Signal: Fresh Face in Brazil?—?Trump’s KORUS Line?—?Orban’s Open Illiberalism

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A BIG BRAZILIAN SHAKEUP

Brazil’s topsy-turvy presidential race just got even wilder as nationally-renowned former Supreme Court President Joaquim Barbosa is set to throw his hat in the ring.

Barbosa’s personal story is as compelling as they come. Born into poverty, his first job in a courtroom was as a janitor. But he rose to become Brazil’s first black supreme court justice, achieving fame by overseeing the massive corruption trial that ensnared the government of former-president Luiz Inácio “Lula” da Silva. (The Car Wash corruption scandal that would bring down Lula’s successor, Dilma Rousseff, would come later.)

In a mad-as-hell election cycle defined above all by frustration with the status quo, Barbosa will have broad appeal as a blunt-spoken anti-corruption crusader untainted by electoral politics.

What’s more, his progressive social views and humble origins will help him poach votes from current front-runner, Lula, who may in any case be behind bars before the voting even begins.

Importantly, in a country where more than half the population identifies as black or mixed race, a strongly competitive black candidate would mark a political and social watershed. If he wins, he’d be the country’s first black president.

Still, it’s a long way from here to election day in October. Brazilian party politics are brutal business, and Barbosa’s inexperience may sink him before then. But for now, his entry could mark an extraordinary turning point in one of this year’s most pivotal elections.

CHINA RESPONDS… BUT SOFTLY

Yesterday, Beijing officially responded to the Trump administration’s tougher line on trade, imposing additional duties of between 15 and 25 percent on 128 US exports, including wine, pork, and nuts (nuts!).

The move affects just $3 billion out of a total of $170 billion in annual US exports to China. In other words, peanuts, which incidentally, were not affected. And China framed the move only as a narrow response to the Trump administration’s recent steel and aluminum tariffs.

But Trump is readying a much bigger blow to China — proposed tariffs on some $60 billion worth of Chinese tech goods as part of a bid to punish China for years of stealing US firms’ intellectual property. That would be a significant escalation in what, so far, is more of a trade spat than a trade war. But the drums are beating louder on both sides.

PUPPET REGIME: Opposite Day

THE ILLIBERAL STATE OF EUROPE

This Sunday, Hungarian Prime Minister Viktor Orban is set to win another term in national elections, giving him a fresh mandate to advance his project of building what he calls an “illiberal” state at the heart of Europe.

Over the past eight years, Orban’s democratically-elected governments have, in fact, behaved less and less democratically — steadily centralizing power, eroding the independence of the courts, the media, and even cultural institutions.

For Orban and his defenders, this is a closing of ranks meant to defend Hungary’s interests against EU bureaucrats whose policies — particularly on the resettlement of refugees from Syria and North Africa — threaten to dilute Hungary’s traditional Christian identity and reduce its sovereignty. Orban himself openly looks to the authoritarian efficiency of Xi Jinping’s China and the conservative nationalism of Vladimir Putin’s Russia as examples.

His critics, meanwhile, say he has mounted an opportunistic political power play that has enriched friendly oligarchs, deepened economic inequality, and undermined the accountability of the government.

All of this presents a growing existential challenge for the EU. Alongside Poland’s move in a similarly illiberal direction, Orban’s continued strength sharpens two critical questions: First, how to impose costs on countries that buck EU institutions and ideals without alienating them further. And second, how to reconcile the desire of core Western European countries like Germany and France, which seek to further integrate the bloc, with Eastern countries’ resurgent nationalism.

A KORUS LINE

The Trump administration delivered its first major achievement on the trade front last week — reaching a preliminary agreement with South Korea to renegotiate portions of the KORUS free trade deal in return for granting it exemptions to new US steel tariffs. Fellow Signalista @gflipton assesses how big a win this actually was, or wasn’t.

On the economic front, the revisions make only a Kafkaesque contribution to President Trump’s stated goal of reducing America’s bilateral trade deficit with Korea, which is concentrated almost entirely in the auto sector. The agreement loosens Korean regulations on US exports that don’t currently apply and extends US tariffs on vehicles that Korea doesn’t currently make. The changes could certainly affect future investment decisions by Korean and US firms, but it would take a lot to change South Koreans’ strong preferencefor German and Japanese cars.

On the domestic political front, however, Trump can claim that he’s delivered on his core campaign promise to renegotiate the “terrible, no good, very bad” trade deals of his predecessors and use the renegotiation to shore up support among the blue-collar base that carried him to the White House. He can even present the 30% reduction in Korean steel exports as a win to steel country, though early indications on the success of this strategy are mixed. Keep an eye on auto country in November.

On the international front, Trump has shown that by playing a tough, zero-sum game he can extract defined economic concessions from allies. That said, KORUS was a comparatively simple renegotiation, affecting a small number of sectors with clear objectives. What’s more, Seoul and Washington had a mutual incentive to reach a deal ahead of the upcoming summits that each will hold with Pyongyang.

Other pending US trade negotiations — most importantly, with Mexico and Canada on NAFTA and with China — will be much more complex, involving much larger players with stronger cards of their own to play. KORUS went well enough, but can Trump demonstrate a similar Art of the Deal on those much larger canvasses?

IN MY DAY THEY CALLED IT THE “WORLD WIDE” WEB

Last week, in an interview tied to the launch of his country’s new AI strategy, French President Emmanuel Macron threw down the gauntlet against the world’s largest tech firms. Google, Apple, Facebook, and Amazon, he said, will have to submit to France’s will on questions of privacy, ethics, and responsibility for the economic consequences of their technologies. Signal’s in-house tech-guru @kevinallison explains what it means.

Whether or not tech giants bend to the French in particular, they do have to grapple with an increasingly kaleidoscopic political landscape today. And so, as a web-user, do you:

Say you take off in Chicago and land in Beijing. When you arrive, you can’t check a lot of US social media sites anymore, because China bans them. Fair enough, you’ll waste less time on Facebook anyway. Now you land in Moscow. You text a friend in Moscow to ask where you can get some Belarusian mozzarella (as one does) — by law that message will stay on a Russian server where it can be read the security services. You OK with that?

And it’s not just authoritarians cutting up the web. The EU’s rigorous privacy laws limit companies’ ability to send Europeans’ data across borders. Back in the US, meanwhile, if you’re not a citizen, authorities can ask you not only for your passport, but for your social media passwords as well.

This trend of regulatory fragmentation will accelerate as world leaders start to grapple more seriously with the ethical and economic challenges of artificial intelligence and other advanced technologies.

We sure are a long way from the 1990s vision of the internet as a public good that promised a post-national future. Where, exactly, we are going isn’t fully clear yet. But national governments will have a lot to say about it.

IS THE US LEAVING SYRIA VERY SOON?

The US is going to leave Syria “like very soon” President Trump said last week, in a remark that evidently caught members of his own administration by surprise. Currently there are about 2,000 US troops in Syria, where their main job is to help local Kurdish and Arab fighters battle ISIS. With that fight largely winding down, Trump appears ready to pull the plug, provided his own generals don’t stop him.

Why now? One clue is that Trump made the remarks at a campaign rally in the rust-belt heartland of Ohio, where he won a lot of votes in 2016 by railing against costly overseas military operations. His decision to send more troops to Afghanistan last year rankled his base, but a well-timed Syria withdrawal could help ahead of midterm elections that will turn largely on views of Trump.

Still, whether Trump actually goes through with it remains to be seen. His top advisors argue that to leave would cede Syria entirely to Russia and Iran — though in reality the US role has always been too limited to seriously obstruct Russian and Iranian advances there. A more pressing question may be whether a US withdrawal would enable ISIS to rise again in Eastern Syria.

Those are the stakes. But at the moment it’s too soon to tell whether Trump’s remark was policy or politics. Too very soon.

HARD NUMBERS

5,499: As of today, Turkey’s leader Recep Tayyip Erdogan has served 5499 days in office, first as Prime Minister and now as President. That makes him the longest serving leader in Turkey’s modern history — Mustafa Kemal Ataturk, who founded modern Turkey, served a mere 5491.

62: India’s new military budget of $62 billion, unveiled in February, passes an important milestone — for the first time since gaining independence in 1947, India now spends more on defense than its former colonial power in the UK. Globally only America, China, Saudi Arabia and Russia have higher defense budgets than India today.

21.8: Non-tech companies spent $21.8 billion on acquisitions in the AI industry in 2017, some 26 times more than they spent in 2015. It’s a sign that non-tech firms are increasingly focused on the impacts — both positive and negative — that AI will have on their markets and businesses.

4:1 : In Brazil, private security guards outnumber police officers by a ratio of four to one. Elsewhere in Latin America, one of the world’s most violent regions, the ratio is even higher. These weakly regulated forces aim to supplement strained police forces, but in practice they can fuel deeper cycles of polarization, inequality, and violence, according to a new report.

0: So far this year, Chinese coal exports to North Korea fell from about 8,500 tons monthly to a big fat zero, according to Chinese government data. Steel exports have also plummeted from about 15,000 tons a month to around 260. Beijing is putting more economic pressure on Pyongyang in order to help bring about a diplomatic solution to the nuclear crisis on the Korean peninsula.

This edition of Signal was written by Willis Sparks, and prepared with editorial support from Kevin Allison (@KevinAllison), Leon Levy (@leonmlevy), and Gabe Lipton (@Gflipton). Spiritual counsel from Alex Kliment (@saosasha). Give a friend the Signal here.

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