US 'oligarch list' postpones Russia sanctions risk

Significance The list contains the names of officials and members of the business elite whom the US authorities regard as part of or closely linked to the 'inner circle' of President Vladimir Putin. Impacts Congressional pressure for tougher penalties for Russia's alleged interference in the 2016 presidential election will continue. US-Russian engagement on Syria and North Korea is unlikely to be affected by the 'oligarch' list. Publication of the list is unlikely to prompt changes to EU sanctions policy.

Subject Prospects for Russian foreign policy in 2017. Significance President Vladimir Putin and senior Russian officials have hailed Donald Trump's victory in the US presidential election. Putin acknowledged that repairing bilateral relations would not be easy. Although some of Trump's campaign remarks will have pleased Moscow, the lack of clarity on what he will do in office means that a rapid 'reset' is not in sight. Moscow aspires to being treated as an equal superpower with its own spheres of interest, and has deployed military power and strong rhetoric to win this. The result is a deteriorating relationship with Western governments.


Subject The implications for Japan of the US presidential election. Significance US presidential election campaign rhetoric has sparked serious concerns in Japan about Washington's commitment to the East Asia region in the context of a long-term rise in geopolitical tensions. Republican candidate Donald Trump has publicly questioned the value of the US-Japan alliance, while Democratic Party candidate Hillary Clinton has muted her previous support for the Trans-Pacific Partnership (TPP) trade agreement, seen as the economic component of the US 'rebalance' to Asia under President Barack Obama's administration. Impacts Doubts about the US commitment to the region work to Beijing's advantage. The US government's likely failure to ratify the TPP will damage perceptions of Washington's commitment to the region. Though occasionally mooted, the idea of developing nuclear weapons is a non-starter in Japan.


Significance Several recent strains in the relationship guaranteed a tense official dialogue and tepid reception of Xi across Washington -- the impact of China's economic slowdown on the US stock market, accusations of Chinese cyber theft of US government workers' personal data, and continued maritime tensions. Impacts China's climate change commitments will improve its international image, but will not reduce tensions on other issues. Washington will impose sanctions if it believes China is breaking the new cybercrime agreement. US politics ahead of next year's presidential election will put more strain on China-US relations. Dialogue on the South China Sea is unlikely to bear fruit while Washington's policy is undecided.


Significance Taiwan-US relations got a symbolic boost when the US government opened a new 250-million-dollar institute to house the de facto embassy in Taipei, Taiwan's capital, on June 12. President Tsai Ing-wen, and a US delegation that included representatives from Congress and the State Department, attended the opening ceremony. It may have received greater attention and perhaps higher-ranking US representation had the first US-North Korea summit not been scheduled for the same day. Impacts Taiwan's president will be constrained from improving China ties by anti-China sentiment at home. More businesses could come under Chinese pressure as cross-Strait relations deteriorate further. Taiwan-US military cooperation will prompt more aggressive Chinese efforts to diminish Taiwan's standing and increase military intimidation.


Subject Indonesia's economic headwinds. Significance Finance Minister Sri Mulyani Indrawati last week said the US Federal Reserve (Fed) should be careful about how its policies affect emerging markets. Tightening US monetary policy and a global trend of trade protectionism is straining Indonesia’s currency and current account deficit. President Joko ‘Jokowi’ Widodo will be eager to demonstrate that he can handle Indonesia’s economic challenges ahead of the presidential election in April 2019. Impacts Sri Mulyani’s message to the Fed is unlikely to have much traction in Washington. The force of economic nationalism will hinder Indonesia’s efforts to court more foreign direct investment. US trade reprisals on Indonesia would damage Washington-Jakarta diplomatic ties.


Significance The standoff with North Korea has led the Senate Foreign Relations Committee to hold a hearing on the president’s authority to order a nuclear first strike. This is the first such formal examination of the executive branch’s nuclear prerogatives and procedures by Congress since 1976. Meanwhile, President Donald Trump’s administration is planning on upgrades to the US arsenal to boost Washington’s ability to wage a nuclear war and has raised the spectre of nuclear conflict with North Korea in its public remarks. Impacts The probable US deployment of new tactical nuclear weapons will not carry over to delegating attack authority to commanders in a crisis. Chinese and Russian anti-access/area-denial systems may trigger more US reliance on nuclear deterrence in the Baltics and North-east Asia. Improved weapons technology convincing policymakers that first strikes are prudent pose greater risks than unbalanced political leadership.


Subject Soft versus hard versions of nationalism in Belarus. Significance Under pressure from Moscow to make concessions on energy and political relations, President Alexander Lukashenka is trying to turn this to his advantage by presenting himself as the sole effective defender of Belarusian independence. The opposition is warning Lukashenka not to submit to Russian expansionism, making this a central issue for a presidential election due by August 30. Moscow may consider backing an alternative to Lukashenka, but pressing too hard might be counterproductive. Impacts A sudden economic downturn caused by oil supply problems could provoke apolitical and less controllable protests. Constitutional changes in Russia reduce the likelihood that Vladimir Putin wants to head a unified Russian-Belarusian state. Lukashenka will try to rally support from other Eurasian Economic Union leaders in his campaign for better trade terms with Russia. The president will use US Secretary of State Mike Pompeo's visit and EU engagement as a partial balance against Russia.


Significance He leaves office having failed to achieve his ambition to reform Japan’s constitution, and is widely seen as having mismanaged the most serious public health crisis in decades. Impacts New foreign policy initiatives are unlikely until after the US presidential election. Abe could make a decision before leaving office on whether Japan should acquire pre-emptive strike capabilities. No moves on constitution revision are likely for the next twelve months at least. Japan would be at a disadvantage if a foreign policy crisis were to occur in the next twelve months, and the next few weeks in particular. Whether the Olympics next summer go well will have some influence on whether Suga stays on as leader.


Significance However, Republican President Donald Trump is alleging that vote tallies are fraudulent and inaccurate. He is seeking recounts and undertaking lawsuits over alleged vote-counting irregularities. Impacts Two run-off elections in Georgia will determine whether the US Senate stays Republican or is tied 50-50 with the Democrats. Given the type of complaints raised by Trump’s campaign, prospects for a Supreme Court intervention look remote. Controversy over the election result will linger, perhaps until the 2024 presidential election.


Significance Signs that Democratic candidate Joe Biden is likely to secure a narrow victory in the US presidential election will boost the Commission’s hopes for global consensus and better transatlantic dialogue on digital taxes. Impacts Despite Brexit, the United Kingdom will support EU calls for a digital tax. The list of countries imposing unilateral digital taxes will continue to grow as pandemic-induced recession bites. The precise bipartisan balance of the US Senate will determine the extent of tech-related policy changes under Biden.


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