Recommended Weekend Reads

October 11 - 13, 2024

What to Watch For At The Upcoming BRICS+ Summit, China’s Dollar Dilemma, Time for A Containment Strategy for Venezuela, and How Protectionism is Failing as an Economic Strategy

Please find below our recommended reading from reports and articles we read last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.

The BRICS+ Upcoming Leadership Summit

• BRICS Expansion, the G20, and the Future of World Order Stewart Patrick/Carnegie Endowment for International Peace

  This month, Russian President Vladimir Putin will host the first-ever summit of BRICS+ from October 22 to 24 in the Tatarstan city of Kazan. There, the founding members of BRICS—Brazil, Russia, India, China, and South Africa—will formally welcome into their fold five new members: Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). Putin has also invited more than two dozen other countries that have applied for or are considering membership in the expanding club. The gathering is meant to send an unmistakable signal: Despite the West’s best efforts to isolate it, Russia has many friends around the world.  But with the addition of new members in BRICS+, the group of emerging powers will be more globally representative­—but also face more internal divisions.
  

• Building BRICS: What Erdogan’s geopolitical gamble could mean for the West  European  Council on Foreign Relations

  Turkey’s President Recep Tayyip Erdogan has announced Turkey’s intention to apply for BRICS membership. If successful, it would be the bloc’s only NATO member – but the mere prospect of joining could open the door to Turkey’s re-engagement with the West.

• BRICS: Hub of Mulitvector Foreign Policy   Wilson Center’s Kennan Institute

  An extraordinary campaign is underway in Russia ahead of the BRICS summit, scheduled for October 22–-24 in Kazan. This event is positioned as a direct challenge to the West, with Putin aiming to showcase it as his coalition, an alliance containing more influential players than those aligned with Western powers. The Kremlin also emphasizes that the group includes some of the world’s most populous nations, branding it the “global majority.” There is additional intrigue surrounding the potential participation of UN Secretary-General António Guterres at the upcoming summit, as reported by the United Nations Information Center in Russia.

China

• China’s Dollar Dilemma  Carnegie Endowment for International Peace

  Increasingly intensifying U.S. economic sanctions targeting Russia’s financial system have deepened concerns in China over its extensive dollar asset holdings and the Chinese financial system’s reliance on dollars.

• Value-added and value lost: The macroeconomic limits of China’s Africa Strategy   European Council on Foreign Relations

  China’s overcapacity has hit Europe’s economies hard, but it is also damaging Africa’s. With both continents suffering, Africa and Europe can make common cause in confronting this mutual challenge.
  
  

Americas

• A Containment Strategy for Venezuela   Ryan Berg & Christopher Sabatini/Foreign Affairs

  A little more than two months after Venezuela’s presidential election, the regime of Nicolás Maduro has yet to release any evidence to support its claim to victory.  Instead, Caracas has brutally repressed its political opponents and civil society.  None of this comes as a surprise. What is surprising is the utter failure of international diplomacy to compel Maduro to negotiate with the opposition, despite credible evidence that he lost by a landslide. The international response to Maduro’s power grab has, thus far, been characterized by piecemeal expressions of concern by individual countries. This will not suffice.  Neither will the kind of broad sanctions that outside actors have relied on for a quarter century to try to dislodge a succession of abusive Venezuelan governments. It is time, instead, for a broad coalition—including Latin American countries, the United States, Canada, and the European Union—to adopt a much more coherent and well-coordinated long-term policy of constructive containment.

Russia

• The Russian War Economy’s Days Are Numbered  Anders Åslund/Project Syndicate

  With Vladimir Putin’s war of aggression in Ukraine approaching its third anniversary, the financial, technological, and demographic hurdles facing the Russian economy are more severe than is commonly understood. Contrary to what the Kremlin would like others to believe, time is not on Russia’s side.

US Economics & Trade

• A Simple Plan to Address Social Security Insolvency  AEI Economic Policy Working Paper

  The authors point out the Social Security’s Old Age and Survivors Insurance trust fund is projected to be exhausted in 2033. Without intervening legislative action, current law dictates that benefits at that time would need to be reduced by approximately 21 percent. It is commonly assumed that such benefit reductions must be made on an equal percentage basis for every retiree, a step that would double the elderly poverty rate and reduce total income for the median senior household by almost 14 percent.  However, when a federal program lacks sufficient funds, the executive branch in fact possesses considerable discretion to allocate those limited funds in a reasonable manner. This discretion would allow the President at the time of trust fund exhaustion to pay full Social Security benefits to those in greatest need. The authors present a framework in which monthly benefits in 2033 would be capped at $2,050 (in 2024 dollars), an amount that would provide full scheduled benefits for roughly half of retirees; benefit reductions for the remaining, higher-income, half of retirees would be progressive.  All this, they argue, will ensure the worst effects of Social Security insolvency can be prevented by executive action.
  

• Protectionism Is Failing and Wrongheaded: An Evaluation of the Post-2017 Shift Toward Trade Wars and Industrial Policy  Michael Strain/Aspen Economic Strategy Group

  The Trump–Pence and Biden–Harris administrations enthusiastically embraced protectionism. Each administration explicitly argued for a break from the bipartisan consensus of recent decades that has been generally supportive of free trade and of allowing markets to shape US industrial and employment composition. But the protectionism of the Trump and Biden administrations has not succeeded and likely will not succeed at meeting its goals: they have caused manufacturing employment to decline, not to increase; they have not reduced the overall trade deficit; they have not led to a substantial decoupling of the US and Chinese economies. More fundamentally, the goals that have not been met are wrongheaded: policymakers should not pay inordinate attention to manufacturing employment, and the trade deficit is a poor guide to economic policy. Finally, these wrongheaded goals often rest on fundamental economic misperceptions: free trade is not a policy to create jobs; it is a policy to increase productivity, wages, and consumption. The balance of the evidence suggests that free trade, including trade with China, has not reduced employment. Of course, trade has been disruptive. But populist policies adopted in response will hurt workers, not help them.