Connect with us

AMERICA

Democrats call for US to refocus on Europe

Published

on

The US Democratic Party’s 2024 platform mentions Europe at the start of its foreign policy section and outlines the party’s Indo-Pacific posture, after highlighting US success in rallying allies against Russia.

The final section of the 90-plus page document, ‘Strengthening American Leadership Around the World’, includes Europe as the first section heading. This is followed by the Indo-Pacific, China, the Middle East and North Africa, the Western Hemisphere and Africa. The 2020 platform had organised these regions in alphabetical order as follows: Africa, the Americas, Asia-Pacific, Europe and the Middle East.

Ivo Daalder, CEO of the Chicago Council on Global Affairs and former US ambassador to NATO under the Obama administration, told Nikkei Asia in an interview that the new platform reflects the thinking of President Joe Biden, whom he described as ‘the last Atlanticist’.

Harris’ foreign policy in the hands of ‘Atlanticists’

“If you go through all of his statements on foreign policy, he talks about alliances, and he puts it in the context of NATO first, and then in the context of everything that is being done in the Indo-Pacific,” Daalder said.

Vice President Kamala Harris, the new Democratic presidential candidate, will be advised on national security by another ‘Atlanticist’, Philip Gordon, who served in the Obama administration as assistant secretary of state for European and Eurasian affairs, Daalder said, adding that there will be a ‘conscious effort to bring the Indo-Pacific and the Atlantic together in addressing global challenges, such as strategic competition with Russia and China, and not try to play one off against the other’.

The emphasis on Europe is causing concern among some foreign policy and security analysts, who fear it will diminish interest in Asia.

Japanese uneasy about return to Europe

For example, Koichi Isobe, a retired three-star general from Japan’s Ground Self-Defence Force, argued that Harris’s foreign policy priorities were not clear.

‘From Japan’s perspective, we understand where former President Donald Trump stands on national security and China. The same is not true of Harris,’ Isobe said.

Noting that the bilateral alliance had made ‘tremendous progress’ under Biden, Isobe said the platform suggested that Harris’ Asia policy could be similar to that of the Obama administration, which floated the idea of a ‘pivot to Asia’ but failed to implement it.

The failed ‘Asia Pivot’ policy

In their recent article ‘The Lost Decade: The US Pivot to Asia and the Rise of Chinese Power’, foreign policy analysts Robert Blackwill and Richard Fontaine describe the failure of successive US administrations to stick to the ‘Asia Pivot’ strategy as one of the three biggest foreign policy blunders since the Second World War, along with the escalation in Vietnam in 1965 and the invasion of Iraq in 2003.

Speaking at a Chicago Council on Global Affairs online event last month, Blackwill said that while the US has been distracted by the Middle East and other regions over the past decade, China has made ‘an astonishing rise in power and influence in the Indo-Pacific and then globally’.

The ‘pivot to Asia’ strategy, first outlined by then-Secretary of State Hillary Clinton in 2011, was a ‘radical’ shift, Blackwill said, adding that ‘for the first time in American history, Europe is no longer the top priority of American foreign policy’.

Reaction from Trump’s foreign policy adviser

Former Pentagon official Elbridge Colby, who is expected to play a key national security role in a possible second Trump administration, tweeted that prioritising Europe was the wrong foreign policy for America and that the US should prioritise Asia and China.

“This is asking for trouble,” Colby wrote, quoting vice-presidential candidate JD Vance as saying the US would prioritise Asia and China.

Democrats’ China policy: ‘Tough but smart’

The 2024 platform was adopted last Monday at the Democratic National Convention.

The platform is a compilation of domestic and foreign policies that could help shape Harris’ presidency if he wins the election in November.

“During President Biden’s first term, no region of the world has better demonstrated the importance of our alliances than Europe,” the foreign policy chapter says, describing NATO as ‘stronger and more united than ever’ after Sweden and Finland joined the alliance.

The chapter also notes that the transatlantic alliance will play a key role in responding to China. It states that Biden is ‘working with our European allies to manage competition with China’.

During President Biden’s first term, no region of the world has better demonstrated the importance of our alliances than Europe,” the foreign policy chapter says, describing NATO as “stronger and more united than ever” after Sweden and Finland joined.

The chapter also notes that the transatlantic alliance will play a key role in responding to China. It states that Biden is ‘working with our European allies to manage competition with China’.

The section on China describes the country as ‘America’s most important strategic competitor’ and the only global actor with the intent and capacity to fundamentally reshape the US-led international order.

Nevertheless, a Democratic presidential administration would ‘responsibly manage’ competition with the country and cooperate in areas such as the safe use of artificial intelligence. The platform states that it ‘does not seek conflict’ with China.

It refers to Biden’s ‘tough but smart’ China policy, which ‘relentlessly advances American interests and values while providing a foundation for stability in the relationship’.

On Taiwan, the foreign policy section sticks to Biden’s basic position on the island, stressing that the party will ‘ensure that there are no unilateral changes to the status quo by either side’.

Trump criticised over Iran

On Ukraine, the platform stresses that Russian President Vladimir Putin ‘miscalculated with his invasion’ and notes that the United States has brought together a coalition of nearly 50 countries to provide security assistance to Ukraine to enable it to defend itself.

The platform also presents a more nuanced approach to Iran than Trump’s ‘maximum pressure’ approach. In this context, the number of sanctions has increased from 370 under the Obama administration to more than 1,500 under the Trump presidency.

While stressing the need to confront and ‘deter’ Iran and prevent it and its ‘terrorist proxies from threatening regional security’, he criticised Trump’s move to withdraw from the Iran nuclear deal in 2018 as ‘reckless and short-sighted’ and a ‘costly mistake’.

This was in line with Gordon’s long-standing views on the region. In his 2007 book Winning the Just War: The Path to Security for America and the World, Gordon wrote that both containing and engaging Iran was the right way forward.

Gordon urged the United States to build a ‘serious relationship’ with Iran in a way that respected its ‘legitimate interests’.

AMERICA

Fed cuts interest rates, dollar surges to two-year high

Published

on

The U.S. Federal Reserve reduced interest rates by a quarter percentage point but signaled a slower pace of easing next year. This move drove the U.S. dollar to its highest level in two years and triggered a sell-off in both domestic and international stock markets.

The Federal Open Market Committee (FOMC) voted on Wednesday to lower the benchmark interest rate to 4.25–4.5%, marking the third consecutive cut. The lone dissenting vote came from Cleveland Fed President Beth Hammack, who favored maintaining the current rates.

Officials highlighted concerns about persistent inflation, projecting fewer rate cuts for 2025 than previously expected. Reflecting these worries, policymakers also raised their inflation forecasts for the coming year. Following the announcement, Fed Chair Jay Powell remarked that the current policy settings were “significantly less restrictive,” indicating the Fed’s inclination to adopt a more cautious approach to further easing.

“This decision was a ‘closer call’ than prior meetings,” Powell noted, emphasizing that inflation trends remain “sideways” while risks to the labor market are “diminishing.”

Aditya Bhave, senior U.S. economist at Bank of America, described the Fed’s message as “unabashedly hawkish.” He pointed to the shift in officials’ 2025 forecasts, which now anticipate just two quarter-point rate cuts instead of three, calling it a “wholesale shift.”

JPMorgan Chase, a key player in U.S. bond markets, noted that money markets are pricing in only a 0.31 percentage point rate cut in 2025. This outlook, significantly tighter than the bank’s earlier 0.75-point forecast, underscores the magnitude of the Fed’s policy shift.

The decision triggered a sharp sell-off on Wall Street, with the S&P 500 falling 3% and the tech-heavy Nasdaq Composite dropping 3.6%. High-profile winners of the 2024 rally were hit hard, including: Tesla, down 8.3%; Meta (Facebook’s parent company), down 3.6%; Amazon, down 4.6%.

Smaller companies, often seen as more sensitive to US economic fluctuations, also suffered. The Russell 2000 index declined 4.4%.

In Asia, stocks fell in early Thursday trading. Benchmarks in South Korea and Taiwan dropped 1.8% and 1.6%, respectively. Meanwhile, U.S. government bond prices fell, driving the yield on two-year Treasuries—sensitive to Fed policy—up by 0.11 percentage points to 4.35%.

The U.S. dollar surged 1.2% against a basket of six major currencies, reaching its strongest level since November 2022. According to Wells Fargo senior economist Mike Pugliese, the currency had already been rising on expectations of inflationary pressures following Donald Trump’s election victory last month. However, Wednesday’s Fed decision “poured more petrol on the fire.”

The South Korean won dropped to a 15-year low against the dollar, while the Japanese yen weakened 0.5%.

Continue Reading

AMERICA

Amazon pledges $1 billion to Trump inauguration fund

Published

on

Amazon confirmed on Thursday that it will contribute $1 million to Donald Trump’s inauguration fund, a move mirroring similar actions by other major tech companies, including Meta, the parent company of Facebook and Instagram. Amazon also plans to broadcast Trump’s inauguration via its Prime Video service.

This announcement comes as major tech executives seek to establish ties with the incoming U.S. president, despite Trump’s longstanding criticisms of Big Tech. Trump has frequently accused technology companies of censorship and bias against conservative media.

Jeff Bezos, Amazon’s founder and CEO, is reportedly planning to meet Trump at his Mar-a-Lago resort next week, according to The Wall Street Journal, which first reported Amazon’s donation. Similarly, Google CEO Sundar Pichai and Apple CEO Tim Cook have expressed their congratulations to Trump since his election victory in November.

Trump’s relationship with Amazon has been fraught with challenges. During his first term, he accused the company of undercutting competition and criticized its tax policies. In 2018, Trump ordered a review of U.S. Postal Service package pricing, claiming the agency acted as Amazon’s “courier.”

Apple, meanwhile, faces potential risks from Trump’s proposed tariff policies, which could disrupt critical supply chains in China. However, during Trump’s first term, Cook secured exemptions for certain Apple products.

Meta’s CEO, Mark Zuckerberg, and other tech leaders have also engaged with Trump. According to The Information, Zuckerberg dined with Trump after the election. Pichai is also expected to meet Trump this week.

While Trump scrutinized Big Tech during his presidency, Amazon now faces mounting regulatory pressure under President Joe Biden. The U.S. Federal Trade Commission (FTC), led by Lina Khan, has been investigating Amazon for alleged monopoly practices, with several states filing lawsuits last year. The FTC is also examining major cloud service providers, including Amazon, over partnerships in artificial intelligence.

Despite earlier conflicts, Bezos recently praised Trump for his “tremendous grace and courage under real fire” in a post on X (formerly Twitter) following an assassination attempt. Bezos, who also owns The Washington Post, reportedly prevented the newspaper from endorsing Trump’s Democratic opponent Kamala Harris in the 2024 election.

Speculation about a tacit agreement between Bezos and Trump has surfaced, allegedly tied to Blue Origin, Bezos’s rocket company competing with Elon Musk’s SpaceX.

Continue Reading

AMERICA

Investors poured $140 billion into U.S. equities following Trump’s victory

Published

on

Nearly $140 billion has flowed into U.S. equity funds since last month’s election, as investors anticipate Donald Trump’s administration will implement sweeping tax cuts and regulatory reforms.

According to the Financial Times (FT), which cites data from EPFR, U.S. equity funds have seen inflows totaling $139.5 billion since Trump’s victory on November 5. This surge in investment made November the busiest month for equity inflows since records began in 2000.

The massive influx of funds has driven major U.S. stock indexes to a series of record highs, as investors appeared to shrug off concerns about potential economic risks, including inflation and its implications for the Federal Reserve’s interest rate policy.

“The growth agenda that Trump has put on the table is being fully embraced,” said Dec Mullarkey, Chief Executive of SLC Management. He added that Trump’s picks for top administration posts have been seen as “very market friendly.”

Trump has promised to fill his administration with financial experts, including Scott Bessent as Treasury Secretary, and Paul Atkins, a cryptocurrency advocate, as Chairman of the Securities and Exchange Commission (SEC).

The president-elect has outlined a pro-growth agenda, emphasizing reduced taxes, deregulation, and economic expansion. These proposals have spurred optimism among investors, fueling a rally in the market.

The S&P 500, Wall Street’s primary stock market indicator, has risen 5.3% since Election Day, bringing its total gains for the year to 28%. Smaller companies, which are often seen as more responsive to changes in the U.S. economy, have outperformed larger firms during this period. The Russell 2000 index recently hit a record high for the first time in three years.

While U.S. equity funds have enjoyed record inflows, other global markets have experienced outflows emerging market funds have seen net withdrawals of $8 billion, with China-focused funds accounting for $4 billion; funds investing in Western Europe have lost $14 billion; and Japan-focused funds have seen outflows of approximately $6 billion.

Continue Reading

MOST READ

Turkey