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TL(PM) DIGEST: Mike Pence and Chris Christie have entered the chat
Plus EU moves to ban Huawei, a likely slowdown of the world economy, and Germany remains the world's most popular country
1. …and then there were ten
What happened? Former vice president Mike Pence and former New Jersey governor Chris Christie both entered the race for the Republican presidential nomination this week bringing the total number of candidates to ten.
Why does it matter? As Nate Cohn reports in the New York Times, the anti-Trump opposition is as fragmented as it was in 2016—once again increasing the likelihood of a Trump primary victory. Unlike last time, however, Florida Gov. Ron DeSantis enjoys at least some advantages with the anyone-but-Trump voters:
So far this cycle, polls have consistently shown Mr. DeSantis with the support of a majority of Republican voters who don’t support Mr. Trump. Nothing like this happened in that past primary, when at various points five different candidates could claim to be the strongest “not-Trump” candidate, and none came even close to consolidating so much of the opposition to Mr. Trump. Ted Cruz got there eventually, but only after a majority of delegates had been awarded and it was down to him and John Kasich.
TLP’s take: At some point before next year, GOP voters and big wigs must consolidate behind one non-Trump alternative if they want any hope of putting up someone other than the nationally-challenged former president. Even then, it’s not clear that these other voices in the party have the numbers or the moxie to knock out their party’s de facto leader.
2. EU looks into Huawei ban as Blinken plans China visit
What happened? The Financial Times reports that the European Union is “considering a mandatory ban on member states using companies deemed to present a security risk in their 5G networks, including Chinese telecoms group Huawei.” Meanwhile, Secretary of State Blinken plans to travel to China in “coming weeks” after an earlier February trip was postponed indefinitely due to the Chinese spy balloon kerfuffle.
Why does it matter? The use of telecommunications gear made by companies like Huawei linked to the Chinese Communist Party and the Chinese state has been a perennial problem for Europe in recent years, with only a third of EU members outright banning Huawei from their 5G networks—but an EU-wide mandate would solve that particular problem. For its part, Secretary Blinken’s visit may only marginally reduce tensions between the United States and the Chinese government, but it’s nonetheless worthwhile for him to make the attempt.
TLP’s take: The EU’s prospective ban on companies like Huawei works for both America, which could see some of its closest allies disentangle their telecommunications networks from a compromised supplier, and the EU, which could create more business opportunities for European telecommunications firms like Nokia and Ericsson. And Secretary Blinken’s trip to China ought to answer overwrought charges from critics that the United States isn’t talking to Beijing.
3. World economy looks likely to slow down, World Bank says
What happened? Two quarters of economic contraction in Germany and a wilting Chinese recovery threaten to slow the overall world economy, a recent World Bank report argued. While the world dodged one potentially fatal bullet with the U.S. avoiding default, higher interest rates look set to drag down global economic growth from 3.1 percent last year to 2.1 percent this year.
Why does it matter? Interest rates set by both the Federal Reserve in the United States and the European Central Bank play an outsized role in the global economy given the outsized role both the U.S. and EU economies play and the way other nations depend on the dollar and euro for trade and investment across borders. The Washington Post summarizes the conventional economic wisdom:
When the Fed raises borrowing costs, it slows the U.S. economy by making it more expensive for consumers and businesses to obtain loans. That reduces demand for goods produced overseas, hurting growth there. Higher U.S. interest rates also encourage investment in the United States rather than elsewhere. The inflow of capital pushes up the value of the dollar, which makes it more expensive for foreign governments and businesses to repay their dollar-denominated loans.
Spillovers from Fed policy could lead to a financial crisis in the most vulnerable developing nations, which borrowed heavily over the past three years to deal with the pandemic’s health and economic consequences, the bank warned. The danger of renewed weakness in the banking industry could further constrict credit, aggravating those effects.
TLP’s take: We shouldn’t take the World Bank’s prognostications as gospel—America keeps beating expert predictions for job growth and employment even as interest rates rise, after all—but it ought to be taken seriously as an index of potential problems the global economy could face through the end of the year. It’s perhaps most important to keep in mind the way the Federal Reserve’s policies affect the rest of the world.
4. U.S. global leadership still lags Germany
What happened? New polling from Gallup shows that Germany remains the top-rated nation globally for the sixth year in a row.
Why does it matter? The U.S. held the world’s esteem as the highest rated nation throughout nearly all the Obama years and promptly lost it once Donald Trump became president. Despite things improving when President Biden took office, the U.S. still lags Germany in world approval by a five-point margin.
TLP’s take: While America shouldn’t seek the approval of other nations for its own sake, it’s important for the U.S. to be held in high esteem globally if it wants to achieve its own national objectives and help achieve a stable and prosperous future for everyone. With Russia squandering whatever goodwill it had with its aggression against Ukraine and China failing to win hearts and minds around the globe, it will be up to Biden and his successor to work closely with key allies like Germany to defend national sovereignty, democratic freedoms, and economic growth—not just for their own countries, but for the well-being of the world as a whole.
Just one more thing…
Promoting his new album in an interview with the New York Times, Indiana rocker John Mellencamp recounts how he got kicked off just about every tour he opened for in the late 1970s—and how he once “punched the blond-haired singer of the Cars” during an altercation in the recording studio.