30 March 2021

China to Invest $400 Billion in Iran under New Investment and Trade Deal

On Saturday, China and Iran concluded a significant investment and trade agreement. Under the deal, China will invest $400 billion in Iran over the next 25 years; in return, Iran will supply significant amounts of oil to China at a discounted price. The two countries will also cooperate militarily, conducting joint training exercises and weapons research, and will share intelligence. The agreement reflects Iran's need for new sources of foreign investment, as well as a market for its oil, following US reestablishment of tough economic sanctions that effectively prevent companies in the US, Canada, Europe and Japan from investing in or trading with Iran.

The agreement must still be approved by Iran's Majles. Iranian critics of the agreement have condemned it as one-sided, and contend that it will lock Iran into a subordinate relationship with China. Nonetheless, the Majles is likely to approve the deal:

https://www.nytimes.com/2021/03/27/world/middleeast/china-iran-deal.html

Mexican Government Significantly Increases Its Estimate of Country's Covid-19 Deaths

The Mexican government has increased by 60% its estimate of the number of people who have died from Covid-19 in Mexico. The country's revised Covid-19 death toll now stands at more than 320,000; only the United States has lost more of its people to the pandemic:

https://www.bbc.com/news/world-latin-america-56558059

21 March 2021

Britain Plans to Spend More on Defense and Scientific Research -- and to Build More Nuclear Weapons

This week, the British Government published its comprehensive review of the United Kingdom's foreign and defense policy. It plans to spend more on defense, and to increase the UK's military presence in Kenya, Oman and Singapore. It also plans to boost its spending on scientific research and technology development, and to increase the country's stockpile of nuclear weapons:

https://www.economist.com/britain/2021/03/20/britains-foreign-and-defence-policy-shake-up-focuses-on-technology

https://www.economist.com/britain/2021/03/18/britain-is-adding-nukes-for-the-first-time-since-the-cold-war

Chinese Government Moves to Reduce the Power of Internet Companies

The Economist reports this week that
[t]he Chinese government [has] escalated its criticisms of the country’s big internet companies. Xi Jinping, the president, chaired a meeting which concluded that some platforms 'are growing in an inappropriate manner'. In another sign that officials think the industry is too powerful, state television aired allegations of tech malpractice, including a claim that Alibaba’s internet browser carried misleading ads. The browser was promptly pulled from app stores.

"Business This Week." The Economist. The Economist Newspaper, Ltd, 20 March 2021. https://www.economist.com/the-world-this-week/2021/03/20/business-this-week. Accessed 21 March 2021.

The Alibaba Group, mentioned above, is one of the world's largest online sellers of goods; it also provides cloud computing, search engine and artificial intelligence services. In November 2020, the Chinese government cancelled the initial public offering of the Ant Group, an online payments service affiliated with the Alibaba Group. The cancellation came just days after Jack Ma, the founder of both Alibaba and the Ant Group and the owner of one-third of the shares of the Ant Group, gave a speech criticizing China's state owned banks and Chinese banking regulations. Ma was not seen in public for several months following the cancellation of the Ant Group's initial public offering.

15 March 2021

Mexico to Roll Back Some of its 2014 Power Sector Liberalization Measures

In 2014, the Mexican Congress approved a constitutional amendment ending the state's monopoly on the generation and sale of electric power. As a result, private investors began to build power plants in Mexico; some of the new power plants generated electricity from renewable sources. At the same time, the Mexican Congress also adopted legislation that established the order in which power plants supply power to the national grid; the legislation favored low-cost providers. This ultimately benefited the new private electricity producers, which operate recently built power plants that are more efficient than the plants run by the state-owned Federal Electricity Commission (Comisión Federal de Electricidad, or CFE). The legislation also benefited producers that generate electricity from renewable resources; the older plants operated by the CFE generate power primarily by burning natural gas.

Mexico's current president, Andrés Manuel López Obrador, opposed the measures liberalizing the country's power sector when they were enacted. During his 2018 campaign for the presidency, he criticized those measures as the products of corruption and as making Mexico dependent on foreign sources of power. At his request, the Mexican Congress is currently considering legislation that would give priority to the CFE in supplying power to the national grid, thus partially reversing the power sector reforms of 2014. López Obrador's proposal is expected to become law, even though critics charge that it will make electricity more expensive, undercut Mexico's commitment to reduce greenhouse gas emissions, discourage foreign investment in Mexico, and increase Mexico's dependence on natural gas imports from the United States:

https://www.nytimes.com/2021/03/07/world/americas/mexico-energy-sector-privatization.html

Mexican Chamber of Deputies Votes to Legalize Marijuana for Recreational Use

In 2009, Mexico decriminalized the possession of small amounts of marijuana for personal use. The cultivation and sale of cannabis, and the possession of more than 5 grams of marijuana, remained illegal. In 2015, however, the Mexican Supreme Court ruled that, to the extent that Mexican law prohibited people from cultivating and growing their own marijuana, it violated the human right, guaranteed by the Mexican Constitution, to develop one's personality freely. In subsequent decisions, the Mexican Supreme Court continued to rule that laws prohibiting the recreational use of cannabis are unconstitutional; a fifth such decision, in 2018, made the Court's decision binding on all other courts in Mexico and obligated the Mexican Congress to adopt legislation legalizing marijuana.

Last week, the Mexican Chamber of Deputies approved a bill legalizing marijuana for recreational use. Mexicans will be allowed to grow up to eight cannabis plants at home, and possess up to 28 grams (one ounce) of marijuana for personal use. The Mexican Senate is expected to approve the measure. Although Mexican President Andrés Manuel López Obrador is unenthusiastic about cannabis legalization, he is expected to sign the bill into law. Mexico is thus likely to become the third country, after Uruguay and Canada, to legalize marijuana for recreational use:

https://www.bbc.com/news/world-latin-america-56356015

14 March 2021

Calculating the Cost of Brexit

The United Kingdom withdrew from the European Union in January 2020; in December 2020, it concluded a free-trade agreement with the EU that does not cover trade in services and which complicates the export of British manufactured goods and agricultural products to the EU. The withdrawal and free-trade agreements that the UK concluded with the EU, moreover, treat Northern Ireland differently than the rest of the UK. In order to avoid the creation of a "hard border" between Northern Ireland and the Republic of Ireland, Northern Ireland remains subject to EU single market and customs union rules even though the rest of the UK is no longer bound by those rules. This, in turn, means that many goods shipped between Northern Ireland and the rest of the UK are subject to inspection; the agreements avoid a hard border in Ireland by creating something of a border (for goods, if not for people) between Northern Ireland and Great Britain. The idea that Northern Ireland is now a bit closer to the Irish Republic than it is to the rest of the UK economically has upset Unionists in Northern Ireland.

This week, The Economist includes two articles that examine the cost of Brexit to the UK. The first attempts to calculate Brexit's economic costs. It concludes that Brexit will do more damage to the British economy than the Covid-19 pandemic and the repeated shutdowns of businesses resulting from that pandemic:

https://www.economist.com/britain/2021/03/13/the-cost-of-brexit-becomes-apparent


The second explores the possibility that the Unionist paramilitary groups in Northern Ireland, unhappy about the inspection of goods moving between Northern Ireland and the rest of the UK, may resort to terrorist violence or other measures that will undermine the relative peace, prosperity and self-government the province has enjoyed for more than thirty years:

https://www.economist.com/britain/2021/03/13/anger-and-division-among-loyalists-over-the-northern-ireland-protocol

National People's Congress Adopts Legislation Further Eroding Hong Kong's Autonomy

In 1984, China and the United Kingdom signed the Sino-British Joint Declaration, which governs the restoration of Hong Kong (a British colony at the time) to Chinese sovereignty. Under the Joint Declaration, the territory returned to Chinese control in 1997. The Joint Declaration provides that Hong Kong will have a separate political system from the rest of China until 2047: it also guarantees Hong Kong residents such basic rights as freedom of speech, freedom of the press, the right to assemble, and the right to form political organizations, and envisions that the territory's system for choosing its leaders, which was only partially democratic under British rule, will eventually become fully democratic.

Protests broke out in Hong Kong in 2014 when the Chinese government proposed a new system for choosing the territory's officials that was not fully democratic. Demonstrations broke out in Hong Kong again in 2019 and 2020, when the territory's government proposed legislation that would have allowed Hong Kong residents to be extradited to mainland China on criminal charges: protesters saw this as an attack on Hong Kong's autonomy, and feared that the territory's residents would be tried in mainland China, which has a court system in which defendants have few procedural rights and rarely prevail, for engaging in activities (such as criticizing the Chinese government) that are illegal in mainland China but which were legal in Hong Kong at the time.

The Chinese government was stunned by the intensity of the 2019-20 protests, and by polls showing that as many as 40% of young Hong Kong residents thought that the territory should become independent from China; it quickly cracked down. In June 2020, China adopted legislation that effectively ended the right of Hong Kong residents to exercise the fundamental freedoms guaranteed to them by the Joint Declaration. The arrest and imprisonment of well-known pro-democracy business leaders, journalists, lawyers and activists soon followed. In February 2021, the Chinese government adopted rules providing that only "patriotic Chinese" (territory residents who support the Chinese Communist Party's monopoly on political power in China) may hold office in Hong Kong. This week, China's National People's Congress adopted legislation changing the way the territory is governed, making it considerably less democratic. The promise of "one country, two systems," the basis on which Hong Kong was returned to Chinese sovereignty, is dead:

https://www.economist.com/china/2021/03/13/to-crush-democracy-china-is-changing-hong-kongs-political-rules

07 March 2021

CCP Begins Purge of Internal Security Agencies

The Chinese Communist Party has begun a purge of the country's police and secret police forces. The Party is also investigating and removing suspect judges, prosecutors and prison officials. The goal is not simply to root out corruption, or to prevent China's organized crime networks from infiltrating its security agencies, but to remove all officials of questionable or uncertain loyalty to the Party and to the Party's General Secretary, Chinese President Xi Jinping:

https://www.economist.com/china/2021/03/01/chinas-domestic-security-agencies-are-undergoing-a-massive-purge

Social Cleavages and Political Conflict in Nigeria

The political boundaries established in Africa by the colonial powers reflected European economic interests and not the traditional locations of the continent's peoples. This meant that, at independence, most African countries included multiple ethnic groups, and that large African ethnic groups were often divided among several African states. This resulted in ethnic conflict in many African countries following independence.

Nigeria is one such country. More than 250 languages are spoken in Nigeria; the bulk of the population (about two-thirds of Nigerians) belongs to one of three large ethnic groups. Reinforcing Nigeria's ethnic divisions, moreover, is a religious cleavage: northern Nigerian ethnic groups are overwhelmingly Muslim while ethnic groups in southern Nigeria are predominantly Christian. In recent months, ethnic and communal conflict has intensified in Nigeria, exacerbated by opportunistic politicians:

https://www.economist.com/middle-east-and-africa/2021/03/06/how-a-spilled-basket-of-tomatoes-paralysed-nigeria

04 March 2021

Clientelism in Contemporary Africa

In many African countries, voters expect their representatives to the national legislature to help them pay their medical bills, their children's school fees, and the funeral expenses of family members. They also expect their representatives to provide their constituencies with development programs and such essential public services as ambulances. Indeed, during election campaigns, candidates for office often compete for votes by providing their constituents with favors and gifts, in order to persuade voters that they will be (or will remain) good providers if elected. This form of politics is, of course, clientelism. Clientelism is common in many parts of the world today; it also typified urban politics in the United States for most of the 19th and early 20th centuries.

Clientelist politics in contemporary Africa has several significant consequences. First, the cost of running for and holding office is so great that only wealthy men can afford to serve in many national legislatures. Second, once in office, elected officials frequently seek access to state revenues in order to fund the favors and gifts that will keep them in office. In some countries this engenders or exacerbates corruption; in others, it leads to a system in which officeholders displace state agencies as the providers of public services:

https://www.economist.com/middle-east-and-africa/2021/02/27/why-does-it-cost-so-much-to-be-an-african-mp


Public Office in Hong Kong to be Restricted to CCP Supporters

The Chinese government is taking steps to ensure that only "patriotic Chinese" (i.e., Chinese who believe in the leadership role of the Communist Party) hold elected or judicial office in Hong Kong. Hong Kong officials have also ended broadcasts of the BBC World Service in the territory. Those broadcasts have criticized the Chinese government's treatment of the Uyghur population of China's Xinjiang Uyghur Autonomous Region:

https://www.economist.com/china/2021/02/27/china-is-mulling-changes-to-hong-kongs-electoral-system

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