US midterm elections: how would a Republican victory affect US foreign policy?
Chinese tech companies are making inroads in Latin America, the US and UAE sign a $100 clean energy pact, and the Asian Development Bank makes some changes
Hi there Intriguer. In honour of Laika, the Soviet space dog who was launched into orbit on this day in 1957, we’d like to draw your attention to a ‘planet killer’ asteroid that’s heading toward Earth. But never fear, the asteroid will only come within ~4.4 million miles of Earth. Either way, we hope Laika is still up there keeping her vigil on the stars for us all.
Today’s briefing is a ~4.9 min read:
- 🇺🇸 US midterm elections: how would a Republican victory affect US foreign policy?
- ➕ Plus: Chinese tech companies make inroads in Latin America, the US and UAE sign a $100B clean energy pact, and the Asian Development Bank makes some changes.
📰 GLOBAL HEADLINES
Our take: The big news breaking as we write the newsletter is that the Ethiopian government and Tigrayan rebels have signed a truce to stop fighting. The deal to end the civil war has come as a bit of a surprise, and is just now being picked up by papers around the world.
🤿 DEEP DIVE
What’s on the Republican agenda if they win back Congress?
- Polls suggest that Republicans are likely to win control of the House of Representatives and possibly the Senate too.
- Despite general foreign policy alignment between the parties, Congressional Republicans have been more cautious with funding to Ukraine, are more hawkish on China, and are generally more passive on climate.
With less than a week to go until the 2022 US midterms, things are looking rosy for Republicans.
According to poll aggregator FiveThirtyEight (which, it must be noted, has copped a lot of flak for its election predictions in the past), Republicans have:
- An 82% chance of winning the House of Representatives.
- A 50% chance of winning the Senate (up from only 29% on 20 September).
As with most countries around the world right now, rampant inflation, high(ish) gas prices, and a looming recession are at the forefront of voters’ minds.
But you don’t read Intrigue for domestic political coverage…
Even though the power to shape foreign policy remains mostly in the hands of the President, a Republican victory next Tuesday could have a big impact on US foreign policy:
1. 🇺🇦 Funding for Ukraine
American military and humanitarian support for Ukraine has been driven by bipartisan support, with $65 billion having been allocated since March.
But some fear that Republican support may be waning:
- Ohio Senate candidate JD Vance said in an interview that “we’re at the point where we’ve given enough money in Ukraine […] The Europeans need to step up.”
- Kevin McCarthy, who will likely be the next Speaker of the House, predicted that “people are gonna be sitting in a recession, and they’re not going to write a blank check to Ukraine.”
The Progressive Caucus, a group of left-wing Democrats, also drew attention last week for a letter urging President Biden to sue for peace with Russia.
- Though the Progressive Caucus and McCarthy have since walked back their positions, funding fatigue may be starting to set in.
2. 🦅 Doubling down on China
Over the past two years, Congress has passed bipartisan legislation designed to “bolster American competitiveness with China”.
- Unsurprisingly, much of that legislation has been criticised by Beijing, but it has also concerned key European allies Germany and France, who worry US protectionism will kick off a global race to the bottom.
Still, don’t expect any change if Republicans win:
- Some Republicans are calling for stiffer tariffs, stricter export controls, larger investments in Taiwan’s self-defence, and an investigation into the origins of Covid-19.
3. 🍂 Climate can wait
The current Congress has prioritised climate, passing the largest clean energy package in US history in August.
While Republicans can’t fully wind back that legislation without control of the White House, they can still make it harder to implement. According to environmental policy expert Kay Jowers:
There are also plenty of other issues likely to be affected by the elections, including immigration policy, the now almost-certainly-dead Iran deal, and the United States’s relationship with Saudi Arabia, just to name just a few. Get the popcorn ready.
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🔦 REGIONAL SPOTLIGHT
In a recent interview with the Financial Times, the head of Colombia’s tax agency, Carlos Reyes, defended the government’s decision to hike taxes on oil and coal companies.
- According to Reyes, the bill is necessary to fund the new government’s ambitious social agenda.
- Oil and coal executives have criticised the tax reform, claiming it will stifle investment in the sector.
🌎 Latin America
Chinese tech companies are rapidly expanding into Latin America, hiring young talent and creating a pool of specialised workers that bounce between companies.
- Latin America has a vast pool of young and educated talent frustrated by the experience of working with US and EU companies.
- Some Chinese companies are enticing prospective employees with significantly higher salaries, occasionally paid in US dollars.
Mexico is considering a host of agreements with American, Argentine, and Brazilian farmers to secure imports of non-genetically modified yellow corn before the 2024 ban on GMO corn takes effect.
- New agreements will be welcomed by US corn farmers, who stand to lose a significant chunk of business in 2024.
- US farm lobbies are encouraging the Biden Administration to challenge the GMO ban under a shared trade agreement, but such a move would likely destabilise already-fraught relations between the US and Mexico.
🇺🇸 The US
The US and UAE have signed a new $100B green energy investment agreement.
- The partnership’s primary goal is to produce 100 gigawatts of clean energy by 2035.
- The US clean energy industry benefits from the deal, while the UAE accumulates ‘green credibility’ ahead of next year’s COP summit in the UAE.
The presidents of Venezuela and Colombia met for the first time in years on Tuesday as their bilateral ties continue to improve.
- Colombia’s new president, Gustavo Petro, promised to renormalise diplomatic ties with Venezuela, which were severed in 2019.
- The meeting is a precious opportunity for Venezuelan President Nicolas Maduro to show he is not entirely isolated from the international community.
🗞 IN OTHER NEWS…
Development banks think big
The news: The Asian Development Bank (ADB) is undergoing a major overhaul of its lending programs.
- The reforms, as first reported by Devex, would streamline lending from the ADB’s five regional branches into one central operation and prioritise fieldwork.
The ADB is a multilateral financial institution primarily financed by the US and Japan that extends loans to support development projects across the Asia-Pacific.
- They support a wide range of initiatives, from railway projects in the Philippines to food security programs in Kyrgyzstan.
The lending program reorganisation is designed to increase the ADB’s responsiveness to clients, according to Managing Director General Woochong Um.
- The move will also help ADB expand its climate financing program, with a target of $100B in climate investments by 2030.
Why it matters: The network of development banks that span the globe, led by the World Bank, is critical to regional economic progress and climate resilience.
- During a recent meeting of development bank heads in Côte d’Ivoire, African Development Bank Group President Dr Akinwumi Adesina suggested that the ADB’s reforms might prove a valuable model for other organisations:
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- This Generation Impact Academy course to help you learn more about impact investing while also introducing you to like-minded peers. You can sign up here.
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