This is a weekly thread for people to discuss international news, foreign policy or IR history. I usually start off with coverage of some current events from around the world. Feel free to drop in with coverage of countries you’re interested in, talk about ongoing dynamics like the Ukraine War, or even just whatever you’re reading.
Argentina
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Argentina opened the first of its three rounds of elections on Sunday; the main three way election will happen on October 22, and if no one gets a majority (very likely) then the two top ranked candidates will go to a runoff November 19. To the surprise of everyone, the largely fringe turbo-libertarian Javier Milei won unexpectedly, placing him as the front runner for October, and making him suddenly the talk of the town in international press. Milei’s party, La Libertad Avanza, performed terribly in recent municipal and regional elections; his own polling at its best was mixed and his ideas polled much worse than himself a man. So his 30% results in the primary genuinely surprised most people. The results look even more impressive at the provincial level, where Milei won 16 of 24 provinces, with remaining provinces divided between the other parties:
[Milei’s] ultra-liberal discourse was imposed, as was foreseeable, in urban centers with more middle classes, such as the cities of Córdoba or Mendoza . But the electoral surprise was greater when the scrutiny revealed that the leader of La Libertad Avanza also reached the poorest districts of the country. ..
As happened in Chaco and Jujuy, Milei was the candidate with the most votes for the PASO in most of the poorest districts in the country, according to the survey carried out by Infobae .
These poorer areas are the traditional stronghold of the Peronists/Kirchnerists, so their switch to the libertarian is quite the sea change. ¿Quien es Milei?
Javier Milei is a former economist and Congressman who’s built up a huge media presence in the past year. It’s a little like if one of the weirdo right wing internet influencers we sometimes discuss here became a major party candidate, down to the fact that he rages about leftism while also being kinda libertine and degenerate, partial to the occasional threesome, moonlighting as a tantric sex instructor, and running with a VP who I guess does cosplay. Otherwise, socially he’s a grab bag of right-wing culture war talking points, generalized hatred of the elites (whom he calls “the caste”), banning abortion in all cases including rape and incest, the right to bear arms, climate change is a hoax, etc - plus a few out there ideas, like the novel proposal that people should be able to sell their own organs or children on the free market.
But really Milei’s support is behind economics, because there’s nowhere that the establishment parties have failed more manifestly. The ruling party, Unión por la Patria (previously Frente de Todos), is the Peronist/Kirchnerist left mega-populist party which set the institutional tone for Argentina’s stagnation since the 30s. Their opposition, the center right Juntos Del Cambio, was originally elected to do what Milei says he will - utterly reform the broken system the Kirchnerists created. And to their credit they did oversee some significant reforms, but most critically failed to address Argentina’s central ill of inflation (partially because it would have conflicted with their other campaign pledge to balance budgets). After a brief upward surge in the economy after they took power, ultimately they left it as they found it, in shambles.
With both parties dropping the ball so horrifically on inflation, Milei has made the centerpiece of his campaign a highly controversial plan to switch from pesos to dollars. Surely this would address inflation (just by keeping it at US rates) but the transition would be remarkably painful. Supposedly about 60% of voters actually oppose the plan and it’s not actually clear Argentina can physically, literally do this - many people apparently think they genuinely do not have sufficient reserves to convert their existing money base entirely into dollars. There’s also the risk that it would hurt competitiveness by inflating the value of Argentina’s exports relative to the region; this was one of the big criticisms of the 90s peso convertibility. Even so, possibly this is still preferable to nonstop runaway inflation.
Milei’s “chainsaw plan” also includes: “eliminating 11 government ministries, reducing government spending by 15% of the country’s GDP, and privatizing or closing down state companies and agencies, among other austerity measures. A potential Milei administration would also eliminate free state schools and healthcare, and replace them with a “voucher system” designed to subsidize whoever needs them, according to his government plan.” I couldn’t really comment on how useful Argentina’s government ministries are, eliminating them could actually be disastrous, especially for their pension system - but it should be said that currently Argentina funds its government expenses with the money printer, so if inflation is ever going to be addressed spending does have to curbed (though perhaps the medicine doesn’t need to be quite that extreme).
To be clear, the election is still anyone’s contest. Milei pulled ahead of the establishment parties only by a hair, and this with neither of them formally unified under a chosen candidate. Also, 30% of the electorate abstained (voting is mandatory in Argentina so this means more than it would most places) and almost half of the ballots were left blank or null. LA’s poor performance in municipal and regional elections also indicates that his party may be less popular than he is, and if he wins with a minority there’s no chance his zanier ideas will be pushed through (and with no provincial governments under LA control he loses a major route to reduce spending). Still, it certainly represents a population extremely weary with their governing parties.
China
The whole world seems to be talking about China’s economy starting to corrode, as economic activity slows down and deflation has begun to set in:
China's National Bureau of Statistics announced Wednesday that consumer prices dropped annually in July for the first time in two years, dipping 0.3%, just slightly better than median estimates for a 0.4% decrease . . .
Year-to-date, China's exports are down 5% compared to last year, while imports have dipped 7.6%
Manufacturing activity has contracted for four straight months July exports declined at the sharpest rate in three years, at 14.5% annually
Doomsaying about how China’s overleveraged, ponzi scheme-esque real estate sector will spell the end have been going on forever without materializing, though now maybe they finally are. Various pundits have already started asking if we’ll soon look at China the way we now do Japan - confused that we ever considered them a serious economic rival. This seems a little premature to me, but I also don’t follow China closely and would be interested to hear from others.
Japan
Speaking of which, Japan grew at a remarkable 6% this quarter, more than doubling expectations. Aside from one crazy quarter in 2020 this is the highest rate they’ve had in a very long time. BBC reports that Japan’s tumbling currency, down 10% relative to the dollar, has actually been a boon for exports, which coupled with an influx of tourism has given their stagnant economy a little boost:
Profits at the country's car makers - including Toyota, Honda and Nissan - have been boosted in recent months as they saw increased demand for exports. While a weak currency makes what the country imports more expensive, prices of commodities on global markets, like oil and gas, have fallen in recent months. That has resulted in a drop in the value of imports, down 4.3% from the previous quarter, which EY's Nobuko Kobayashi called "a major culprit for GDP growth".
Japan's economy has also been helped by a rise in tourist numbers after the government lifted border restrictions at the end of April. As of June, the number of foreign visitors to Japan had recovered to more than 70% of pre-pandemic levels, according to the country's national tourism authority. Spending by tourists is also expected to give the country's economy an even bigger boost from this month after China lifted a ban on group travel. Before the pandemic Chinese visitors accounted for more than a third of tourist spending in Japan.
I’ve reported previously on Japan and Korea ending their trade war and normalizing relations following the comfort women/forced labor lawsuits. Japanese PM Kishida, Korean President Yoon, and Biden will now hold their first ever standalone meeting on Friday to “institutionalize their trilateral ties”. This will mean holding yearly summits like this, strengthening security cooperation, training, and intelligence sharing against threats from China and North Korea. “The three leaders are also expected to signal deeper cooperation in areas such as cybersecurity, supply chain resilience and fighting economic coercion.”
Ecuador
Following the assassination of a mayor, which put two of Ecuador’s provinces under a state of emergency, and the assassination of a candidate for the Presidential election, which put the rest of the country under a state of emergency, a third politician has now been killed - all of this in under a month and barely a week away from election. Pesto Briones was a local leader in the Esmeraldas province for the democratic socialist Revolución Ciudadana, party of the previous presidents Rafeal Correa and Lenín Moreno (the latter of whom later left/was expelled), and the current leading party in the polls for the upcoming election. This has been a remarkably violent period for Ecuador. Beyond the political violence overall homicides in 2022 were 4600, double the previous year, and 2023 is on pace to exceed that number still; so far there have been reportedly been 3,568 murders compared with 2,042 at the same point in the year during 2022.
Six Colombians have now been arrested in the murder of Fernando Villavicencio. Details are sparse but the Colombian drug trade is intertwined with Ecuador’s, and Villaviencio had been threatened by the cartels. Reportedly Villavicencio’s family has accused the Ecuadorian government of neglecting to provide sufficient security, lacking armored/bulletproof cars, leading him through public entrances and exits rather than established side routes, etc. Venezuelan President Nicolas Maduro, in a message offering condolences for the assassination, made explicit the comparison between this and the group of Colombian mercenaries who assassinated the Haitian President Jovenel Moise.
South Africa
Former President Jacon Zuma has now been released after only two months of his sentence, reportedly due to a program to reduce prison overcrowding. Zuma was the previous leader of the ANC, and the central opposition party, the Democratic Alliance, has accused the move of political corruption (supposedly the overcrowding reduction measure was passed shortly after Zuma was sentenced). The far left Economic Freedom Fighters, who in part started as the anti-Zuma block of the ANC till they were expelled, have switched their tune and have been trying to pull away Zuma supporters from the ANC (Zuma and current President Ramaphosa are rivals), so are likely to be supportive.
The economy overall looks staggeringly bleak in advance of their election. Official unemployment has hit 33%, with observers suggesting the real rate may be as high as 42%.
When it comes to youth unemployment, the rate is 61% of 15- to 24-year-olds, according to official statistics, and a staggering 71% if you again count those who are no longer trying . . . it equates to 24 million adults out of a population of 60 million who are either unemployed or not involved in any economic activity and barely surviving . . . South Africa’s GDP needs to grow by 6% a year to start creating enough jobs just for the 700,000 people who enter the workforce every year…South Africa’s growth hasn’t approached that much-needed figure for more than a decade. Its economy — which grew by 2% last year — is expected to grow by less than 1% this year and between 1% and 2% for the next five years.’
Ethiopia
Less than a year after the war in the country’s northern Tigray region ended, Ethiopia’s military is battling an ethnic militia in the neighboring Amhara region in a part of Africa already ravaged by conflict.
The Amhara are the historic ruling group of Ethiopia, previously unseated by the Tigray People’s Liberation Front, who after they were unseated in turn, later helped fill the ranks of the Tigray secessionist group from last year’s war. Current President Abiy Ahmed is a half-Amhara, half-Oromo who holds both ethnic parties within his Prosperity Party coalition. However, he’s been blamed for some attacks on the Oromo (or for not doing enough to stop them) and is accused of leaning towards his Amhara side, at least by the Oromo secessionist groups which the government has also had to deal with.
This makes it somewhat ironic that Amhara forces are now turning against him as well. His post-war project has been to consolidate the different ethnic militias into a formal security force, just as he (somewhat) did by forming the ethnic political parties into one ostensible party. The Amhara militia Fano, which played a major role in fighting for the government during the Tigrayan War, has balked at this attempt to strip away their autonomy and (supposedly) leave them less secure to other ethnic attacks, and fighting has broken out. For now the government seems to have gained the upper hand and regained control of the areas taken by Fano, but the conflict is certainly not over. Ethiopia is straining right now under the weight of Sudanese refugees, so hopefully the conflict does not escalate.
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Notes -
Dollarization is worse than better monetary policy and fiscal consolidation.
On china the doomsayers are wrong for the reasons they say. The real issue is converting from investment focused economy to consumption economy. And I think leadership doesn’t trust the consumer or wants to be western materialism but it’s necessary for long term growth.
Xi does not trust it, wsj article today or yesterday said rumors are he/his circle are suspicious of it, and think focusing in industrial capacity is better. Something about choices make ccp less important (i kind of doubt tho - the chinese consumer has so much choice!!)
Ironically the west / other countries’ consumption is what fuels chinas growth.
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I think what affluenza people in the US call "western materialism" many people in China would call "non-shitty standards of living at last". The generation that experienced the last famine in China is still alive, I think. I would expect them and their descendants to want to be a bit "materialistic" about not experiencing it again?
Don’t disagree. But the people in power see individual materialism as a regime risks.
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Note that this is also true for Westerners who grew up during the ‘20s and ‘30s. You can’t easily talk to them now because the vast majority are dead, but they tend(ed) to put a higher importance on things that they feel would give them an edge when surviving the next Great Depression.
Lean times like that tend to fuck with people in ways that just passed out of Western living memory and everyone before that is already dead; already standards and cultural outlooks of relevant generations have been lost.
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Latest Finnish update discusses the presidential race and the Finns Party's party convention.
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There's been a lot of China doom in international media and I'm sceptical. According to the World Bank, Chinese real GDP growth is at a dire 5.3% while the booming US economy is at 1.6%. Chinese manufacturing may well be down 5% yet it's roughly equal to the US, Germany and Japan combined.
https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD
https://worldpopulationreview.com/country-rankings/manufacturing-by-country
Or take car production - China is again bigger than the next three combined:
https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production
In my opinion, it's the US that should be worried about remaining an actual rival to China. US ports are abysmally inefficient, backwards and unmechanized. US infrastructure is old - no HSR. Construction of anything is very slow and very expensive. Political division is severe. Government debt is massive and rapidly growing. China is now ahead in the Nature Index too, so it's only a matter of time before the US lead in high technology is undone.
that seems overly sure
Though stories like this: https://arstechnica.com/tech-policy/2023/07/tsmc-delays-us-chip-fab-opening-says-us-talent-is-insufficient/ (yes, I know the difference between Taiwan and China, but it's beside the main point) make me think it may happen not only because of China getting better, but also because of the US getting worse and losing the hitech edge in service of myopic political considerations. The smart thing would be to say "fuck the unions, chip producing facilities on US soil are vital, especially given how vulnerable Taiwan is" but that's exactly the opposite of what is happening.
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Comparing trends, China's growth rate is higher and their total output is higher... and this is in terms of high-value papers not rubbish. Shouldn't that mean their scientific capacity is higher and that they'll pull ahead, once they catch up to all the US's previous gains?
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Boots on the ground view is that the chinese economy definitely needs help, and Chinese people (esp below a certain age) basically think it is gloomy.
Anything in particular you see from talking to people or just in your environment that we might not get from reading about it at a distance?
From my family, but layoffs of friends and so on in Shanghai, which is shocking and surprising to people. Especially shocking to those from Shanghai/big metropoles in China under the age of 50 or 40, who have only lived in continuous boom times
All but confirmed by the news that they will stop reporting young unemployment rate as well. So things can be assumed to not be improving…
Thanks for the added context
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