a senior communications adviser.
+ Rob Flaherty, the White House digital director, is slated to move to a senior role on the campaign in coming weeks, a person familiar with his plans said.
As Trump battles charges, Biden focuses on the business of governing: NYT reports the past week appears to provide a blueprint for the way the White House wants to handle the politically touchy subject of former President Donald J. Trump’s legal troubles.
The indictment can only hurt Trump: Even his loyal supporters will understand that his mishandling of documents endangered US security. Peggy Noonan
In Nevada, DeSantis sells Republicans on ending ‘culture of losing’: NYT reports Gov. Ron DeSantis of Florida avoided mentioning Donald Trump at a GOP fund-raiser in Nevada, but he took clear aim at the former president.
Tracing the power of Casey DeSantis: As Ron DeSantis pursues the presidency, his wife’s role is limitless. Casey, 42, isn’t a typical political spouse. Why does that inspire so much fear? Her rise in TV and insular marriage tell the story. WP
Bloomberg: Republican pledge to back 2024 nominee draws growing criticism
+ Christie and Hutchinson express reservations on Sunday talk shows
+ Trump’s indictments focus attention on party leaders’ policy
The South Carolina Republican Party voted unanimously on Saturday to hold their 2024 GOP presidential primary on February 24 next year, sources close to the process told ABC News.
Speaker McCarthy’s next trick: Averting a government shutdown: WSJ reports Democrats cry foul as speaker backs hard-right GOP dissidents on spending cuts.
Is crypto dead? Or can the industry recover? Annie Lowrey
+ The industry also has a complexity problem.
+ Fourteen years since the advent of bitcoin, people still struggle to comprehend how the blockchain works, what Web3 is, and what tokens and coins and NFTs are.
+ Many folks also struggle to figure out how to buy crypto assets and manage their investments. (Why do you need a weird series of letters and numbers to secure your bitcoin, again?)
+ “A mature market is one that shouldn’t make you afraid to put your money in. You shouldn’t be turning off a bunch of folks with greed and theft,” Yesha Yadav, an expert in financial-market regulation at Vanderbilt University’s law school, told me. “Equally, it should be one in which folks feel comfortable in understanding the technicalities.”
+ From the very beginning, many crypto businesses have been engaged in something called “regulatory entrepreneurship.”
+ It’s “ask forgiveness, not permission” as a business model: Start-up founders create a company in probable violation of American law, argue that the law should not apply to them, grow “too big to ban,” lobby intensively, and hope for the best.
+ It might sound delusional, but it’s a common strategy in Silicon Valley, one that has worked out for Airbnb, Uber, Lyft, and DraftKings, among others.
+ The collapse in November of FTX, Sam Bankman-Fried’s Bahamian crypto mega-exchange-slash-alleged-Ponzi-scheme, did not destabilize the financial system. But it did kill off the chances of Congress passing crypto-friendly legislation.
+ While Congress delayed, debated, and walked away, the SEC forged ahead, insisting that most crypto assets are securities, arguing that crypto companies have failed to register their businesses and structure them properly, and promising to force them into compliance.
+ Most crypto assets are securities: “an investment of money in a common enterprise with profits to come solely from the efforts of others,” as defined in a 1946 Supreme Court case.
+ (Bitcoin, notably, is not a security: Nobody is profiting from the efforts of bitcoin’s leadership, because bitcoin has no leaders.)
+ Many crypto firms do not have a business model that nets out if standard financial regulations apply—that’s the essence of regulatory entrepreneurship.
+ Crypto boosters’ grandest vision—of digital currencies changing everything, putting the Federal Reserve out of business, supplanting Wall Street and Main Street, and remaking the web as Web3—does seem over.
+ Crypto is a trillion-dollar global asset class.
+ Crypto is also a fringe industry that is offshoring and shrinking and growing more fringe, not one innovating alongside and outcompeting Big Finance.
+ A recent CNBC survey found that 8 percent of adults have a positive view of crypto.
+ A recent Pew survey found that just 2 percent of adults familiar with crypto are “extremely” confident in its safety and reliability.
A simple way to regulate TikTok Ganesh Sitaraman
+ Ganesh Sitaraman is director of the Vanderbilt Policy Accelerator and a law professor at Vanderbilt University. This essay is draws from his article, The Regulation of Foreign Platforms, which appeared in the Stanford Law Review.
+ The legal history of restrictions on foreign ownership of radio stations might seem obscure more than a century later, but in fact, it has direct relevance to our current debate over social media, and the push to ban Chinese-owned TikTok in particular.
+ The truth is that debates over foreign ownership of the means of communication is part of an important history and tradition in American law.
+ In the Radio Act of 1927, Congress created the Federal Radio Commission and authorized it to license and regulate radio companies, including with restrictions on foreign ownership.
+ With the 1934 Communications Act, Congress once again acted. Instead of delegating expansive powers to the president to seize radio stations in times of war or emergency, it instead restricted foreign ownership by law.
+ The new Federal Communications Commission was banned from giving radio licenses to foreigners, foreign governments and foreign corporations, and the law also closed loopholes regarding indirect ownership.
+ In fact, since the very first Congress, the United States government has frequently placed restrictions on foreign ownership, control and influence on companies providing network, platform and utility services in the communications, banking, transportation and energy sectors.
+ Restrictions on foreign control in the banking sector, for example, go back to Alexander Hamilton, when the newly independent United States needed capital from European countries.
+ The history of restrictions on foreign ownership, control and influence has important lessons for the TikTok debate.
+ Like radio, banking, transportation and energy, tech platforms are akin to public utilities. They feature network effects and economies of scale that create tendencies to monopoly or oligopoly. They are a critical infrastructure for modern commerce and communication, and for national security and economic resilience.
+ Just like radio a century ago, tech platforms are a modern utility, essential for commerce and communication. We should start treating them that way.
Talk of a US TikTok ban is shaking up the creator economy: Influencers and others who make money on TikTok are looking to hedge their bets by diversifying their content across other platforms. WSJ
+ A ban on TikTok could have a catastrophic impact on the $100 billion-plus creator economy in the US.
+ “Currently, nearly five million U.S. businesses use TikTok,” says Maria Jung, a TikTok spokeswoman, adding that the company has invested $1.5 billion to protect US user data.
Bloomberg: Intel to build in Israel as chipmakers move beyond East Asia
+ Move follows Poland investment and Micron’s Indian expansion
+ Netanyahu says project shows confidence in Israeli economy
Israel’s Netanyahu touts expanded investment by Intel: WSJ reports the prime minister put the figure at $25 billion. His announcement comes amid protest from the country’s tech industry over his plan to overhaul Israel’s judiciary.
AP: Amazon’s $1.7 billion deal to buy Roomba maker iRobot gets UK approval
Bloomberg: Ford chairman says US can’t yet compete against China with EVs
+ Ford tells CNN, “we’re getting ready” for the competition
+ China has been steadily closing in on global vehicle exports
China’s small businesses are hit hard as economic recovery falters: WSJ reports the government in Beijing has pushed banks to extend loans to small businesses, with limited success.
Dismantling of Alibaba empire marks end of an era for China: The split-up into six subsidiaries of the digital giant founded by Jack Ma is the consequence of a crackdown launched in 2021 by Beijing, but also marks the end of the unbridled growth of the Chinese economy. Le Monde
+ Alibaba Group will become a holding company that will retain the majority of shares in its subsidiaries. The aim is to "allow all of our businesses to become more agile, enhance their business decision-making and respond faster to market changes," explained Daniel Zhang, the company's CEO, in a video aimed at the group's 240,000 employees and broadcast by the state media.
IKEA reinvents the shopping center with meatballs and Billy bookcases The Times
+ IKEA bought what was the King’s Mall, a dreary shopping centre, three years ago for £170 million.
+ The flatpack furniture giant renamed it Livat — a Swedish word that translates as “bustling gathering” — and opened a two-storey Ikea shop inside that stocks about half of its 10,000 products.
+ The emergence of online shopping and rapid deliveries of everything from beer to bedding are reshaping consumers’ expectations of convenience.
+ That, coupled with declining car ownership in city centres, is drawing IKEA further into major cities around the world.
+ Today, the Ingka Group owns 51 retail parks and shopping centres across 14 countries, typically anchored by an IKEA store. The vast portfolio stretches from China to Europe and America.
+ “Ingka Centres’ strategy is to be closer to where people live and work,” a spokesman said.
+ IKEA is capitalising on a stunning collapse in the value of shopping centres.
+ “Fika”, a cherished Swedish custom of a coffee, a cinnamon bun and a chat.
Iraq unveils ancient stone tablet returned by Italy: AFP reports Iraq unveiled on Sunday a 2,800-year-old stone tablet returned by Italy, as the war-ravaged country works to recover from abroad antiquities looted from its territory.
Bloomberg: PGA-LIV golf merger inquiry may lead to subpoenas, senator says
+ Saudi bid for influence over golf tour draws intense scrutiny
+ Connecticut’s Blumenthal says US legislation is also an option
Enjoy the ride + plan accordingly.
-Marc
Marc A. Ross | Chief Communications Strategist @ Caracal
Caracal produces ITK Daily.
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