China has allowed its currency, the Yuan, to depreciate below the critical level of 7 Yuan per dollar: “onshore trade of the Chinese yuan changed hands at 7.0304 against the dollar, while the offshore yuan traded at 7.0807 against the greenback. The effect of the depreciation is to make Chinese exports less expensive and Chinese imports more expensive. There was no explicit announcement about the move, but most suspect that it is retaliation by China against US President Trump’s decision to impose an additional 10% tariff on Chinese exports to the US. The US stock market fell sharply because of the news as it suggests that the trade war is far from being resolved. The US does not seem to have a plan for resolving these tensions and the Chinese are simply reacting to US moves. The actual data indicates that Chinese exports to the US are falling, but the US trade deficit with other countries is increasing.
US trade policy seems to be identifying the wrong source of the balance of trade deficits.
India has revoked the special status of Jammu and Kashmir, making the territories legally equal to all other parts of India. Jammu and Kashmir have been contested territories ever since the partition of India into India and Pakistan in 1947. The territory has a primarily Muslim population, but was divided by a “Line of Control” between India and Pakistan, and the two states have fought several times–in 1947, 1965, and 1971–over the right to control the territory. Since the Simla Agreement of 1972, there has been sporadic violence between the two states but the government of Narendra Modi in India has encouraged the growth of Hindu nationalism which has aggravated the tension. The revocation decision has led many in Pakistan to fear that the Indian government wishes to foster Hindu nationalism in these volatile territories. Pakistan has angrily responded to the decision:
” Pakistan’s Foreign Ministry responded to the revocation with a statement saying it ‘strongly condemns’ India’s decision and ‘will exercise all possible options to counter the illegal steps.’
“‘The Indian Occupied Jammu and Kashmir is an internationally recognized disputed territory. No unilateral step by the government of India can change this. Nor will this ever be acceptable to the people of Jammu and Kashmir and Pakistan,’ the ministry said, citing that its status had been upheld by UN Security Council resolutions.
“‘Pakistan reaffirms its abiding commitment to the Kashmir cause and its political, diplomatic and moral support to the people of occupied Jammu and Kashmir for realization of their inalienable right to self-determination.'”
“More broadly, though, India unilaterally pushed to change Kashmir’s status without Pakistan’s buy-in. The worry now is that widespread unrest will spike in the region. Indian forces already heavily patrol Kashmir, but it has sent thousands of extra troops there in anticipation of violence, as well as closed schools, evacuated tourists, cut off internet connectivity, and put some of the area’s political leaders under house arrest. In effect, the area is on lockdown.”
We should all keep an eye on how this situation unfolds.
Protests are continuing in Hong Kong and the central government in Beijing appears to be at a loss to address the situation effectively. The immediate cuase of the protests is a extradition bill proposed by the Legislative Council in Hong Kong which would make Hong Kongers subject to the laws of the central government. That possibility violates the spirit of the agreement worked out with great Britain in 1997: “One Country, Two Systems”. The protesters seem to be taking a harder line:
“Authorities in Hong Kong and Beijing this week signalled a hardening stance, including with the arrests of dozens of protesters, and the Chinese military saying it was ready to quell the “intolerable” unrest if requested.
“But protesters have remained unyielding, vowing to hold multiple occupations and rallies into next week, sending tensions soaring once more.
“On Saturday they embraced their mantra ‘be water’ – a philosophy of unpredictability espoused by local martial arts legend Bruce Lee – in a bid to keep police guessing.
“Throughout the evening they put up makeshift barricades across multiple roads in Tsim Sha Tsui, a popular shopping and tourist district on the harbourfront, where many luxury malls and hotels shut their doors.
“They also blocked one of the three cross-harbour tunnels connecting to the main island, causing widespread traffic chaos, before disappearing after half an hour.
“’We will fight as guerrillas today and be water,’ a masked and helmeted 19-year-old, who gave her surname Lee, told AFP.”
China blames the US for stoking the protests, but the US has yet to issue strong warnings to the government in Beijing to respect the right of protests, even as it seems as if China may be contemplating a military crackdown on the protests.
The European heat wave has moved north and now temperatures in Greenland are leading to significant glacial ice melt. In the month of July, Greenland lost 197 billion tons of ice, including 11 billion tons in one day. At the same time, wildfires are burning out of control in Siberia. Climate change is clearly not a future event.
The US has formally withdrawn from the Intermediate-range Nuclear Force (INF) Treaty. The Treaty was signed by President Reagan of the US and President Gorbachev of the Union of Soviet Socialist Republics (USSR), now Russia in 1987. It was the first treaty to eliminate an entire class of nuclear weapons, those with missiles that could fly between 500 and 5,500 kilometers. The purpose of the treaty was quite explicit: to prevent an outbreak of nuclear war between the US and the USSR on the European continent. Intercontinental ballistics missiles remained, but their number was limited by another treaty, the Strategic Arms Reduction Treaty (START, which expires in 2021. The US withdrew for a number of reasons. First, it claimed that Russia had violated the treaty by developing an intermediate-range missile. The Russians have not tested the missile beyond the proscribed distance limits, but the new missile is mobile, so the issue of testing is moot. Second, the US worries about Chinese development of an intermediate-range missile and wants to rewrite the treaty to include China. The Chinese have not indicated any interest whatsoever in signing such a pact.
US President Trump announced that the US will impose an additional 10% tariff on $300 billion of imported Chinese goods. The tariffs will start on 1 September and Mr. Trump did not foreclose the possibility of imposing another 25% tariff on Chinese goods. The trade talks with China are obviously not going well and it seems to be a safe bet that the Chinese will now just wait out the rest of President Trump’s term, hoping for a more receptive US President after November 2020. The new tariffs will have a dampening effect on the US economy. President Trump promised that the tariffs imposed earlier on China, Mexico, and Canada would bring manufacturing jobs back to the US, but so far that has not happened:
“Under mounting pressure as tariffs threaten to drive up costs, US manufacturers in China are indeed packing up and heading elsewhere. Companies including Nike, Crocs, Roomba and GoPro are now producing most of their goods outside the country, having set up operations in Vietnam, India, Bangladesh and Mexico. Dell, Sony, Nintendo and HP are reportedly considering such moves.
“But very few are moving back to the US.
“’Trump’s tariffs may have sent the message to ask US companies to consider reshoring, [but] very few will actually follow through,’ said Daniel Ikenson, director of the Centre for Trade Policy Studies at the Cato Institute, a non-partisan think tank. ‘Making products in America has become too expensive.’”
President Trump seems to be unconcerned about the impact of the tariffs. He said today: ” “If they don’t want to trade with us anymore, that would be fine with me. We’d save a lot of money.”
For the third time in just over a week, North Korea has launched ballistic missiles toward the Sea of Japan (or, the East Sea as the Koreans call it). There is no question that Leader Kim is demanding an answer to his calls for the US and South Korea to postpone their scheduled military exercises. But President Trump’s public response is strangely unaware of the urgency of Kim’s actions. On the White House lawn, President Trump responded to a reporter’s question:
Q On North Korea, sir. On North Korea, they apparently just launched their third missile in about a week. Is Kim testing you?
THE PRESIDENT: I think it’s very much under control. Very much under control.
This response is profoundly inappropriate. It will force Kim to escalate his actions, giving the US little wiggle room to respond. It also ignores the fact that short range missiles pose a serious threat to US allies, South Korea and Japan. President Trump is not exactly talking like a reliable ally to states under the serious threat of a nuclear attack.
The Israeli newspaper, Haaretz, is reporting that Israel made two attacks on Iranian positions in Iraq on 19 July. Although Israel has made hundreds of similar strikes in Syria, this is the first time (that we know of) that Israel has attacked positions in Iraq since the days of Saddam Hussein. Israel used the US-made F-35 fighter planes in the attacks. The attacks represent a significant change in tactics that suggest that Israel is willing to escalate its activities against Iran. The Iraqis will undoubtedly protest and it will be interesting to see if the US supports Iraq or Israel in this matter. I suspect that the Trump Administration will support Israel, but do so will jeopardize the US troops currently stationed in Iraq.
The Pew Research Center has conducted a poll on the partisan divide in the US over threats to US security. There are some remarkably discrepant views about national security within the US population, suggesting that forging a common foreign policy would be difficult for any government. The biggest discrepancy is perhaps the most worrisome: climate change. Only 27% of Republicans regard climate change as a major threat whereas 84% of Democrats consider it to be a major threat. The most surprising result, however, is about how well respected the US is by other countries in the world.
“A majority of Americans have long held the view that the United States is “less respected by other countries than in the past,” including 57% who currently say this. But the share of Republicans who say this is now lower than it has been in Pew Research Center surveys dating back to 2004.
“At the same time, the share of Democrats who say the U.S. is less respected remains near a record high. As a result, the 53 percentage point partisan gap in the share saying the U.S. is less respected than in the past is wider than at any point in the last 15 years.
“Overall, 57% of adults overall say that, compared with the past, the U.S. is less respected by other countries these days, while 20% say it is more respected and a similar share (21%) say it is about as respected as it has been in the past.”
I would suggest that members of the Republican Party start reading some international newspapers.
“In his first seven months in power, Bolsonaro, who was elected with strong support from agribusiness and mining interests, has moved rapidly to erode government agencies responsible for forest protection.
“He has weakened the environment agency and effectively put it under the supervision of the agricultural ministry, which is headed by the leader of the farming lobby. His foreign minister has dismissed climate science as part of a global Marxist plot. The president and other ministers have criticised the forest monitoring agency, Ibama, for imposing fines on illegal land grabbers and loggers. The government has also moved to weaken protections for nature reserves, indigenous territories and zones of sustainable production by forest peoples and invited businesspeople to register land counter-claims within those areas.
“This has emboldened those who want to invade the forest, clear it and claim it for commercial purposes, mostly in the speculative expectation it will rise in value, but also partly for cattle pastures, soya fields and mines.”
“In the last half-century, about one-fifth of this forest, or some 300,000 square miles, has been cut and burned in Brazil, whose borders contain almost two-thirds of the Amazon basin. This is an area larger than Texas, the U.S. state that Brazil’s denuded lands most resemble, with their post-forest landscapes of silent sunbaked pasture, bean fields, and evangelical churches. This epochal deforestation — matched by harder to quantify but similar levels of forest degradation and fragmentation — has caused measurable disruptions to regional climates and rainfall. It has set loose so much stored carbon that it has negated the forest’s benefit as a carbon sink, the world’s largest after the oceans. Scientists warn that losing another fifth of Brazil’s rainforest will trigger the feedback loop known as dieback, in which the forest begins to dry out and burn in a cascading system collapse, beyond the reach of any subsequent human intervention or regret. This would release a doomsday bomb of stored carbon, disappear the cloud vapor that consumes the sun’s radiation before it can be absorbed as heat, and shrivel the rivers in the basin and in the sky.”
Please forgive me, but the Editorial in today’s Baltimore Sun represents sea change in political discourse in the US. It will be remembered as a turning point.
” In case anyone missed it, the president of the United States had some choice words to describe Maryland’s 7th congressional district on Saturday morning. Here are the key phrases: “no human being would want to live there,” it is a “very dangerous & filthy place,” “Worst in the USA” and, our personal favorite: It is a “rat and rodent infested mess.” He wasn’t really speaking of the 7th as a whole. He failed to mention Ellicott City, for example, or Baldwin or Monkton or Prettyboy, all of which are contained in the sprawling yet oddly-shaped district that runs from western Howard County to southern Harford County. No, Donald Trump’s wrath was directed at Baltimore and specifically at Rep. Elijah Cummings, the 68-year-old son of a former South Carolina sharecropper who has represented the district in the U.S. House of Representatives since 1996.
“Rep, Elijah Cummings has been a brutal bully, shouting and screaming at the great men & women of Border Patrol about conditions at the Southern Border, when actually his Baltimore district is FAR WORSE and more dangerous. His district is considered the Worst in the USA……
“….As proven last week during a Congressional tour, the Border is clean, efficient & well run, just very crowded. Cumming District is a disgusting, rat and rodent infested mess. If he spent more time in Baltimore, maybe he could help clean up this very dangerous & filthy place. 7:14 AM – Jul 27, 2019
“It’s not hard to see what’s going on here. The congressman has been a thorn in this president’s side, and Mr. Trump sees attacking African American members of Congress as good politics, as it both warms the cockles of the white supremacists who love him and causes so many of the thoughtful people who don’t to scream. President Trump bad-mouthed Baltimore in order to make a point that the border camps are “clean, efficient & well run,” which, of course, they are not — unless you are fine with all the overcrowding, squalor, cages and deprivation to be found in what the Department of Homeland Security’s own inspector-general recently called “a ticking time bomb.”
” In pointing to the 7th, the president wasn’t hoping his supporters would recognize landmarks like Johns Hopkins Hospital, perhaps the nation’s leading medical center. He wasn’t conjuring images of the U.S. Social Security Administration, where they write the checks that so many retired and disabled Americans depend upon. It wasn’t about the beauty of the Inner Harbor or the proud history of Fort McHenry. And it surely wasn’t about the economic standing of a district where the median income is actually above the national average. No, he was returning to an old standby of attacking an African American lawmaker from a majority black district on the most emotional and bigoted of arguments. It was only surprising that there wasn’t room for a few classic phrases like “you people” or “welfare queens” or “crime-ridden ghettos” or a suggestion that the congressman “go back” to where he came from
” This is a president who will happily debase himself at the slightest provocation. And given Mr. Cummings’ criticisms of U.S. border policy, the various investigations he has launched as chairman of the House Oversight Committee, his willingness to call Mr. Trump a racist for his recent attacks on the freshmen congresswomen, and the fact that “Fox & Friends” had recently aired a segment critical of the city, slamming Baltimore must have been irresistible in a Pavlovian way. Fox News rang the bell, the president salivated and his thumbs moved across his cell phone into action.
“As heartening as it has been to witness public figures rise to Charm City’s defense on Saturday, from native daughter House Speaker Nancy Pelosi to Mayor Bernard C. “Jack” Young, we would above all remind Mr. Trump that the 7th District, Baltimore included, is part of the United States that he is supposedly governing. The White House has far more power to effect change in this city, for good or ill, than any single member of Congress including Mr. Cummings. If there are problems here, rodents included, they are as much his responsibility as anyone’s, perhaps more because he holds the most powerful office in the land.
“Finally, while we would not sink to name-calling in the Trumpian manner — or ruefully point out that he failed to spell the congressman’s name correctly (it’s Cummings, not Cumming) — we would tell the most dishonest man to ever occupy the Oval Office, the mocker of war heroes, the gleeful grabber of women’s private parts, the serial bankrupter of businesses, the useful idiot of Vladimir Putin and the guy who insisted there are “good people” among murderous neo-Nazis that he’s still not fooling most Americans into believing he’s even slightly competent in his current post. Or that he possesses a scintilla of integrity. Better to have some vermin living in your neighborhood than to be one.”
We have witnessed a number of large protests in some places as it appears as if people are becoming unwilling to accept political conditions as unalterable. In two places, Russia and Hong Kong, the central governments have cracked down on the protests. In Moscow, police have arrested hundreds of people protesting the dismissal of candidates for elections for capricious reasons. The BBC explains:
“Many candidates managed to meet the threshold but the electoral commission ruled some signatures ineligible, saying they were unclear or the addresses provided were incomplete, and barred the candidates from taking part.”
“Activists held the march in Yuen Long, scene of the attack by club-wielding men, despite a police ban on safety grounds.
“Building barricades out of street furniture and umbrellas, protesters threw rocks and bottles. Many armed themselves with hiking sticks and improvised shields from wood, surfboards, cardboard and other materials.
“Police, widely criticized for failing to better protect the public from last weekend’s attack, responded on Sunday with tear gas, rubber bullets and sponge grenades, a crowd control weapon.
“Several hundred protesters remained as dark fell, fighting with police in the local train station, where blood could be seen spattered on the floor. Earlier, Reuters witnesses saw a hard core group of activists with small metal bats, metal and wooden poles and slingshots moving against the human tide.”
Protesters in Hong Kong Sing “Do You Hear the People Sing?” from Les Miserables
On the other hand, protesters in Puerto Rico scored a major victory after the Governor of Puerto Rico, Ricardo Rosselló, resigned after hundreds of degrading and misogynistic chats were published. What is most interesting is that in China and Russia the protesters are literally putting their careers on the line and are willing to make that sacrifice for the public good. There are other places in the world where large scale protests are warranted, but the public seems to be willing to tolerate wretched behavior.
There are wildfires burning in the Arctic–in Siberia, Greenland, and Alaska which are visible from space. Ecowatch describes the significance of the wildfires:
“Copernicus’ scientists have been tracking more than 100 wildfires raging above the Arctic Circle since the start of June, which was the hottest June on record. July is on pace to break records too as Europe bakes under another heat wave this week.
“The magnitude is unprecedented in the 16-year satellite record,” said Thomas Smith, an assistant professor in environmental geography at the London School of Economics, to USA Today. “The fires appear to be further north than usual, and some appear to have ignited peat soils.”
Peat fires burn deeper in the ground and can last for weeks or even months instead of a few hours or days like most forest fires, according to the UPI.
The researchers at Copernicus track how much greenhouse gas the wildfires emit into the atmosphere as well. So far, the Arctic’s fires have released approximately 100 megatons, 100 million metric tons, of CO2 between June 1 and July 21, which Parrington said on Twitter “is getting close to 2017 fossil fuel CO2 emissions of Belgium” for the entire year, as USA Today reported.
The smoke from the fires extends for hundreds of miles. The world cannot afford to listen to the climate deniers any longer.
The Turkish decision to buy the Russian S-400 air defense system–one of the best in the world–has roiled NATO and the US. US President Trump decided to stop the sale of the US fighter plane, the F-35, because of the purchase. The US argued that the Russians would have access to the F-35s and would therefore be able to figure out ways to defeat the F-35’s offensive and defensive capabilities. Turkish President Erdogan is calling President Trump’s bluff and has stated that Turkey will purchase fighter planes elsewhere–most likely from Russia which produces a very capable fighter plane, the Su-35. If Turkey makes that decision, then it would be impossible for Turkey to remain within NATO. Strangely, President Trump made the following statement today about the situation: “We’re looking at the whole Turkey situation. It’s a tough situation … I don’t blame Turkey because there are a lot of circumstances.” The emerging relationship between Turkey and Russia is unusual, given the historical tensions between the two states. And that relationship will make resolving the civil war in Syria more difficult, particularly if Turkey decides to take strong action against the Kurds in Syria. It seems to me that both the US and Turkey have not really thought out the long-term implications of this dispute, but it seems clear that Russia is playing a very sophisticated long game.
The Su-35
A few days ago, Israel demolished 10 buildings in the occupied East Jeruslaem town of Sur Bahir, a move that was condemned by Canada, the European Union, and the Arab League. Under international law, it is illegal to force the transfer of civilian populations in occupied territory. Article 49 of the Fourth Geneva Convention (1949) reads, in part: ” Individual or mass forcible transfers, as well as deportations of protected persons from occupied territory to the territory of the Occupying Power or to that of any other country, occupied or not, are prohibited, regardless of their motive.” Virtually every country in the world except for Israel and the US considers East Jerusalem as occupied territory since it was taken over by the Israelis in the 1967 war. Today the US prevented the UN Security Council from considering a resolution condemning the Israeli demolition of the buildings. Mondoweiss describes the reaction of the Palestinian Authority to the Security Council’s decision not to consider the resolution:
“While the US was blocking any condemnations of the Israeli government’s actions in East Jerusalem, Palestinian Ambassador Riyad Mansour addressed the UNSC, imploring the council to ‘alleviate the human suffering, to salvage peace prospects and to contribute to making that peace a reality.’
“During his remarks, Mansour called attention to the case of Sur Bahir, calling the demolitions ‘deliberate and systematic in nature,’ which he said ‘constitute gross violations’ of international charters and agreements.
“’This is a blatant act of ethnic cleansing and forced transfer, tantamount to a war crime, and it must be fully condemned and prosecuted as such,’ Mansour said.”
The President of the Palestinian Authority, Mahmoud Abbas, declared that, because of these decisions, the Palestinians would cease to honor its agreements with Israel. Al Jazeera outlines the PA’s position:
“The 84-year-old’s declaration on Thursday came after an emergency meeting of the Palestine Liberation Organization in the wake of Israel’s demolition this week of several Palestinian buildings in Sur Baher village – a move Abbas described as an act of ‘ethnic cleansing’.
“‘We announce the leadership’s decision to stop implementing the agreements signed with the Israeli side,’ Abbas said at a speech in Ramallah, in the occupied West Bank.
“He added that a committee would be set up in order to implement the decision but did not offer additional information.
“‘We will not bow to dictates and imposing a fait accompli by force in Jerusalem and elsewhere,’ Abbas said. “
It is not clear what Abbas’s statement actually means, but the PA’s position casts significant doubts about the viability of the US “Deal of the Century” that was released last month by Jared Kushner.
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