Author Archive: Economist

British PM Scrambles to Avoid Chaotic Brexit Finale

Britain’s government redoubled its efforts Thursday to win over the main opposition party in a last-gasp bid to avoid a chaotic exit from the European Union next week.

The latest round of talks came after lawmakers tried to safeguard against a doomsday ending to the 46-year partnership by fast-tracking a bill Wednesday night seeking to delay Brexit.

May is racing against the clock in a desperate search for votes that could push her ill-loved divorce deal with the other 27 EU leaders through parliament on the fourth attempt.

May’s spokesman said there would be “intensive discussions over the course of today”, noting the “urgency” of the situation.

Britain’s latest deadline is April 12 and resistance to May’s plan remains passionately strong.

But increasingly weary EU leaders — tired of Britain’s political drama and eager to focus on Europe’s own problems — want to see either a done deal or a new way forward from May before they all meet in Brussels on Wednesday.

Her European counterparts will decide whether to grant May’s request to push back Brexit until May 22 — the day before nations begin electing a new European Parliament.

One alternative is to force her to accept a much longer extension that could give Britain time to rethink Brexit and possibly reverse its decision to leave.

The other is to let Britain go without a deal on April 12 in the hope that the economic disruption is short-lived and worth the price of eliminating long-term Brexit uncertainties.

‘Sense of resignation’

May dramatically ended her courtship of her own party’s holdouts and resistant Northern Irish allies by turning to the main opposition Labour Party this week.

The premier met Labour leader Jeremy Corbyn on Wednesday for a reported 100 minutes of talks both sides described as “cordial” but inconclusive.

The EU’s chief Brexit negotiator Michel Barnier on Thursday welcomed the cross-party effort to resolved the deadlock.

“It’s time for decisions,” he tweeted.

But May’s decision to hear out Corbyn’s demands for a closer post-Brexit alliance with the bloc that includes membership in its customs union has enraged Britain’s right-wing and seen two junior ministers resign.

One senior minister said May had no other choice.

“It’s very simple — there’s nowhere else to go,” the unnamed cabinet minister told the news website Politico.

“There’s a sense of resignation about her that ‘we get this through and I take the flak’.”

Pro-European members of May’s team also insisted that it was time to compromise on long-standing political beliefs for the benefit of safe resolution of Britain’s biggest crisis in decades.

“Both parties have to give something up,” finance minister Philip Hammond told ITV.

“There is going to be pain on both sides.”

Competing visions

May and Corbyn have competing visions of Britain’s place in Europe and neither has shown much willingness to compromise in the past.

Corbyn said late Wednesday that he did not see “as much change as I expected” from May.

The Times newspaper quoted an unnamed government source as saying that May’s office thought it more likely than not that the negotiations would fail.

May has resisted the customs union idea because it bars Britain from striking its own independent trade agreements with nations such as China and the United States.

And Corbyn is under pressure from Labour’s pro-EU wing to push for a second referendum that would pit May’s final deal against the option of staying in the bloc.

Corbyn has shied away from backing another vote due in part to his own sceptical view of Brussels.

The Labour-backing Mirror newspaper said May and Corbyn would let their teams negotiate Thursday before deciding on whether to meet again face to face Friday.

 

 

 

 

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South Korea to Launch World’s First National 5G Networks 

South Korea on Friday launches the world’s first nationwide 5G mobile networks, a transformational leap that has superpowers sparring for control of an innovation that could change the day-to-day lives of billions of people.

The fast communications heralded by fifth-generation wireless technology will ultimately underpin everything from toasters to telephones, from electric cars to power grids. 

 

But while Seoul has won the race to be first to provide the user experience, that is only one part of a wider battle that has pitted the United States against China and ensnared giants including Huawei. 

 

Hyper-wired South Korea has long had a reputation for technical prowess, and Seoul has made the 5G rollout a priority as it seeks to stimulate stuttering economic growth. 

 

The system will bring smartphones near-instantaneous connectivity — 20 times faster than existing 4G — allowing users to download entire movies in less than a second. 

 

In the same way that 3G enabled widespread mobile web access and 4G made new applications work ranging from social media to Uber, 5G will herald a new level of connectivity, empowered by speed. 

 

It is crucial for the future development of devices ranging from self-driving vehicles that send data to one another in real time to industrial robots, drones and other elements of the Internet of Things.  

That makes it a vital part of the infrastructure of tomorrow, and the 5G standard is expected to bring about $565 billion in global economic benefits by 2034, according to the London-based Global System for Mobile Communications, an industry alliance. 

‘1 million devices’

But the implications of the new technology have pitted Washington against Beijing in an increasingly bitter standoff. 

The U.S. has pressed its allies and major economies to avoid 5G solutions from Chinese-owned telecom giant Huawei, citing security risks that technological back doors could give Beijing access to 5G-connected utilities and other components. 

 

But Chinese firms dominate 5G technology.  

Huawei, the global leader, has registered 1,529 5G patents, according to data analysis firm IPlytics. 

 

Combined with manufacturers ZTE and Oppo, plus the China Academy of Telecommunications Technology, Chinese entities own a total of 3,400 patents, more than a third of the total, according to the research firm.    

 

South Korea comes next, with its companies holding 2,051 patents. 

 

In contrast, U.S. firms have 1,368, IPlytics said, 29 fewer than Finland’s Nokia alone. 

 

All three of South Korea’s mobile operators — KT, SK Telecom and LG UPlus — will go live with their 5G services on Friday. 

 

“5G’s hyperspeed can connect 1 million devices within a 1-square-kilometer zone simultaneously,” KT said in a report. 

 

Neither KT nor SK Telecom uses Huawei technology in its 5G network, but Huawei is a supplier to LG UPlus, the companies told AFP. 

 

On the same day, Samsung Electronics will release the Galaxy S10 5G, the world’s first available smartphone using the technology, and rival phonemaker LG will follow with the V50s two weeks later. 

Deployment in US

Until now, no mobile networks have offered nationwide 5G access.  

U.S. network carrier Verizon said Wednesday that it had become the first carrier in the world to deploy a 5G network — in Chicago and Minneapolis, with more cities due to follow this year.  The system will work with Lenovo’s Moto Z3 smartphone. 

 

“Verizon customers will be the first in the world to have the power of 5G in their hands,” said Hans Vestberg, Verizon’s chairman and chief executive officer. “This is the latest in our string of 5G firsts.” 

 

Rival US carrier AT&T deployed what it called its 5G E network in 12 cities last year with speeds faster than 4G networks but below those being deployed in other fifth-generation systems. 

 

Andre Fuetsch, president of AT&T Labs, said in a statement Wednesday that independent testing shows “that we are the fastest wireless network nationwide.” 

 

Qatari firm Ooredoo says it offers 5G services in and around Doha but does not have devices available to use them. 

 

Japan is also expected to roll out a limited deployment in 2019 before full services start in time for next year’s Tokyo Olympics. 

Cost barrier

More than 3 million South Koreans will switch to 5G by the end of this year, predicted KT Vice President Lee Pil-jae. 

 

Cost is likely to be a barrier initially for users, analysts say, as the cheapest version of the new Galaxy handset will be priced at 1.39 million won ($1,200). 

 

“While there are many cheap 4G smartphones under $300, Samsung’s 5G phones are well over $1,000, which could be a major minus point for cost-savvy consumers,” a KT representative told AFP.  

 

None of South Korea’s three network operators would say how much they have invested in 5G, but Seoul’s Economy Minister Hong Nam-ki estimated it would be at least $2.6 billion this year alone. 

 

“If 5G is fully implemented,” he said, “it will greatly improve people’s lives.”

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Closure Threat Hurts Truckers, Stores on US-Mexico Border

Trucks inched through traffic Wednesday and some stores reported fewer customers in U.S.-Mexico border towns as staffing shortages tied to a surge in asylum seekers slowed checkpoints and threats of a complete closure of the border scared shoppers.

U.S. President Donald Trump reiterated his threat to close the border, or parts of it, saying Congress could avert such a shutdown by changing laws to fix what he called immigration “loopholes.”

Business leaders on both sides of the border have lashed out against the threat, saying a shutdown would hurt supply chains and $1.7 billion in daily trade at some of the world’s busiest land crossings.

Already, Washington’s decision to move 750 agents from commercial to immigration duties has triggered long delays for legitimate cross-border traffic. 

Petra Gomez, 63, who owns discount store Buy 4 Less near the Otay Mesa crossing in California, opposite Tijuana, said Trump’s threats were also taking a toll. 

​Fear of being trapped

“Many people are not crossing for fear that if they close the border, they will be trapped,” she said, referring to the tens of thousands of people who cross every day from the Tijuana area into California. “If they close the border, I will have to close because I will not have clients.”

However, Mexican President Andres Manuel Lopez Obrador said on Wednesday there were no “serious problems” at the border, and that the government was in constant communication with U.S. authorities to keep it open. 

“It’s not in anyone’s interest to close the border,” he told reporters at his regular morning news conference. 

U.S. Customs and Border Protection (CBP) has estimated that 100,000 migrants were apprehended or encountered at the border in March, the highest level in a decade. Most were Central American families claiming asylum. 

The CBP said it would suspend cargo operations every Saturday at one of its El Paso crossing points until it had enough staff to operate fully.

On Wednesday, some lanes were open to commercial traffic at El Paso, Laredo and Otay Mesa. The longest wait stretched up to five hours at a section of the El Paso crossing where only one of six lanes was open at a major bridge, according to the CBP. In Ciudad Juarez, across the border from El Paso, lines of trucks were longer than usual, according to a 

Reuters witness.

​’Green gold’

Mexico is the third-largest trading partner of the United States, and is its largest supplier of agricultural products, including vegetables and avocados.

“Avocados in particular have the potential to become the new green gold in terms of prices” if a shutdown caused shortages, Moody’s said in a report on Wednesday. 

Americans would run out of avocados in three weeks if imports from Mexico were stopped, Steve Barnard, president and chief executive of Mission Produce, the largest distributor and grower of avocados in the world, said this week. 

The Business Roundtable, a powerful private sector lobby, said in a letter to White House officials on Wednesday that shutting the border would severely damage U.S. businesses, particularly those that depend on employees who commute daily to work from Mexico. 

Luis Ventura, 23, crosses from Tijuana every day to work at a customs agency in San Diego. More than just concern over his job, he fears a shutdown would take him away from his son. 

“If you close the border, either I stay in Tijuana without work or I stay here without family,” he said. 

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US-China Trade Talks Progressing, White House Says  

White House economic adviser Larry Kudlow said Wednesday that U.S. trade talks with China are continuing to progress as negotiations between the world’s two biggest economies resume in Washington this week.

Kudlow told reporters that the two countries made good headway in Beijing last week, with China acknowledging such problematic issues as the theft of intellectual property, forced technology transfers and computer hacking.

He said no decisions have been made on automobile tariffs.

U.S. lawmakers are taking a wait-and-see attitude on the lengthy talks.

Republican Sen. Lindsey Graham, a key ally of President Donald Trump, told VOA’s Mandarin service, “I’m hopeful. I think the president is right to insist on change. We want it to be a win-win for both countries. And I will see. We will know in a few weeks.”

He added, “It’s got to be some enforcement mechanism that future Congresses and presidents can believe will work, because it just can’t be, you know, a deal in name only.”

Another Republican, Sen. Thom Tillis, said, “One of the things that I’m particularly focused on is intellectual property and intellectual property protection. So, I hope that we’re moving along not only the general terms of the trade agreement but also a real focus on what I think is the single greatest threat long term, and that’s having China more productively participate in the production of intellectual property.”

Republican Sen. Charles Grassley said the U.S. hopes to complete the trade negotiations by the end of April. 

But Myron Brilliant, executive vice president at the U.S. Chamber of Commerce, a lobby for the biggest American corporations, said concluding the talks will not be easy.

“The end game is never going to be easy,” he said. “It’s talks about the two largest economic powers in the world. You are talking about a set of issues that requires some changes, significant changes, in China’s behavior.” 

Yihua Lee of VOA Mandarin service contributed to this report.

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US Says Will Not Send High-Level Officials to China’s Silk Road Summit

The United States will not send high-level officials to attend China’s second Belt and Road summit in Beijing this month, a spokesperson for the U.S. State Department said on Tuesday, citing concerns about financing practices for the project.

China’s top diplomat, Yang Jiechi, said on Saturday that almost 40 foreign leaders would take part in the summit due to be held in Beijing in late April. He rejected criticisms of the project as “prejudiced.”

The first summit for the project, which envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending, was held in 2017 and was attended by Matt Pottinger, the senior White House official for Asia.

There are no such plans this year.

“We will not send high-level officials from the United States,” a spokesperson for the U.S. State Department said in answer to a question from Reuters.

“We will continue to raise concerns about opaque financing practices, poor governance, and disregard for internationally accepted norms and standards, which undermine many of the standards and principles that we rely upon to promote sustainable, inclusive development, and to maintain stability and a rules-based order.

“We have repeatedly called on China to address these concerns,” the official added.

Chinese President Xi Jinping’s Belt and Road Initiative has proven controversial in many Western capitals, particularly Washington, which views it as a means to spread Chinese influence abroad and saddle countries with unsustainable debt through non-transparent projects.

On Saturday, Yang called such criticisms “prejudiced,” saying China has never forced debt upon participants and the project was to promote joint development.

On Saturday, he did not name the 40 leaders he said would attend, but some of China’s closest allies have already confirmed they will be there, including Russian President Vladimir Putin, Pakistani Prime Minister Imran Khan, Philippines President Rodrigo Duterte and Cambodian Prime Minister Hun Sen.

​The United States has been particularly critical of Italy’s decision to sign up to the plan this month, during a visit by Xi to Rome, the first for a G7 nation.

Washington sees China as major strategic rival and the Trump administration has engaged Beijing in a tit-for-tat tariff war. 

The world’s two biggest economies have levied tariffs on hundreds of billions of dollars’ worth of bilateral trade since July 2018, raising costs, disrupting supply chains and roiling global markets.

White House economic adviser Larry Kudlow on Tuesday said the countries “expect to make more headway” in trade talks this week, while the top U.S. business lobbying group said differences over an enforcement mechanism and the removal of U.S. tariffs were still obstacles to a deal.

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Report: Asian Economies Lag as Trade Tensions Drag on Growth

Trade tensions between China and the United States are putting a drag on economies in the region, with growth likely to continue to slow in the coming two years, the Asian Development Bank says in a report released Wednesday.

 

The Manila, Philippines-based regional lender’s latest economic outlook forecasts that growth in developing Asia will slow slightly to 5.7 percent this year and 5.6 percent in 2020. In 2017 growth was at 6.2 percent.

 

“The main risk to the outlook is still the ongoing trade conflict, as heightened trade policy uncertainty can negatively affect investment and manufacturing activity,” it said. “A sharper slowdown in the advanced economies or the PRC (People’s Republic of China) is another risk.”

 

The annual update comes as China and the U.S. prepare for another round of talks, this week in Washington, aimed at resolving their dispute over China’s industrial policies and acquisition of technology.

 

After the dispute escalated in mid-2018, with both sides imposing billions of dollars’ worth of tariffs on each other’s products, world trade weakened, contracting nearly 2 percent in January from a year earlier, the report shows.

 

It said the solid growth momentum in the first nine months of the year began to fade in the last quarter. Growth in industrial production also showed signs of weakness, the ADB report said.

 

This is an added burden as the business cycle for major economies heads into a “negative trend,” said the ADB’s chief economist, Yasuyuki Sawada.

 

“This global business cycle seems to create some impact on Asian economies,” he said in an interview. “It’s not only trade tensions.”

 

Other reports show similar sluggishness in the region, which remains the main driver for world economic growth.

 

The latest set of purchasing manager indexes showed slight improvements in exports in March from January-February for Indonesia, Vietnam, Thailand and Taiwan as well as China.

 

“But other data suggest that growth in China could well weaken again in the near term,” Capital Economics said in a report. “As such, we think it is too soon to predict a turn in fortunes for the region’s manufacturing sectors.”

 

The Asian Development Bank forecasts that growth in major economies will slip to 1.9 percent in 2019 and 1.6 percent in 2020 from 2.2 percent last year. The U.S. economy is forecast to expand at a 2.4 percent annual rate this year, slowing from 2.9 percent in 2018, and to decelerate to 1.9 percent growth in 2020. Japan’s growth will remain flat at 0.8 percent this year, it estimates, and fall to 0.6 percent next year.

 

The bank expects growth in the area using the euro to fall to 1.5 percent in 2019 and 2020 from 1.8 percent in 2018.

 

On the positive side, inflation should remain manageable and domestic demand in many economies in Southeast and South Asia is vibrant, the Asian Development Bank said.

 

That’s less true of East Asia, where consumers have grown more cautious about spending: auto sales in China, for example, have plunged in recent months in one of the biggest reversals of sentiment.

 

Developing countries in Asia are seeing an uptick in investment from many parts of the world, especially China, it noted. China’s foreign direct investment in new projects such as renewable energy, textile factories and property in the region nearly tripled, while investment by the U.S. jumped by nearly three-quarters.

 

While much of the ADB’s report focused on trade and investment, the bank urged governments across the region to devote more resources to cultivating resilience and taking measures to help prevent or mitigate natural disasters.

 

The report noted that 84 percent of the 206 million people affected by natural disasters each year in 2000-2018 lived in developing Asian economies. More than half of the 60,000 deaths from such catastrophes each year were in this region, which suffers a large share of extreme weather events and earthquakes.

 

The report says that a large share of the $1.7 trillion in annual investments in infrastructure needed over the coming decade should go to reducing risks from such disasters.

 

One area of concern is insurance.

 

“Almost all direct damage is not covered by insurance,” Sawada said.

 

Another area that could yield strong results is in weather forecasting and warnings in the Asia-Pacific, home to four of every five people affected by storms and other disasters.

 

While earthquakes and tsunamis are virtually impossible to predict, when it comes to extreme weather, “there is room for constructing mechanisms and building up early warning systems,” Sawada said. “There is huge potential.”

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Citing Climate Differences, Shell Walks Away From US Refining Lobby

Royal Dutch Shell on Tuesday became the first major oil and gas company to announce plans to leave a leading U.S. refining lobby due to disagreement on climate policies, citing its support for the goals of the Paris climate agreement.

In its first review of its association with 19 key industry groups, Shell said it had found “material misalignment” over climate policy with the American Fuel & Petrochemical Manufacturers (AFPM) and would quit the body in 2020.

The review is part of Shell’s drive to increase transparency and show investors it is in line with the 2015 Paris climate agreement’s goals to limit global warming by reducing carbon emissions to a net zero by the end of the century.

It is the latest sign of how investor pressure on oil companies, particularly in Europe, is leading to changes in their behavior around climate. Last year, Shell caved in to investor pressure over climate change, setting out plans to introduce industry-leading carbon emissions targets linked to executive pay.

Its chief executive, Ben van Beurden, has since repeatedly urged oil and gas producers to take action over climate and pollution, staking out a more radical position than the heads of other major oil companies.

“AFPM has not stated support for the goal of the Paris Agreement. Shell supports the goal of the Paris Agreement,” the Anglo-Dutch company said in its decision.

“The need for urgent action in response to climate change has become ever more obvious since the signing of the Paris Agreement in 2015. As a result, society’s expectations in this area have changed, and Shell’s views have also evolved,” van Beurden said in the report.

The company has disagreed with AFPM on a number of issues for some time, according to two lobbying sources. Shell said it also disagreed with AFPM’s opposition to a price on carbon and action on low-carbon technologies.

Shell and AFPM have also been at odds in recent months over regulation over the use of renewable fuels. While Shell and other large refiners invested in cleaner fuel technology, AFPM has fought hard against standards requiring refiners to blend or subsidize the blending of biofuels into the gasoline pool – saying it hurts independent refiners.

Shell and rivals Exxon and BP have in recent years left the American Legislative Exchange Council, a conservative political group, over its stance on climate change.

AFPM Chief Executive Chet Thompson thanked Shell for its “longstanding collaboration.”

“We will also continue working on behalf of the refining and petrochemical industries to advance policies that ensure reliable and affordable access to fuels and petrochemicals, while being responsible stewards of the environment,” Thompson said in a statement.

AFPM counts around 300 U.S. and international members including Exxon Mobil, Chevron, BP and Total SA that operate 110 refineries and 229 petrochemical plants, according to its 2018 annual report.

French oil major Total said in a statement to Reuters that consensus required by organizations such as AFPM does not always reflect its position, and that it regularly monitors the relevance of its participation.

“In this case, Total takes a pro-active approach in order to convince its peers, particularly on climate issues. In case of differing points of view, Total publicly defends its position, and is ready to reconsider its participation in case of disagreement,” the company said.

Total said it was fully aware of climate issues, has publicly recognised them and takes them into its strategy.

Shell’s review was welcomed by Adam Matthews, director of ethics and engagement for the Church of England Pensions Board, which invests in Shell and led discussions with the company over its climate policy.

“This is an industry first,” Matthews said. “With this review Shell have set the benchmark for best practice on corporate climate lobbying not just within oil and gas but across all industries. The challenge now is for others to follow suit.”

Walk Away

Shell also found “some” misalignment with nine other trade associations, including the American Petroleum Institute, the oil and gas industry’s main lobby.

Shell said that while it had some climate-related differences with the API, it welcomed the lobby’s advocacy on a range of state and federal issues such as trade and transport, as well as the API’s efforts to reduce methane emissions.

Shell said it will continue to engage with the API and other groups over climate policies and monitor their alignment.

Shell last month urged President Donald Trump’s administration to tighten restrictions on emissions of methane, a potent greenhouse gas, instead of weakening them as planned.

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World Trade Forecasts Slashed Again Amid US-China Standoff

The World Trade Organization has cut its forecast for trade growth this year by more than a percentage point, to 2.6 percent, due to an economic slowdown and amid a trade conflict between the United States and China.

The downgrade — from 3.7 percent forecast issued in September — reflects how quickly the prospects for global business are fading as, among other things, the U.S. and China struggle to agree on how to lift tariffs on hundreds of billions of dollars-worth of trade.

 

“With trade tensions running high, no one should be surprised by this outlook,” WTO Director-General Roberto Azevedo said Tuesday.

 

Beyond the trade war, the WTO has cited weaker economic growth in North America, Europe and Asia — largely as the effect of fiscal stimulus by the Trump administration wears off. It noted a “phase-out” of monetary stimulus in Europe and China’s efforts to shift its economy away from its traditional reliance on manufacturing and investment toward services and consumption.

 

In 2018, trade grew by just 3 percent — far below the WTO’s forecast for 3.9 percent, which had itself been downgraded last year. And next year, the Geneva-based trade body expects only a small uptick in trade growth by volume next year, to 3 percent.

 

The WTO oversees international trade rules and settles disputes between countries. The Trump administration has also been critical of the WTO, accusing it of being “unfair” with the United States.

 

The U.S. has slowly squeezed the WTO by blocking appointments to its dispute settlement group, the Appellate Body, which could in December fall below the minimum number of members required.

 

Azevedo pointed to the “fundamental importance of the rules-based trading system,” saying that its weakening would “be an historic mistake with repercussions for jobs, growth and stability around the world.”

 

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NATO Celebrates 70th Anniversary, But Demands Rise For European Burden-Sharing

On April 4th, 2019, NATO members will mark the 70th anniversary of the signing of the North Atlantic Treaty — part of a successful effort to contain Soviet expansionism and to cajole the war-torn nations of Western Europe to forsake ancient enmities and to forge solidarity. 

But for the transatlantic alliance to continue, Europe will have to make a greater contribution and share more of the burden, warn analysts.

After the collapse of the Soviet Union, NATO appeared uncertain about what part to play, but the return of Russian assertiveness under President Vladimir Putin has partly changed that — and the alliance’s supporters say NATO’s traditional role of collective security has never been more important.

Nonetheless, the U.S.-European alliance has been shaken by President Donald Trump’s episodic questioning of the very value of the transatlantic pact in periodically bruising encounters with European leaders and using tweets or brusque off-the-cuff remarks to do so. 

The resignation in December of U.S. Defense Secretary Jim Mattis highlighted strained ties between the Trump administration and European allies. 

In his resignation letter, the outgoing defense secretary said: “One core belief I have always held is that our strength as a nation is inextricably linked to the strength of our unique and comprehensive system of alliances and partnerships. While the U.S. remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies.”

​Weeks earlier, Trump suggested he might cut U.S. force levels in Europe, if the European allies didn’t boost their military spending. “They kill us with NATO,” Trump said during a speech in Montana. “They kill us,” he repeated. 

Last July, during his visit to the annual summit of NATO allies in Brussels, President Trump expressed frustration with German Chancellor Angela Merkel over a planned Russia-to-Germany undersea gas pipeline, saying, “We’re supposed to protect you from Russia, but Germany is making pipeline deals with Russia. You tell me if that’s appropriate. Explain that.”

There have also been sharp disagreements over Iran and the U.S. decision to withdraw from a landmark nuclear arms pact with Russia in reaction to alleged cheating by Moscow. Washington has also expressed growing frustration with European partners over what it sees as a lax attitude to Chinese security threats to the West.

Such clashes have added to the uncertainty about the future of NATO, which is founded on a US security guarantee to Europe. 

Much of the media coverage on the current strains in the transatlantic relationship focus on President Trump’s characteristically confrontational style. European newspapers have highlighted the U.S. leader’s general distrust of multilateral organizations and his wanting a return of powerful, independent nation states that deal with each other bilaterally rather than via international organizations

But some analysts say the problems with the alliance predate the current American incumbent and at the heart of the strains has been a European reluctance to help to rebalance NATO. “The deeper reasons for the uncertainty go beyond him [Trump],” argues Hans Kundnani of Britain’s Chatham House. 

He says Europe has failed to uphold its part of a bargain. Even before Trump was elected there was a consensus in Washington that, as the United States increasingly focuses on Asia, Europe needs to take more responsibility for its own security. Presidents before Trump, including his immediate predecessor, Barack Obama, have also pressed the European members to increase their defense expenditure and to share more of a burden.

“It seems pretty clear that the only way the U.S. security guarantee to Europe might be made sustainable in the long term is for Europeans to make a greater contribution to their own security,” Kundnani argues.

And the U.S. President has his defenders when it comes to his table-thumping approach to NATO — both in the U.S. and Europe — who say Trump’s confrontational style may be the only way to shake up the alliance’s European members. 

Many in Britain’s military and intelligence establishments have been supportive of Trump’s complaints. A group of eight former British military and intelligence chiefs, who worry Britain could slip from being a “tier one” military power, argued in a newspaper advertisement that the U.S. leader’s criticism of the Europeans (and Canadians) over burden-sharing was valid.

They argued the threats the West faces demand increased military expenditure, even though Britain is one of only four European countries that already meets an agreed two percent of GDP in defense spending.

Combat readiness across the board among European militaries is woefully inadequate.

Last year, the German parliament’s military commissioner issued a scathing report on the readiness of Germany’s armed forces, noting that only a fraction of crucial weapons systems was operational. At the end of 2017, six out of six of the navy’s submarines were out of commission and none of the air force’s 14 large transport planes were available for deployment due to repairs. More than 20,000 officer and non-commissioned officer positions were unfilled. Many fighter jets, tanks and ships are outdated or in disrepair, the commissioner noted.

The report urged the government to pursue reforms “with greater urgency” and to increase defense spending.

In the face of U.S. complaints, a division has emerged among European policymakers — between those who argue they must take into greater account U.S. interests in a bid to try to improve strained transatlantic relations and those officials and leaders who want to adopt a more aggressive “Europe First” strategy to counter Trump’s “America First” approach.

French President Emmanuel Macron has advocated ambitiously a Euro-army and talks of Europe needing to free itself from military dependence on America. But both Britain and Germany are deeply skeptical of Macron’s idea for such an army. Skeptics say such an army could never make up for American military might and its importance for European defense. Others point out that it would end up with European governments having to increase their spending dramatically.

Central European states much closer to Russia place greater faith in an American security guarantee than one from their Western neighbors — for good historical reasons, they say. And despite Trump’s sharp criticism of NATO’s European members, they note, Washington remains committed to expanding a military presence in the Black Sea, the Baltic states and Poland and supporting Ukraine in its conflict with Russia.

On Monday, NATO Secretary-General Jens Stoltenberg announced an agreement to invest $260 million to fund a military storage site in central Poland in support of U.S. forces that operate in the region. “This will fund storage and maintenance of pre-positioned military equipment — which will speed up reinforcement for Europe,” Stoltenberg said during a news conference at the alliance’s Brussels headquarters.

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