The world may be reaching another inflection point in the next few years. Instability (political, economic, social, financial) and upheaval may be reaching alarming levels. Consequently, the global balance of power may be shifting. The act of rebalancing the international order may exacerbate instability before or after the rebalancing is completed, in a manner similar to the developments prior to the Westphalian Treaty (1648), the Vienna Congress (1814), the Paris Treaty (1919), the Bretton Woods Agreement (1944), or the Camp David decisions (1971). In that spirit, we will be offering our readers a bi-weekly summary of 4-5 articles related to the geopolitical unfolding and the implications they may have for our lives.

How to Contain Putin’s Russia

Michael McFaul, Foreign Affairs
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With the Biden administration will come a shift in the U.S.’s stance towards Russia.  Under the Trump administration, the general perception of Russia as a rival superpower was overshadowed by China’s growing threat, but with its nuclear arsenal and illiberal ideological focus, Russia’s threat cannot be ignored. Putin’s grip on the country is as strong as ever, and with a two-decade tenure in power, he is unlikely to quickly change his tack in regards to multilateral diplomacy.  To combat Russia’s growing influence at home, the U.S. must bolster its cybersecurity operations, leverage economic tools, and take strong action wherever is needed. Abroad, the U.S. should start with a deterrence policy, increasing NATO’s ground force capabilities through a renewed leadership position in the alliance. Given the Crimean annexation, Biden’s administrations should strengthen ties with other Russian border nations, such as Armenia, Georgia, and Ukraine, as well as securing the roads and seaways that lead to those countries. While international actions are important and necessary, building strength at home may be more so.  Putin has characterized liberalism as obsolete; Biden’s America must show it is stronger than ever. At the same time, those bilateral ties which have survived must be reforged with a new strength. The New START treaty is a prime example: renewing this Agreement for five years will not only head off a dangerous arms race but will also provide invaluable information about the modernization and scale of Russia’s nuclear arsenal. As official and unofficial links between the U.S. and Russia have dissolved, the new administration should seek new avenues of connection between diplomats and citizens alike.  Putin’s regime will not last forever. Someday, a change in leadership or government may open the door to new, better relations. To do this, the U.S. must contain Putin’s vision, engaging officially where necessary and working directly with the Russian people to bring about a new era of cooperation, whenever that may come.

How America Can Shore Up Asian Order

Kurt M. Campbell and Rush Doshi, Foreign Affairs 
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The US has the opportunity to play a critical role in the restoration and development of the Asian order. Regional order works at its best when both balance and legitimacy are sustained. To make this happen, an allied and partner coalition is necessary to address China’s challenge to both the balance of power in the Indo-Pacific region and the legitimacy of regional states. Unfortunately, former US President Donald Trump strained nearly every element of the region’s operating system, allowing Chinese assertiveness to grow. If China remains unchecked, the 40 years of peace in the Indo-Pacific could soon be shattered. Evan Feigenbaum argues there are currently “two Asias”: one focused on politics and security and the other on economics. China’s territorial assertiveness undermines the first, and its coercive economic policies the second all the while the US’ ambivalence of the Trump administration undermined both. The key to successfully bringing about balance and legitimacy will be for the US to forge coalitions with its allies in the region and to persuade China that there are benefits to a competitive and peaceful region.

China Is an Economic Bully—and Weaker Than It Looks

Luke Patey, Foreign Policy
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China has been using coercive economic, financial, and punitive measures against some of its neighbors in order to demonstrate strength on a global scale. While these actions are quite formidable on paper, in practice they are more bark than bite. For example, following Australia’s call for an investigation into the origins of the Covid-19 pandemic, China placed high tariffs and bans on Australian beef producers, barley, wine, and other exports. Yet these measures only amounted to 4% of Australia’s exports to China, and 2% of its total exports – by no means an insignificant amount, but not a crippling one either.  The damage done has been more to individual companies and industries in target countries than to their overall economies, but these targets have a history of lobbying governments for policy change when squeezed by trade restrictions. Even if China’s punitive actions are not severe on their face, the amount of soft power it can wield with them should be impetus enough to diversify around dependencies on China.  Advanced democracies can increase their investments in other growth economies and band together through the World Trade Organization to deter China’s use of trade weapons.  Doing so will require a great deal of political will, but should Beijing’s targets succeed in forming a unified front, China may find its economic strongman policies weaker than it had hoped.  

Americas in 2021: Trends to watch in four key economies 

Economist Intelligence Unit 
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The Economist Intelligence Unit (EIU) investigates the trends and challenges ahead for Argentina, Brazil, Mexico, and the US in its Americas 2021 report. Pre-pandemic, Argentina was dealing with a deep economic crisis which is now being compounded by the Covid-19 pandemic, dealing a huge blow to business in Argentina. Financing constraints, macroeconomic instability, and an unpredictable regulatory environment have encouraged the outflow of business and investment from Argentina. Political turmoil in Argentina’s upcoming midterm elections could damage governability, spurring labor and social unrest. Nextdoor, Brazil’s far-right president, Jair Bolsonaro, is expected to pursue more populist policies at the expense of fiscal discipline as he builds his platform for re-election in 2022. This could create “choppy waters” for investors especially if Bolsonaro pushes the envelope on the country’s rigid public spending rules which are the only thing keeping interest rates and inflation low. 

 In North America, Mexico is poised for rising wages and the opening of private investment opportunities. Much of the political success of President Andrés Manuel López Obrador can be attributed to improving conditions for Mexico’s working class, which have also been supported by the new US-Mexico-Canada Agreement (USMCA). However, the downside risk of this is the possibility for greater widespread labor unrest, especially if the new freedom of unionization introduced by the USMCA leads to more combative relations with employers. President Obrador has also promoted an “ambitious” infrastructure agenda which has created new opportunities for private investment. In the US, newly elected President Joe Biden will attempt to lead the nation out of its deepest recession in history. Biden will also be faced with resolving a digital tax battle with the EU, a topic that has slipped down the agenda in recent months. As the rivalry between the US and China deepens, the US will seek to boost investment and trade in both developed and emerging markets, but growing public pressure to boost domestic job creation and investment first will likely hinder these efforts.