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America’s best hope of hanging together is China

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One of the first battles in the American civil war took place near a Missouri town that it amused fate to name Carthage. Two millennia before, the Romans sacked the original, only to turn against themselves in the ensuing peace. Metus hostilis, fear of the enemy, had kept the republic together, wrote the historian Sallust, a favourite of the US founders. Without it, discord and corruption had licence to breed.

If the US is always recruiting for a Carthage (Gore Vidal referred to its “enemy of the month club”) it is not because of an innate militarism. It is just that peace can be a psychic ordeal. Without an ethnic basis, a nation can need something outside to define itself against. The civil war happened after the US trounced the closest thing it had to a local threat in Mexico. Urban strife grew between the world wars: it was armed mobilisation, not just the New Deal, that bound ethnic Italians, Poles and Irish into a civic whole. As for the cold war, note the surge in partisanship after its end. Unanimous confirmations of Supreme Court nominees are one proxy-measure of a co-operative Washington. There has not been one since 1988.

An unchallenged US is a divided US. It follows that America’s best hope of retaining some cohesion in the coming decades is a mighty China. What is disastrous for its relative power in the world might turn out to be a godsend for its internal cohesion. Decline has its uses.

None of the other answers to the nation’s disunity is even faintly adequate. Better-regulated social media, more competitive congressional districts: these reforms are sensible on their own terms. But the mismatch between the depth of the problem and the fiddliness of the solutions is the definition of bathos.

“Bring back weekly bipartisan Senate meetings” and “Bring back patriotic art” are other ideas that do the trivial rounds. Because they give up so much to acquire power, politicians tend to overrate how much policy can ever achieve against structural and historical forces. The US did not enter an age of discord because of some technical faults in its political system. It will not escape the mire by fixing them.

Only an external foe can do that. But not just any will do. The US requires two things of an enemy: vast scale (to induce fear) and a different model of government (for a sense of otherness). The absence of the first is why al-Qaeda turned out to be such a fleeting adhesive on US society after the September 11 2001 atrocities. As lethal as it is, terror — even the word is an abstract noun — is too diffuse and de-territorialised a thing. As to the second condition, boom-era Japan, a fellow democracy, lacked it and so never crossed from daunting commercial rival to nation-binding enemy.

China scores extravagantly well on both counts. Even Americans who do not mind the loss of world primacy can object to the usurper’s political model.

It is tempting to invert the causality here. Perhaps it is not a common enemy that unifies the nation. Rather, only a unified nation can agree on a common enemy.

But recent events suggest otherwise. In his first month as president, Joe Biden has undone almost every eye-catching tenet of Donald Trump’s foreign policy. The US is rejoining the UN Human Rights Council. It is open to a revival of the Iran nuclear pact, with conditions. Relations with Saudi Arabia are colder. In a virtual G7 summit on Friday, Biden will continue his rapprochement with familiar allies.

The one line of rough continuity is China. Beijing threatens to “eat our lunch”, says Biden. The US faces “extreme competition”. It is with China in mind that his administration is taking a protectionist line on federal procurement and mulling over a coalition of democracies. One of the few subjects of weight on which America has cross-party agreement is China. And this is after just a few years of great-power showdown (2021 is approximately 1948 in cold war terms). If and when the US is overtaken in economic size, the sense of unity in adversity is likelier to deepen than fade.

“We are going to do a terrible thing to you,” Georgi Arbatov, the Soviet adviser, is said to have told an American audience in the 1980s. “We are going to deprive you of an enemy.” What a neat but desperate line it must have seemed at the time. How chillingly prescient it now reads. If the deprivation is ending, the US stands to gain in togetherness what it loses in clout. It should not need saying which is more precious.

janan.ganesh@ft.com



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Emerging Markets

NYSE to suspend trading of China’s Cnooc next month

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The New York Stock Exchange is to start delisting proceedings against China National Offshore Oil Corporation to comply with an executive order from Donald Trump that bans Americans from investing in companies with ties to the Chinese military.

The NYSE on Friday said it would suspend trading in Cnooc’s American depository shares on March 9, after determining that the company was “no longer suitable for listing” following the order that the former US president signed in November.

The order banned investing in several dozen Chinese groups that were last year put on a Pentagon blacklist of companies that are accused of working with the People’s Liberation Army and threatening US security. Trump set a January 28 deadline for the ban to take effect, but President Joe Biden pushed the deadline back to May 27.

The NYSE move comes as Biden evaluates a number of assertive actions that Trump took against China during his last year in office. The commerce department last year put Cnooc on a separate blacklist — called the “entity list” — that makes it hard for US companies to sell products and technology to the Chinese oil group.

The Biden administration has not made clear whether it intends to keep Trump’s executive order in place. But the new president and his officials have so far adopted a tough stance towards China over everything from its economic “coercion” to concerns about its clampdown on the pro-democracy movement in Hong Kong to the repression of more than 1m Uighur Muslims in the northwestern Chinese province of Xinjiang.

Earlier this month, Biden used his first conversation with Chinese president Xi Jinping since assuming office to raise concerns about Hong Kong and Xinjiang, and aggressive Chinese actions towards Taiwan. Antony Blinken, secretary of state, also described the detention of Uighurs in labour camps as “genocide”.

Jen Psaki, White House press secretary, has said the administration was conducting a number of “complex reviews” of the China actions that Trump took. The former president put dozens of other Chinese companies on the Pentagon and commerce department blacklists, including Huawei, the Chinese telecoms equipment group.



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Bond sell-off roils markets, ex-Petrobras chief hits back, Ghana’s first Covax vaccines

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The yield on the benchmark 10-year Treasury exceeded 1.5 per cent for the first time in a year and the outgoing head of Petrobras warns Brazil’s President Jair Bolsonaro against state controlled fuel prices. Plus, the FT’s Africa editor, David Pilling, discusses the Covax vaccine rollout in low-income countries. 

Wall Street stocks sell off as government bond rout accelerates

https://www.ft.com/content/ea46ee81-89a2-4f23-aeff-2a099c02432c

Ousted Petrobras chief hits back at Bolsonaro 

https://www.ft.com/content/1cd6c9fb-3201-4815-9f4f-61a4f0881856?

Africa will pay more for Russian Covid vaccine than ‘western’ jabs

https://www.ft.com/content/ffe40c7d-c418-4a93-a202-5ee996434de7


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Petrobras/Bolsonaro: bossa boots | Financial Times

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“Brazil is not for beginners.” Composer Tom Jobim’s remark about his homeland stands as a warning to gung-ho foreign investors. Shares in Petrobras have fallen almost a fifth since President Jair Bolsonaro said he would replace the widely respected chief executive of the oil giant.

Firebrand Bolsonaro campaigned on a free-market platform. Now he is reverting to the interventionism of leftist predecessors. It is the latest reminder that a country with huge potential has big political and social problems.

Bolsonaro reacted to fuel protests by pushing for a retired army general to supplant chief executive Roberto Castello Branco, who had refused to lower prices. This is politically advantageous but economically short-sighted.

Fourth-quarter ebitda beat expectations at R$60bn (US$11bn), announced late on Wednesday, a 47 per cent increase on the previous quarter. This partly reflected the reversal of a R$13bn charge for healthcare costs. Investors now have to factor the cost of possible fuel subsidies into forecasts. The last time Petrobras was leaned on, it set the company back about R$60bn (US$24bn at the time). That equates to 40 per cent of forecast ebitda for 2021.

At just over 8 times forward earnings, shares trade at a sharp discount to global peers. Forcing Petrobras to cut fuel prices will make sales of underperforming assets harder to pull off and debt reduction less certain. Bidders may fear the obligation to cap prices will apply to them too.

A booming local stock market, rock bottom interest rates and low levels of foreign debt are giving Bolsonaro scope to spend his way out of the Covid-19 crisis. But the economy remains precarious. Public debt stands at 90 per cent of gross domestic product. The real — at R$5.40 per US dollar — remains near record lows. Brazil’s credit is rated junk by big agencies.

Rising developed market yields will make financings costlier for developing nations such as Brazil. So will high-handed treatment of minority investors. It sends a dire signal when a government with an economic stake of just over a third uses its voting majority to deliver a boardroom coup.

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